Buffet had said that he paid 17% tax while his cleaning lady paid 34%. That may be true but the reason behind it may be different. Buffet being rich not because of the income he has but mostly because his wealth can be attributed to the shareholding in his company Berkshire Hathaway. As such he will mostly have to pay capital gains tax which is at 10% rather than the ordinary income tax at 35%. Buffet being a financial whiz will also know more about how to evade taxes in a perfectly legal manner than his housekeeper. The point he made is a valid one but its not that important since the increase in the treasury cash will not be significant. Also income inequality can also be reduced by reducing the taxes on the poor. United States already has one of the highest corporate tax rates and individual tax rates in the world.
I don't believe income inequality will be impacted almost at all with tax cuts to the poor, a lot of the poor are already exempted from taxes. Actually, I don't even think income equality is even that important, unless you want to have figures like (Sweden: -5.1% Hungary: -6.3% GDP growth rate...). 2 most income equal countries by the way.. The importance is growth of the entire economy. Just think about how different it is to be poor 30 years ago and to be poor now.. it still sucks, but it's way better than being poor 30 years ago. A lot of that is due to many innovations such as computers, cell phones, and the continual development of technology that has led to cheap goods available to most of the public. It is much better to be poor in the U.S. than in most other countries and also much better to be in a stable/growing economy rather than a declining one. I think that leads to the importance of maintaining investment figures and making sure the economy continues to develop rather than decline. But at the same time, although tax cuts helps to develop the economy as a whole, in cases like now, when the goal of the country is to cut the deficit, I feel that not just raising the corporate tax, but getting rid of some loopholes in the tax system that help people lie Warren Buffet avoid paying a lot of taxes will help. (Unless of course, you agree with Jon Stewart's sarcastic point of view.)
Income inequality is a serious social problem in our economy, and it is a problem that need solutions. Stewart's display of the US's standing by income inequality compared to other countries in the world shows that we are much worse that countries with comparable economic systems. Income inequality limits opportunities and social mobility for those in the lower classes. However, I do agree that economic growth should be our focus in the current economic state, rather than income inequality. Decreasing the taxes on anyone is not the answer with the size of our federal debt. I agree with Buffet that it would be a good idea to examine billionaire taxes more closely. I also agree with Andrew, that raising taxes shouldn't be the answer before we explore closing the loopholes that allow billionaires to pay a lower tax rate than most.
the loopholes that are being referred to are not exactly mistakes they are their so that capitalist's like Mr. Buffet invest their money in productive things or help finance the deficit and as people respond to incentives these are those incentives... Buffet in his letters talks about the estate tax and so on. However there is a very fundamental argument regarding this. Why should people who worked hard all their life so that their family and children could have a good living be asked to pay a tax on what is theirs and their children's. Also rather than increasing taxes to finance federal debt, focus should be on decreasing federal debt... This is because no country can have such a huge deficit and while keeping a strong currency and a low interest rate. The only reason this is happening is because of cash from abroad from countries that dont care about interest income they just use the dollar for keeping it in their reserve banks or just so that the value of dollar can be kept strong... I am of course talking about China who keep their currency artificially low compared to the dollar. As such China holds a huge amount of american bonds... However America should become self sufficient rather than having the risk of most of their debt being held by foreign institutions... but this again is a matter of opinion
I've heard the argument, "why should those who have worked hard have to give up their money to others?" a lot. However, can you really argue that Warren Buffet, Bill Gates, Steve Jobs, or the children of the Walmart dynasty work harder than the guy with two full-time jobs trying to pay off his family's debt? You may say it's an unfair comparison, but in reality, many of the "poorer" we are talking about work much harder than the billionaires. The only difference is that those billionaires either are brilliant, or had a heck of a father/mother. The ideology is highly debatable. I still disagree with the idea of unemployment benefits. However, to even think about arguing for taking money from the poor while letting the rich keep their money seems insensible. To decrease the federal debt, it must be financed. To finance, you must raise revenue. To raise revenue, the government does not have much choice than to tax (unless you want to go to the conquer another country and extract their wealth route..). Stewart presents this dilemma in a satirical way. Yes, spending must be cut, but revenue must be raised also, and that is not going to come from the poor. I am a big believer in lower taxes and a smaller government. However, right now, IF the premise if that the government must lower its debt, then the only real option is to raise tax revenue and cut some spending.
USA is not just a closed economy... the economies of a lot of other countries are dependent on it.As such once you raise taxes the American corporations will decrease the amount of goods they import from developing countries, which will affect the developing economies. While the exporters will increase their prices again making goods more expensive for other countries.And since America loves thinking about other countries, that should be taken into account as well. This is a cycle which may reduce corporate profits and hence personal income. As such since taxes are calculated on revenues and profits the absolute amount in taxes paid by firms and individuals may fall.
