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psychohist
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Warren Buffett wrote an editorial in The New York Times arguing that because he, a billionaire, is taxed at only 17%, the 35% top tax rate on millionaires should be increased. But what is Buffett's real tax rate? Well, in the editorial, he says he paid taxes of just under $7 million last year. Let's suppose he's paid as much in every year since he was a baby - 80 years. That's $560 million in taxes. Now, how much money has he made in that time? Various sources, including the wikipedia article on Warren Buffett, say his net worth is $50,000 million (50 billion). He wasn't born with much of that, so virtually all of it is income. Divide $560 million by $50,000 million, and we have Buffett's real tax rate to date - not 17%, but just over 1%. 1%. That's roughly what Buffett pays in income taxes - with other estimates as low at 0.06%. Even if we raised the tax rate on all those other millionaires to 100%, the real tax rate on Buffett's increase in wealth would still be only about 3% at most. No wonder he likes this idea! The truth is, if we want to figure out a way to raise taxes on the super rich like Buffett, we need to figure out a way to tax all that money that doesn't even show up on Buffett's tax return as income. It just sits there on his personal balance sheet as unrealized capital gains until he dies and it goes to some nonprofit, never ever getting taxed. That's what needs to get fixed, not the tax rates that Buffett largely isn't paying anyway. In the meantime, Buffett's article should be seen for what it is - an attempt by him to raise taxes on people who have a lot less money than he does, so as to avoid such consequences for himself. Economist Arthur Laffer estimates Buffett's 2010 income tax rate at 0.06%: http://online.wsj.com/article/SB1000142 And Buffett's company owes 9 years of back taxes: http://www.huffingtonpost.com/2011/08/2 |
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