I reckon that most people that saw the President’s latest speech were angry. Mad that poor secretaries pay more taxes than super rich folks. However, I was doing something like this:
There are 3 ways to perceive things. You can believe what you want (what most people do). You can try to find the truth, or you can keep an open mind and be some where in the middle (the grey area if you will).
In my opinion, the President’s latest showing was class warfare mixed with politicking. He could of easily said we need to fix the deficit by getting rid of loopholes and simplifying the tax code, but no, he went all Marx on us. Also, his speech was not specific at all. They already plan to raise taxes in 2013. Tax Law Changes For 2009–And Beyond And get this, taxes increase for all of us in 2013. Tax Changes You Need to Know for 2011 – DailyFinance He knows that raising taxes now would hurt the economy even more. So why is he doing this? Bill Clinton: No more taxes now – MJ Lee – POLITICO.com
1. You damn dirty tax.
First off, there are many different taxes (income, capital gains, state, corporate, etc).
Income Tax is money taking from your salary. Salary is a wage. You agree to work for a certain organization or person for such and such dollars/hour/day/year.
Capital gains tax is money taking from investment profits. For instance, if you flip a house, you will pay taxes on the profit. Capital gains taxes are lower to provide incentives for investors to make investments and entrepreneurial activity.
Basically, investing creates jobs by encouraging people to lend money to new start-ups, technology, etc. So raising these taxes would result in less investment, which would cause less innovation and fewer jobs.
2. Buffett’s Lie.
I do not know if Buffett really lied or not (gave up after 3 google searches). However, he is very misleading. Buffett definitely pays more income tax than his secretary, see chart below. His income is taxed at a higher bracket. I am pretty sure his secretary makes bank also.
Buffett’s overall tax rate maybe less, but that is because most of his earnings are from capital gains. Overall, Buffett pays way more in taxes than his secretary, as do the majority of the stinking rich, see chart below. Plus, why doesn’t Buffett throw a bone to his secretary and give her a hot stock pick or something? She could be paying capital gains also. Fact check: The wealthy already pay more taxes – USATODAY.com
3. Why Buffett? Why?
Buffett’s company, Berkshire Hathaway, itself is a sophisticated tax shelter. If tax rates are raised, more people would invest into his company. The IRS says Buffett’s company owes a billion dollars in back taxes. If Buffett thinks the rich don’t pay their fair share, why is he fighting this? Why doesn’t he just pay his fair share as required under current law? The American Spectator : His Biggest Big Lies Buffett could also write a check to the IRS if he thinks he needs to pay more in taxes. The Tax Foundation – Pitching in to Help Reduce Public Debt
4. Hauser’s Law.
History shows that the tax rate has changed many times with little to no differences in increased revenue. Hauser’s Law | Hoover Institution
Basically you can fool with the tax code all you like, but the government is only getting around 20% of the GDP. You would think that the Federal Govt. should set their annual budget to be around 20% GDP. Well, they are an overly optimistic bunch. I do not understand what raising taxes will do to the deficit unless we slow down government spending. According to the chart above and below, we already are giving more than we bring in.
5. Raising Capital Gains Tax.
The capital gains tax is a drag on the economy largely because it raises the cost that businesses pay to raise new funds for expansion, computers, hires, etc. So raising them during an economic slow down is not a bright idea. Regular peeps like you and me get our money from salary. If our tax rate goes up, we don’t really have much opportunity to protect ourselves by changing how our income comes in. Rich folks can move their investments to municipal bonds (no tax on those suckers), Buffet funds, overseas, etc. So raising taxes will cause these rich people to invest else where, which is not good for our economic growth.
The president and congress should be focused on economic growth. If the economy grows more, the more money the government will take in. For instance, if our GDP in 2012 is 1 trillion dollars and our overall tax rate is 50%; the government would bring in 0.5 trillion dollars. If our GDP is 10 trillion dollars and our overall tax rate is 10%; the government would bring in 1 trillion dollars. I know it is not that simple, but it is common sense that we can pay down our debts faster if we make more money. Or better yet, stop spending so much. Bottom Line, even a democratically controlled congress is not going to raise taxes during a recession or a weak economy. Even Mr. Obama himself knows that it’s a bad idea. This is plain demagoguery.