Warren Buffet is now famous for claiming that his secretary pays more in taxes than he does. Forget for a second that she doesn’t literally pay more. Also forget for a second that she most certainly doesn’t pay the rate that Buffet claims she does.
Instead, focus on Buffet. And his salary:
Warren Buffett, the billionaire chief executive officer of Berkshire Hathaway Inc. (BRK/A), was paid a $100,000 salary for a 30th straight year after warning that excessive executive compensation can hurt shareholders.
Buffett, 80, received no bonus in 2010 and he doesn’t get stock options or grants, the Omaha, Nebraska-based firm said today in a filing. Buffett’s personal and home-security services paid for by Berkshire cost $349,946. The company’s compensation committee has determined salaries since 2004. Buffett, Berkshire’s chairman and largest shareholder, formerly recommended his own salary to the board.
It’s reasonable to conclude that Buffet will earn another $100,000 next year. Plus, of course, the security compensation. So, if he gets his way and Obama and the Democrats raise the marginal tax rate from the 35% it is now to what ever they wanna move it to, guess what happens to Buffet’s tax burden?
It remains almost exactly the same.
See, Buffet makes his money in other ways than a simple paycheck:
- Buffett’s adjusted gross income last year was $62,855,038
- Buffett’s taxable income last year was $39,814,784
- Buffett paid $15,300 in payroll taxes last year
- Buffett’s federal tax bill came to $6,923,494, or 17.4% of his taxable income last year
Buffett doesn’t want taxes raised because of his situation, he wants taxes raised because he knows that given economic conditions and the impact of low tax rates (they led to bubbles rather than jobs), it is good economic policy to raise taxes, especially when budget cuts hit the poor and middle class. No other country has tax rates as low as ours, and ours are coupled with deductions that the wealthy make out like bandits with. What really gets me is how people seem to assume that they actually have earned whatever they manage to make (while the working poor who aren’t in the 53% but struggle to keep their families fed) truly only deserve what the market gives them. In my opinion that’s perverse! The idea that market outcomes are the proper outcomes is absurd.
Buffett doesn’t want taxes raised because of his situation
I think he does. I think he wants millionaires and billionaires to pay more.
No other country has tax rates as low as ours, and ours are coupled with deductions that the wealthy make out like bandits with.
Tax rates that are high, or tax rates that are low, produce revenue at about 18% GDP. Every single year.
What really gets me is how people seem to assume that they actually have earned whatever they manage to make
I’m confused. If I didn’t earn what I make, who did?
The idea that market outcomes are the proper outcomes is absurd.
Look, I’m as distressed about the Vikings as you are! But that’s no reason let go of rationality here 😉
If we stipulate that there is no fraud, the market outcomes is proper. That is NOT to say that personal charity isn’t required.
What you earn is the result of a social process and a myriad of social, cultural and legal arrangements. So, for instance, a sports star “earns” more because of the nature of sports in our society, how sports franchises are run, the nature of television deals, etc. The market deems good play worth over $1 million, while a teacher in a rural poor region where kids need help to overcome their situation might be worth only $24,000 a year. That’s the market’s determination of worth of each bit of labor. But does that really mean that the sports star’s actions should be rewarded so much, while the teacher may be below the poverty line? Is it wrong for a democratic populus to say “you know, we don’t like the implications of the market on some aspects of society, and we choose to tax those who make large amounts a bit more so that we can reflect our social values.”
There is no reason to think the market outcome is proper, even absent fraud. We can and should use democracy to reflect on whether markets do give outcomes that reflect societal values, acting only in ways allowed by the Constitution. I’m not willing to equate market outcomes with just outcomes. I don’t see why anyone would.
That’s the market’s determination of worth of each bit of labor. But does that really mean that the sports star’s actions should be rewarded so much, while the teacher may be below the poverty line?
It most certainly does.
We clearly value sport entertainment more than we value education. Further, a football star making $1 million per year represents an actor that is in an elite class. He is one of less than possibly 500 people in the world that can do what he does at the level he does it.
Further, the nature of employment is different. An athlete can be cut. Fail to perform? He is fired. Teachers, on the other hand, value different things. They want protection from failure to perform. They don’t wanna travel. They don’t wanna train to the degree an athlete does. They want to be off during holidays and all summer long. They don’t wanna subject their body to the physical abuses that an athlete does.
Is it wrong for a democratic populus to say “you know, we don’t like the implications of the market on some aspects of society, and we choose to tax those who make large amounts a bit more so that we can reflect our social values.”
But you’re wrong. The populous DOESN’T wanna value teachers more than athletics. Rather, the populace wants to spend other people’s money for those things. Not their own.
There is no reason to think the market outcome is proper, even absent fraud. We can and should use democracy to reflect on whether markets do give outcomes that reflect societal values, acting only in ways allowed by the Constitution.
Yowza! We have a formidable difference in our bedrock views.
The difference, PINO, is that in democracy its one person, one vote, and one can make clear choices on values (e.g., we can decide we think as a society it’s important to pay rural teachers enough to draw good people). If you let the market do it a few things happen that distort. First, people don’t make value judgments, they make individual self-interest judgments that often do not take into account unintended consequences. Second, those with the most resources can affect the final outcome. Therefore, markets are a good tool to communicate demand via price, and with which to spur innovation and flexibility in the economy. As an arbiter of values and collective decision making mechanism there is no reason to trust markets, and every reason to construct constitutional democratic modes of decision making to limit, regulate, and adjust market outcomes. Markets are not magic, and can lead to aggregate results that people don’t want as unintended consequences of things people do want.
To simply embrace whatever the market gives as a result doesn’t strike me as rational or defensible.