When Investor Billionaire Warren Buffet Begs for Capital Gains Tax Increase, Can Republicans be Right?
How can Republicans still believe a capital gains tax increase will hurt investment and jobs when the world’s most successful, multi-billionaire, investment advisor begs to differ? Republicans may stand on the right side of the aisle, but they certainly do not stand on the right side of the argument when it comes to ending the Bush Tax Cuts for Billionaires.
Warren Buffet has been in the investment business longer than just about anyone alive, and he has certainly made more money by counseling investors than anyone on earth during any time on earth, yet Warren mocks the idea that higher tax rates discourage investment. In fact, Warren writes that the minimum tax rate for those making over $500,000 a year should be 30% of all they make; but, more importantly, Warren advocates raising the one tax where the Bush Tax Cuts have created a huge subsidy for millionaires — the capital gains tax.
Without capital gains tax increases, the rich are subsidized by the poor
As I’ve often argued in The Great Recession Blog, millionaires and billionaires do not make their money in wages. You’d think that would be so obvious that no one would need to say it. Yet, over and over, you hear Republican pundits saying that the rich already pay the highest tax rates. NO THEY DON’T! Flush that STUPID thought out of your head! The high 35% income tax rate is smoke and mirrors. The rich make very little of their money off of the kind of income that pays income tax. The highest income-tax rate is nothing but window dressing to make it APPEAR that the rich pay a higher tax rate than the rest of us.
Many millionaires make none of their money from wages. They make their money the way Warren Buffet does — off of investments — and money made off of investments is taxed through capital gains tax, which the Bush Billionaire Tax Cuts reduced all the way down to 15%. According to Warren, the average upper-class person made $97,000 PER HOUR last year, and paid less in taxes than you probably did. And, YES, the top twenty-percent do pay eighty-percent of the taxes, BUT they make eight-five percent of the wealth! So, by any measure, they are underpaying. The poor and the middle class are carrying their sorry fat asses uphill for them. Why do you want to do that? What is wrong with you?
I know this is obvious to many, but it clearly is not obvious to Republican voters. I am not sure whether Republicans are this ignorant or are simply liars. I like to think that it is only the Republican politicians that are the liars, and that the Republican voters are simply ignorant masses. Republicans (and I USED TO vote Republican more often than Democrat, being an independent myself) would stop endlessly repeating that the rich already pay higher taxes if this was as obvious to them as it should be. THE RICH PAY LOWER TAXES! The reason Romney only paid 15% tax on his income in 2011 is because he makes his money buying and selling investments and off of stock dividends, and all of these pay only 15% in taxes! That is one step from the LOWEST tax rate in our income-tax system.
In other words, thanks to George Bush (and earlier Ronald Reagan), the rich are subsidized by the middle class. People in the middle class all pay a proportionately larger amount of their total income in taxes than the rich do. Why are Republican voters so unwilling to believe a major capitalist like Warren Buffet who is arguing against his own personal interest? You’d think that would wake them up! Bill Gates, a hero to many capitalists, is also making the same argument.
As if the low capital gains tax rates were not bad enough, the rich also have numerous exemptions and credits available in the income tax code that help them write down the taxes paid on the portion of their income that is made through wages … well below the stated 35% top bracket. So, even those who make some of their money in wages, do not pay anywhere near 35% on their salaried income. It is ABSURD to think the rich pay a higher percentage in taxes than the middle class. THE RICH DO NOT EVEN PAY AS HIGH A PERCENTAGE IN TAXES AS MANY OF THE POOR!
What fools Republican voters are to continue to gulp down this bilge water whenever their favorite talk-show hosts and Republican politicians regurgitate this swill into their hungry little mouths.
