Warren Buffett has been all over the business press recently suggesting that the very rich, those on the Forbes 400 list, are taxed advantageously to the rest of the workforce. That it makes no sense that his tax bill as a percentage of income is lower than that of his secretary or housekeeper.
He is absolutely right.
It makes absolutely no sense that he, or I should pay a smaller percentage of our income than those who go to work 8 hours a day and have to save as much as they can to afford a vacation every year and stress out about whether or not they can pay their rent, mortgage or college for their kids.
Its also wrong that those who must live paycheck to paycheck find themselves paying the same amount of taxes on consumables as the super rich. That 8pct sales tax on life's basic necessities is real time cash out of pocket, a far greater percentage of income and much more expensive money than the federal taxes we pay the following April 15th.
I would be perfectly fine paying a higher percentage of income, both in federal income taxes and as part of a consumption tax on luxury items. If Warren wants to buy or build a yacht for a hundred million dollars. Nail him with a 10pct federal tax surcharge. If I want to buy a Gulfstream Jet for 40mm dollars. Nail me with a 10pct federal surcharge above and beyond current taxes. There are plenty of items, from jewelry to 100k plus cars to 10mm dollars or more first, 2nd and 3rd homes. If you can afford to buy these kind of goodies, and choose to, cough it up.
Will i avoid the Gulfstream or Warren the Yacht because of the surcharge ? Will I drive a used car instead of my new expensive Lexus Hybrid. Nope. You are rich when you know that money is no good unless you can enjoy it. No one on the Forbes 400 or near by is going to let a 10 percent more increase in the cost of a luxury item get in the way of enjoying the lives they have always dreamed of.
The perspective that Hillary Clinton is offering that 250k in annual earnings qualifies you as rich is not only ridiculous but its a huge disincentive to those who work their asses off every day and have accomplished a salary that rewards their hard work. It also will impact millions who can least afford it.
I will tell you who will suffer the most if a "tax increase for the wealthy" starts at only 250k. The 50 plus year old executive who has spent the last 25 to 35 years working his or her butt off to reach a 250k salary. The 60 year old executive who is already scared shitless that their job could be eliminated tomorrow and that they have not saved enough for retirement.
Is that who you want to impact Hillary ? Men and women who are approaching retirement already in fear of job security and their futures ?
Not a good idea.
Instead, go after those of us who are really rich.
I'm OK with paying either higher taxes at my level of income OR paying a consumption tax on luxury items that cost more than the 250k threshold that Hillary thinks is the level of income that defines rich. But my agreement to pay more taxes comes with a caveat.
Right now I hate paying taxes because I feel like I'm giving money to a known crack addict. However much you give, its not enough. They will buy their crack, get a short term high and soon be back asking for more.
The federal government , whether in Republican or Democratic hands is the same way. No matter how much you give, they are always asking for more, more, more. Always spending on the ridiculous, without remorse and without the ability to restrain itself. Just like a drug addict.
If you are going to raise my taxes, I want somethings in return.
Raise my taxes by 1 pct, by every 1 pct you cut federal spending. Your choice of raising taxes on luxury items, or on annual income of 10mm dollars per year or more. Cutting spending means the government needs to raise less which allows you to raise the income threshold on which you charge this "Forbes 400 surcharge"
And I want 1 more thing. I want transparency. The way the government publishes information on money it spends ,receives and owes is a joke. No one in this country has any real knowledge of how much our country really owes. There are so many hidden and unpublished liabilities that if our country were a public company, someone would go to jail.
The accounting data of this country is public domain information. There is no reason why it can't be published if not in real time on a government website, than at least quarterly. Money coming in . Money going out. Money that is owed to us and from us. It is currently being recorded somewhere , and someone has responsibility to collect it or pay it. So it can be published.
Then every quarter, our federal government can publish an Income Statement and Balance Sheet according to GAAP principles. It wont be perfect, but it will be a hell of a lot better than what we have today.