Buffet had said that he paid 17% tax while his cleaning lady paid 34%. That may be true but the reason behind it may be different. Buffet being rich not because of the income he has but mostly because his wealth can be attributed to the shareholding in his company Berkshire Hathaway. As such he will mostly have to pay capital gains tax which is at 10% rather than the ordinary income tax at 35%.
ReplyDeleteBuffet being a financial whiz will also know more about how to evade taxes in a perfectly legal manner than his housekeeper.
The point he made is a valid one but its not that important since the increase in the treasury cash will not be significant.
Also income inequality can also be reduced by reducing the taxes on the poor. United States already has one of the highest corporate tax rates and individual tax rates in the world.
I don't believe income inequality will be impacted almost at all with tax cuts to the poor, a lot of the poor are already exempted from taxes. Actually, I don't even think income equality is even that important, unless you want to have figures like (Sweden: -5.1% Hungary: -6.3% GDP growth rate...). 2 most income equal countries by the way..
ReplyDeleteThe importance is growth of the entire economy. Just think about how different it is to be poor 30 years ago and to be poor now.. it still sucks, but it's way better than being poor 30 years ago. A lot of that is due to many innovations such as computers, cell phones, and the continual development of technology that has led to cheap goods available to most of the public. It is much better to be poor in the U.S. than in most other countries and also much better to be in a stable/growing economy rather than a declining one.
I think that leads to the importance of maintaining investment figures and making sure the economy continues to develop rather than decline. But at the same time, although tax cuts helps to develop the economy as a whole, in cases like now, when the goal of the country is to cut the deficit, I feel that not just raising the corporate tax, but getting rid of some loopholes in the tax system that help people lie Warren Buffet avoid paying a lot of taxes will help. (Unless of course, you agree with Jon Stewart's sarcastic point of view.)
Income inequality is a serious social problem in our economy, and it is a problem that need solutions. Stewart's display of the US's standing by income inequality compared to other countries in the world shows that we are much worse that countries with comparable economic systems. Income inequality limits opportunities and social mobility for those in the lower classes. However, I do agree that economic growth should be our focus in the current economic state, rather than income inequality. Decreasing the taxes on anyone is not the answer with the size of our federal debt. I agree with Buffet that it would be a good idea to examine billionaire taxes more closely. I also agree with Andrew, that raising taxes shouldn't be the answer before we explore closing the loopholes that allow billionaires to pay a lower tax rate than most.
ReplyDeletethe loopholes that are being referred to are not exactly mistakes they are their so that capitalist's like Mr. Buffet invest their money in productive things or help finance the deficit and as people respond to incentives these are those incentives...
ReplyDeleteBuffet in his letters talks about the estate tax and so on. However there is a very fundamental argument regarding this. Why should people who worked hard all their life so that their family and children could have a good living be asked to pay a tax on what is theirs and their children's.
Also rather than increasing taxes to finance federal debt, focus should be on decreasing federal debt...
This is because no country can have such a huge deficit and while keeping a strong currency and a low interest rate.
The only reason this is happening is because of cash from abroad from countries that dont care about interest income they just use the dollar for keeping it in their reserve banks or just so that the value of dollar can be kept strong...
I am of course talking about China who keep their currency artificially low compared to the dollar.
As such China holds a huge amount of american bonds... However America should become self sufficient rather than having the risk of most of their debt being held by foreign institutions...
but this again is a matter of opinion
I've heard the argument, "why should those who have worked hard have to give up their money to others?" a lot. However, can you really argue that Warren Buffet, Bill Gates, Steve Jobs, or the children of the Walmart dynasty work harder than the guy with two full-time jobs trying to pay off his family's debt? You may say it's an unfair comparison, but in reality, many of the "poorer" we are talking about work much harder than the billionaires.
ReplyDeleteThe only difference is that those billionaires either are brilliant, or had a heck of a father/mother. The ideology is highly debatable. I still disagree with the idea of unemployment benefits. However, to even think about arguing for taking money from the poor while letting the rich keep their money seems insensible.
To decrease the federal debt, it must be financed. To finance, you must raise revenue. To raise revenue, the government does not have much choice than to tax (unless you want to go to the conquer another country and extract their wealth route..). Stewart presents this dilemma in a satirical way. Yes, spending must be cut, but revenue must be raised also, and that is not going to come from the poor.
I am a big believer in lower taxes and a smaller government. However, right now, IF the premise if that the government must lower its debt, then the only real option is to raise tax revenue and cut some spending.
USA is not just a closed economy...
ReplyDeletethe economies of a lot of other countries are dependent on it.As such once you raise taxes the American corporations will decrease the amount of goods they import from developing countries, which will affect the developing economies. While the exporters will increase their prices again making goods more expensive for other countries.And since America loves thinking about other countries, that should be taken into account as well. This is a cycle which may reduce corporate profits and hence personal income. As such since taxes are calculated on revenues and profits the absolute amount in taxes paid by firms and individuals may fall.