Republican voters believe they know more than Warren Buffet when it comes to capital gains tax increases
Mitt Romney, Grover Norquist, Karl Rove and Rush Limbaugh have argued until spit is spewing from their mouths that an increase in the capital gains tax will drive money out of investment and will hurt jobs. Republican politicians have stated in lock-step with each other since the days of Ronald Reagan that the best and only way to spur the economy forward is to keep capital gains taxes low. Republican voters have swallowed this hook, line and sinker, even though history proves them wrong. Warren Buffet also says they’re dead wrong!
Let’s forget about the rich and ultrarich going on strike and stuffing their ample funds under their mattresses if — gasp — capital gains rates and ordinary income rates are increased, argues Buffet, Only in Grover Norquist’s imagination does such a response exist.
Grover Norquist has managed to subjugate the entire Republican party to his will with a simple pledge, and he’s not even elected. Fortunately, his stronghold his finally starting to crack. This week such Republican stalwarts as Lindsey Graham have said they will break their no-tax-increase pledge.
Let’s get another fact straight here once and for all. If you’re an average voter who is screaming in fear, “I don’t want my taxes raised,” NO ONE is talking about raising your taxes. President Obama and Democrats have consistently said that they are not about to raise taxes on the middle class or the poor. YOUR TAXES ARE NOT GOING TO GO UP. The taxes of the rich are going to go up, and if you pity the rich because you think we are about to confiscate their wealth and give it to the middle class as a transfer of wealth via taxes, then put on your reading glasses and go back and read the beginning of this article. It is YOUR wealth that has been confiscated by having to pay higher taxes than any rich person pays in order to help keep the rates of the rich low.
Get a brain! Find a used one. It will work better than the one you have already discarded! First, you have been subsidizing the rich for years, so taxing them at a higher rate now than the rate you pay, is merely recalling the debt they owe you for letting them off so easy for decades. It will take them a LONG time to pay back the debt they already owe the middle class, so have no fear that a capital gains tax increase is confiscatory toward the rich. THEY OWE YOU because you HAVE been subsidizing them for a very long time. That’s a fact!
So, it’s time to call in the loan you’ve given to the very rich because our country is in need, and the middle class simply cannot afford to pay more taxes to work our nation out of this huge debt we’ve created.
Romney preached the Grover gospel that lower capital gains taxes are “the right way to encourage economic growth, to get people to invest, to start businesses, to put people to work.” Even Hurricane Sandy didn’t create as much Wall Street rubbish as came out of Romney’s mouth.
Warren Buffet, who has managed investment funds for the very rich for decades, has said repeatedly that a capital gains tax increase will not stymy investment one iota. Back in the fifties and sixties, capital gains taxes were 27.5%, and income taxes were 70%, while Warren rose to his present wealth guiding the investments of the world’s greatest capitalists during that time. Writing about that time, Warren says,
Under those burdensome rates, moreover, both employment and the gross domestic product increased at a rapid clip. The middle class and the rich alike gained ground.
Republican mantra against capital gains tax increase already proven wrong by Clinton
An even better argument against the Greedy Grover Gang is the Clinton era. Clinton raised capital gains taxes and income taxes on the wealthy, and the economy surged forward at a far faster rate than was even healthy. While the dot-com boom in the Clinton years went bust, it certainly proved in a dramatic way that higher capital gains taxes will not slow down investment or job growth. Clinton raised the capital gains tax, and we experience a long boom period of wildly speculative investment. People invested insane amounts of money as if money flowed out of their fingertips. They invested in companies that had never even shown a profit. This is the exact opposite of what Romney said will happen if we raise the capital gains tax, and he is without excuse for such a lie because history had already proven otherwise … to anyone who was paying attention.
If you cannot learn by listening to a major capitalist like Warren Buffet, who specializes in counseling other major capitalists on their investments, I would think you could, at least, learn from history. We raised both capital gains taxes and income taxes in the Clinton years, and yet investments new ventures soared beyond the stratosphere.
Wake up to a capital gains tax increase and smell the rich aroma!