Without complete transparency, politicians will do what politicians always do. They find ways to play with our hard earned tax dollars and to put a lien on our current and future earnings, and that of our kids and grand kids just so they can get elected and re-elected. That's just wrong.
So if Warren Buffett wants the Forbes 400 Rich to pay more taxes, great. Than Warren also needs to ask the two candidates he is supporting to do the same thing he would ask of any company he is investing in, show him accurate , up to the minute accounting data with transparent information supporting every number.
When that happens the government can take more of my money if they need it. My guess however is that when the citizens of this country see how much we really owe and where the money is being spent, and the short and long term implications of our politicians spending like addicts, they may start voting for those who respect the value of a dollar.
Will your candidates agree to this Warren ?
I also have one more tax suggestion that I think will create so many jobs in this country that it really wont matter what else our politicians do.
If we really want to stimulate job creation in this country, take the same approach to small business with fewer than 25 employees that we take to Internet taxes. Outlaw them.
No taxes of any kind on small businesses with fewer than 25 employees. No employer payroll tax. No state or local taxes. No taxes on earnings. Nada. The business owners will pay income taxes on their personal income they pay themselves, but not corporate earnings
The only taxes they would collect and remit are sales taxes, the employee's portion of payroll taxes and of course they would still file personal income taxes on their individual earnings.
Today to start a business today is so frustratingly tax and paperwork burdensome that it requires hiring experts on taxes ,state and local filings just to get started. That is more of an impediment than trying to actually make the business work as a going concern. It also pushes businesses underground so that they can operate on a cash basis and away from the tax collector. I would rather have entrepreneurs think twice about their 26th employee than whether or not they think its worth the hassle to start up a licensed business.
Those are my ideas. I have no illusions that any could actually happen.
UPDATE: For some reason some people seem to confuse the Luxury Tax of 1990 which put surcharges on minimal pricing thresholds of 10k for jewelry, 100k for boats and 25k for planes with what I am suggesting.
Thresholds that low are not what I had in mind when i offered a 100mm dollar yacht and a 40mm dollar jet as examples. For those who would rather conclude rather than ask, lets just say that nothing with a cost of under 10mm dollars would be subject to a surcharge. . And I will remind everyone that I would only support this IF government spending was reduced and transparency was introduced. For some shocking reason bloggers who have linked to this post don't seem to comprehend the whole of the post.
Warren Buffett , Taxes and the Presidency
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Reader Comments
(Page 3)42. You wanna pay more? Go ahead. Nobody is stopping you. As for me, unlike
you, I am not wealthy enough to become a socialist so as to prevent others
from achieving wealth.
Posted at 4:29PM on Dec 12th 2007 by Gary
43. I have a better idea, Mark. Instead of ruining the economy with higher taxes, why don't you just break open your tight purse strings and donate a few bucks to The Salvation Army. They do more good for the poor and unfortunate in our society with a dollar than the government does with a hundred dollars.
From MC:
You didnt read the entire post did you ? Or do you just have a hard time understanding what i wrote ?
Just curious
Posted at 4:33PM on Dec 12th 2007 by KC
44. Fine...if you want to pay higher taxes go right ahead. There is absolutely NOTHING to stop you from writing a larger check to the government the next time you pay taxes. But I'm sure your rich-liberal hypocrisy will rear its ugly head and you will have your accountants find and exploit every legal means available to keep your taxes as low as possible.
Posted at 5:10PM on Dec 12th 2007 by Fig Jam
45. Mark,
I would appreciate if you would share advice about how to invest/prepare for US dollar decline and the seemingly inevitable US economic crisis on the horizon. thanks.
Posted at 5:11PM on Dec 12th 2007 by DARRYL
46. I sell a home furnishing product to interior designers. One of my client's client IS a Forbes 400 billionaire. Redoing one of their houses, they went out on their own and bought a bunch of furniture from a name brand company telling the designer they got a 40% discount. Turns out they were using her name to get the designer discount. Don't tell me billionaires don't count their money........and wouldn't avoid a 10% tax on luxury items.
