Warren Buffett's Tax Plan Makes Sense

reuters.com

Finally, someone has devised a tax plan that makes sense and uses reality rather than ridiculous non-facts!  Warren Buffett wrote an op-ed piece for the November 25 edition of the NY Times presenting his views on a change in the tax structure that would stimulate the economy and affect only those who earn above $500,000 a year.
 

He wrote, in part, "Between 1951 and 1954, when the capital gains rate was 25 percent and marginal rates on dividends reached 91 percent in extreme cases, I sold securities and did pretty well. In the years from 1956 to 1969, the top marginal rate fell modestly, but was still a lofty 70 percent — and the tax rate on capital gains inched up to 27.5 percent. I was managing funds for investors then. Never did anyone mention taxes as a reason to forgo an investment opportunity that I offered."

 

He added, "Under those burdensome rates, moreover, both employment and the gross domestic product (a measure of the nation’s economic output) increased at a rapid clip. The middle class and the rich alike gained ground."

People like Karl Rove and John Boehner sound a note that plays out-of-tune with Buffett's comments, saying that if tax rates rise on the wealthy, the economy will shrink, and the country will return to an oppressive recession.   Many wealthy citizens have a sense of entitlement about their money.  Romney accused 47 % of Americans of feeling entitled, but he wasn't referring to the wealthy elite because that group doesn't comprise almost half of the country's population.  The people to whom this post refers consists of only the 400 highest income earners in the country.

Take a deep breath before you continue.  According to Buffett, that group had an average income of $202 million and half of them paid less than 20% in federal income taxes and payroll taxes combined in 2009.  Readers might want to check the percentage they paid in the same year.  This constitutes a national disgrace, and no justification can explain away the imbalance.  The 400 wealthiest could pay a 90% income tax rate and still have more money than most taxpayers can imagine.  It would still leave them with more that $20 million, a fact that blows away all the protests about how "damaged" this group would be if its members had a tax hike.

Americans will benefit from tax reform if properly applied, but both parties mucst approach such an undertaking with a commitment to negotiate a compromise.  The uber-rich don't need protection.  They already have tax shelters that most taxpayers can't access.

For more details on Buffett's plan, read his entire article on the nytimes.com website.