As Buffet and Gates have both said, “Stop coddling the super rich!” They are not made of straw. They will not blow away in a summer breeze or freeze in the winter if they have to start paying the same tax rate on their investment income that the rest of us pay on our income! They will not stop investing and stop making money just because they have to pay the same taxes you do. As Buffet writes,
Suppose that an investor you admire and trust comes to you with an investment idea. “This is a good one,” he says enthusiastically. “I’m in it, and I think you should be, too.” Would your reply possibly be this? “Well, it all depends on what my tax rate will be on the gain you’re saying we’re going to make. If the taxes are too high, I would rather leave the money in my savings account, earning a quarter of 1 percent.”
Don’t be stupid! Of course, the rich are still going to invest. Are they going to decide, just because they have to pay higher taxes on their capital gains and investment income that they don’t want to get richer? You haven’t stopped trying to earn money at the rates you pay, if you are poor or middle class, so why would the rich stop trying to make money if they suddenly have to start paying as much as you do on their investment income? Don’t be absurd. According to Buffet, not once in his career has one of the investors whom he helps make rich mentioned tax rates as a reason to not invest. Why do you believe these Republican peddlers of fear? Seriously? What’s wrong with you?
Stop thinking and acting like your livelihood depends on the rich.
Sure, it’s true that tax decreases can stimulate the economy, but the Bush Tax Cuts have done nothing to stimulate the economy. The economy stinks! The Bush Tax Cuts have not created jobs. We’ve had these tax cuts for eleven years, and jobs have rarely been worse. They did not create jobs last year; they did not create jobs the year before that; they did not create jobs before Obama first took office. Jobs before Obama took office were sinking in the belly of a great depression.
The fact is that tax cuts do most to stimulate the economy when they are given to the poor and to the middle class. When those groups get tax cuts, they go out and buy things. And if you think the rich won’t quickly go out and build factories to make those things when people are ready and able to buy, you don’t know the rich. If the rich smell a market, they’ll go after it like sharks on blood. So, stop thinking your livelihood depends on being easy on the rich in order to help them help you out by building factories so that you’ll have a job. The factories built by the Bush Tax Cuts were all built in China, Mexico and India anyway!
Stop living in the fantasy that someday you’re going to be rich, so you want to keep those capital gains tax rates lower than what you are paying in taxes now because you want to be able to benefit from them when your ship comes in. Your ship is far more likely to come in if the rich are paying more taxes than if you are! And NO ONE is talking about raising taxes on the middle class or the poor. So, get that silly little fear out of your head.
And stop buying the rubbish that higher taxes on higher income bracket tax any person more unfairly than another. In a marginal tax system with no write-offs that favor one kind of person over another, the rich pay the same on their first 10,000 that you do, and then they pay the same amount on their next 100,000, and they pay the same amount on their next $1,000,oo0 that you will pay if you ever get there. They are not being singled out. If we ever get back to such a tax, it is a sliding scale for everyone that decreases your tax burden as your ability to pay decreases. It adjusts the load to what you can manage at any particular time in your life. But the rich don’t currently pay those higher tax rates anyway. Not even close.
Why on earth Democrats have not managed to convince blue-collar Republicans that the rich are currently taxed less then the middle class is beyond me. The argument continues to be that we should not tax the rich “more” than the middle class. Heck, I’d be glad if we just taxed them the same by treating capital gains like all other income and by ending all their special write-offs. It’s a simple fact that the rich are all taxed far less than the middle class, so it is ludicrous that middle-class Republicans want so badly to keep them from being taxed as much as the rest of us. We are still bound in political gridlock here in the U.S., and people are still thinking like ideologues about whether a solution is “Republican” or “Democrat,” “Conservative” or “Liberal.” Who cares?
A capital gains tax increase increase would merely level the playing field so that investors are not coddled with kid gloves as if they are so precious and vital and fragile that we have to make sure they pay the LOWEST tax rate in our code so that they don’t break.
Give ME a break!