Posted at 5:18PM on Dec 12th 2007 by Will
47. Don't raise MY taxes because YOU feel guilty, Mark, What percentage of your gross income have YOU donated to NONPOLITICAL charitable causes? If YOU want to pay more, YOU pay more.
You greedy, self-centered fraud, my money- that I've worked hard for- is MINE, not yours to give away to the government or for your cause-du-jour.
The Carnegies and the Mellons built libraries and museums- what have YOU built, Mark? Where's YOUR buildings, open to the public, for the betterment of the public? The Du Ponts built hospitals... where's yours?
Poseur. It's awful easy to be generous with other people's money, isn't it Mark?
Posted at 5:31PM on Dec 12th 2007 by DaveP.
48. Great post Mr. Cuban. It is refreshing to hear people in your economic class discuss the inequities in our tax policy. However, I think you are being a little naive in your view of federal government spending. It's a lot harder to cut spending than you think it is... fat pork discretionary spending projects (ie the "bridge to nowhere in alaska") make up a tiny tiny tiny portion of federal spending... the vast majority of the federal budget is for important or mandatory programs that can't be cut...
"Just seven programs make up about 75 percent of all federal spending: Social Security, Medicare, Medicaid, military pensions, civil service pensions, defense and interest on the debt.
That's "big government." Republicans aren't trying to cut a dime of it. In fact, they're calling for big increases in every one of these programs. According to the White House, interest on the national debt alone will soar by 66 percent over the next five years thanks to the red ink oozing from President Bush's budget.
And those "big 7" programs come before you toss in everything from NASA to the national parks to the National Institutes of Health, not to mention homeland security, student loans and farm subsidies - all things Republicans support, and which take up a goodly portion of the quarter on the federal dollar that's left."
http://www.mattmilleronline.com/articles.php?id=34
52. I often don't agree with you Mr. Cuban, but the ideas you are representing here couldn't have been expressed better by anyone else... Because almost no one else with the amount of influence you have would say them. People need to stop worrying about if the Democrats or Republicans are the ones failing because the answer is obvious - they both are.
So you are rich? That means you either earned the capital or came upon it by a random way (EX: Lottery, inheritance). Regardless of how you got it the money is yours. All humans are created equal, if we still hold to that ideal than this complaining about the rich getting richer should stop. I am so sick of hearing peers state that the "rich just keep getting richer and the poor just keep getting poorer!" I always tell them the remedy for that is to work more. The harder and more uniquely you do your job, the more money you will eventually make. I always tell middle class citizens who complain to think about the poor. The lowest class of the low. They most likely could make the argument that we should be paying more as a higher income than tem. That would sound absurd to you right? Well it is no different middle class working American, than if you were rich. You work, get you’re money, do what you’re government tells you and shut you’re mouth.
Posted at 6:52PM on Dec 12th 2007 by Tyler
53. Mark,
Great post and perspectives. I really like some of your ideas and many of your comments. I agree that taxing $250k + individuals would include a lot of hardworking people close to retirement and that it could damage their plans. A+ on the small business tax!
54. Bravo Mark!
Transparency plus mandates for Federal departments to freeze or cut budgets by selected percentages will bring a more RESPONSIBLE government. Will it every happen? Not until the crack addicts are thrown out of DC . . .
Posted at 9:51PM on Dec 12th 2007 by bob jacoby
55. Mr. Cuban-
It makes absolutely no sense that he, or I should pay a smaller percentage of our income than those who go to work 8 hours a day
Why didn't you pay more last year? The Gov't will take it, you know...
Why did Warren donate all that money to the Gates' Foundation? Did he "take" the "tax break" for "charitable contributions"? Why?
Apparently. you and Warren want "others" to pay more, just not yourselves!
