Tuesday, September 27, 2011

Why Does Warren Buffet Want To Pay More In Taxes?

Warren Buffett speaking to a group of students...Image via WikipediaWarren Buffet, the "Oracle of Omaha, thinks the rich are not paying their fair share of taxes. He announced that he pays less taxes than the people that work for him, like his secretary.

 "Last year my federal tax bill -- the income tax I paid, as well as payroll taxes paid by me and on my behalf -- was $6,938,744. That sounds like a lot of money. But what I paid was only 17.4 percent of my taxable income -- and that's actually a lower percentage than was paid by any of the other 20 people in our office. Their tax burdens ranged from 33 percent to 41 percent and averaged 36 percent." says Warren Buffet.

 Some claim that his calculations are off. The money he receives in dividends has already been taxed once at the corporate level. So his personal taxes are the IRS’s second taxing of the income. And that's why he takes his income in dividends only.

 Warren Buffet and the wealthy like himself are the exception and not the rule. He has control of a vast amount of wealth and capital. He isn't rich, he is super-rich. His company and many other prosperous companies are sitting on billions of dollars in domestic banks. Add to that the billions kept in overseas banks of American companies profits that will not come back to this country because of high taxation.

 Mr. Buffet is in the position to pay higher taxes. But the so called rich, those making $200,000 - $500,000 range are not being paid in dividends like Mr. Buffet. They are most likely being paid a salary with some bonuses. Are they the rich he is talking about. They are the ones that already pay high taxes and don't want the ideas of Warren Buffet to come into fruition.

 I compare Warren Buffet to the Henry Ford's, J.P. Morgan's, and John D. Rockefeller's of the last century. They were wealthy enough to bailout failing companies and do the right things to help this country before their were bailouts. It was done right at that time when fiscally healthy companies stepped in and bailed out failing companies.

 In 1907, during a vicious stock panic that threatened to engulf the U.S. financial system, J.P. Morgan single-handedly stepped in. "This is the place to stop the trouble, then," he said, while putting his own funds at risk to orchestrate a bank bailout. Amid the panic, John D. Rockefeller loudly deposited money in a troubled bank and pledged to buy stocks. In 1914, at a time of rising labor unrest, Henry Ford shocked his competitors (and the establishment) by announcing he would pay assembly line workers the above-market wage of $5 per day. These moves may not have seemed economically rational at the time. People who commit big sums to equities in the middle of crashes generally lose money, and businesses that intentionally pay unskilled labor above-market wages tend to go out of business. But they were actually very shrewd investments in the system. If U.S. markets ceased to function, J.P. Morgan's firm would have been among the biggest losers. Ford reasoned that his company would prosper if he could turn the automobile from a luxury product into a utility for the working- and middle class. He wanted to pay his workers enough so they could afford to buy his products. It worked out pretty well for Ford and his heirs.

My View:

 Mr. Buffet should forget about his tax ideas and concentrate on what he knows best, building companies and making money. We should of put him in charge of the so called bailouts. He could of done the whole thing in less time and at half the cost. It should of been left to the private sector to heal itself. The government is pathetic at anything financial or business.

 Warren Buffet should use his goodwill and knowledge to lobby the administration to think like a business man.

1 comment:

  1. Buffett should just keep his mouth shut when it comes to politics and concentrate on running Berkshire Hathaway. His claims have been debunked all over the blogosphere and in the news media by AP. He is losing credibility. If he wants to pay more taxes, he should just write an extra large check to the IRS or donate his estate to the government.


Join 1000's of People Following 50 Plus Finance
Real Time Web Analytics