Posted at 10:11PM on Dec 12th 2007 by Scott F Fletcher
56. All good points but if you really want something to complain about, move to Canada and pay our taxes!!
Posted at 10:24PM on Dec 12th 2007 by Murphy
57. Cuban for President?
Posted at 10:46PM on Dec 12th 2007 by Poko
58. although you are right, the rich do not pay their fare share in taxes, there is a much bigger problem with our economy. it seems to me that in 1976 i left my families business at home and went into the workforce starting out at $14 per hour doing autobody repair. today that same job might still pay you $14 an hour, maybe. most of which i believe is controled by insurance companies guilty of price fixing. when you flip that coin over, our taxes, utilities, rent, and insurance has risen many times over that.
my first home was 3 bedrooms, in the country with 5 acres of land and i paid $17,000 for it in 1978. today that same place just sold for $96,000 and with only 2 acres of land. in 1976 a family could live on the mens single income,leaving mom home to tend to the kids. today most families have double incomes and life is still week to week, and the quality of the family unit has deteriorated tremendously.
i personally believe the stock market is an over inflated joke, simply because i dont see any reflection in the streets to pay checks for the increase in business economic improvements. Exxon oil reports $15-20 billion dollar profits per quarter and we still are strapped with $3+ dollar a gallon gasoline ? in 1976 gas was 26 cents a gallon, rent for a 3 bedroom home was $150 a month, insurance for my new car was $186 dollars a year for full coverage, cigarettes was 40 cents a pack, a gallon of milk was around a dollar, i think you catch my drift here !
i live in illinois where the minimum wage is $7.50 an hour and business still prides themselves in offering work for only $7.50 to $10 an hour. rarely will you see a job for $13-$15 an hour. this is simply inexcusable considering the overwhelming increases in the price structure of todays goods and services ! saying nothing to address utility companys, petroleum companys, and insurance companys, who hold more money in investments than anyone today ! big money makes money, but one thing i know is true, i could live very well off the waste in big corporations today, that continue to raise prices to cover their cost increases, instead of tightening their belts and address, waste, pilfering,and corporate upper level salarie waste and corruption.
my question to my government now would be, at this rate of price increases and my paycheck being reduced to pennys in comparison, when can i the consumer and tax payer, be broke ??
i have never made over 28k a yr and today it takes an income of 75k to stabily maintain a family of 4. well im sorry, i guess i will never be able to have the american dream of a wife and family, because i simply cannot afford it ! very sad, i think...............
Posted at 11:20PM on Dec 12th 2007 by dgatorr
59. Mr. Cuban:
Your problem is you can suffer much higher taxation without any decline in your lifestyle than I can, and your lifestyle is considerably nicer than mine, if measured by private airplanes, nice cars, big houses, etc. This is not the state of 99.8% of Americans, which makes your statements quite foolish except as a prescription for yourself.
And even then I can't say I support your idea, though it might cut your ego down a little...a good thing, that.
If you feel that you should be giving more to government, just do it. You and Warren and Gates can just cough up a few billion right now. No reason you can't, the politicians will accept it. Put your money where you mouth is, sir. any other action is just bluff and stuff. Is that who you really are?
Or just shut up until you have something really useful to say.
Posted at 12:00AM on Dec 13th 2007 by Harry Schell
60. Appreciate your willingness to pay higher taxes to take the burden off the little guy. What do you think of the FairTax? Its somewhat like Forbes' flat tax, but it offers a prebate each month to everyone to help them offset the higher costs of food, clothing, etc. Give it a look if you haven't already and keep up the thoughtful - if controversial - posts.
Posted at 12:26AM on Dec 13th 2007 by David Mackey
41. Nice blog, jackass. That's the problem with you and your 399 other
rich pals, you're woefully out of touch with the rest of us "working
stiffs". Just because you got lucky speculating over the internet
boom doesn't mean you are a tax expert. What say, you just worry
about dancing with the stars and programming ultimate fighting on
your tv station until you're actually ready to put your money where
your mouth is.
Posted at 3:42PM on Dec 12th 2007 by kurt himmler