One of the biggest problems with Washington is that it’s rigged for those who’ve already made it, like successful corporations and billionaires, instead of small businesses and the middle class. I’m all for people succeeding and becoming millionaires, but everybody willing to work hard ought to have a fair shot at it. And once they make it, they ought to pay their fair share to help the folks behind them get ahead.
This is one of the places where Scott Brown and I see things differently.
Just last week, Scott Brown said in an interview that he thinks Mitt Romney and Warren Buffett should get special tax breaks that are not available to most Americans. I don’t think that’s fair.
Senator Brown opposes what’s called the Buffett Rule, which would get rid of the special tax breaks that allow a billionaire like Warren Buffett to pay taxes at a lower rate than his secretary. President Obama, in his State of the Union speech, called on Congress to enact the Buffett rule to require people making more than $1 million a year to pay at least 30 percent in taxes. Senator Brown told a newspaper that higher taxes would hurt millionaires.
People in Massachusetts tell me all the time that it’s pretty obvious what’s wrong with Washington. “We work harder than ever, but it’s harder than ever to get ahead. Instead of helping us, Washington helps the big guys.” They are right.
Look at the tax laws. Huge corporations like GE can pay zero in taxes, while small businesses and working families suffer. How did that happen? The lobbyists that represent large corporations have fought for twists, turns, and complications that will let their clients off the hook, and their friends in Congress have gone right along. Things are so out of control that a recent report (highlighted on BMG) found that 30 corporations pay more for lobbyists than they pay in federal taxes. I think that’s wrong.
Lately, Senator Brown has been telling the people of Massachusetts that we don’t understand Mitt Romney’s tax bracket. No, we understand. Mitt Romney pays 14 percent of his income in taxes. Many people who work for a living pay 25, 28, 33 percent of their hard-earned dollars. Mitt Romney gets a better deal because he earns his income in a way that has been specially protected in the tax code to help people like him.
This isn’t the first time Senator Brown has been more concerned with protecting millionaires than helping working families. Just last fall, Brown opposed three jobs bills that would have made a big difference in Massachusetts. The first could have supported 22,000 jobs in the Commonwealth. The second would have prevented layoffs of teachers, firefighters, and police officers. The third would have supported 11,000 jobs rebuilding roads, bridges and other infrastructure. Each bill would have been paid for with a small tax on people making more than one million dollars a year. Senator Brown and every other Republican voted against those jobs.
This isn’t about criticizing people for making a lot of money. This is about basic fairness, and it is about our values. Do we really believe that we should protect tax breaks for those who have already made it while we tell our children to take on more debt to get an education or tell our seniors that they will have to get by on less?
I think that’s wrong and that Washington – and Senator Brown – don’t get it.
If so, what percent of your income do you pay in taxes?
The point is that the rules as they are now do not work, and therefore should be changed. That way, everyone who makes a lot of money – and Warren is part of that group – will pay their fair share, just like you and I do.
Much of Warren’s income is wages (e.g. her salary from Harvard Law School), so it is quite likely that her tax rate is considerably higher than Romney’s or Buffett’s, but that’s beside the point. A single person, even Warren Buffett, can’t make much difference by unilaterally increasing his own tax rate. The rules need to be changed across the board.
simple solutions to complicated problems
…I have to ask you which government services you are willing to go without? People like yourself seem to think that governments can function without funding. Will you forgo police protection, fire protection, public schools, snow removal, traffic regulation, or any of the other myriad services the government provides you?
about the Republican party in states including Idaho, Kansas, Maine, Missouri, Ohio, Oklahoma and South Carolina are pushing plans to steeply reduce or eliminate their state income taxes. Excuses include “well Texas does it”, to “if they look hard enough they will find the cuts to pay for it”, to enhancement in other taxes such as sales taxes, property taxes, and cigarette taxes to name three. Now think about what you said in light of what these people are trying to do. Succeed, and you had better be wealthy and live in an affluent community, or you will be out of luck for public services.
http://www.huffingtonpost.com/2012/01/30/gop-state-income-taxes_n_1243054.html
…that would be the end of civilization as we know it. We have a system that, in ways both blunt and subtle, allows phenomenal wealth acquisition but this system is wholly dependent upon a solid tax base… and if the CEO won’t pay up, then the secretary must. Buffet understands this, that’s why he’s willing to advocate for higher taxes on the CEO: a stable system is more important to him than unfettered monies. Mitt Romney, likewise, knows this and despite his apparent tax cutting fervor will only do so within limits that keeps the system stable, even if that means a burden upon the secretary that is not borne by the CEO.
Honestly now, when Mitt Romney was born the methodologies, processes, practices, laws and basic capabilities that allowed him to so quickly amass such stunning wealth DID NOT EXIST. They were created by businessmen but incubated, nurtured, grown and protected by government in an infrastructure built by taxes. Romney doesn’t even have a product to sell. Buffet sells insurance. Bill Gates sells computer software. Mitt Romney simply moves money around… and every time he moves money around some of it sloshes out and gets stuck in his hip-waders.
THAT IS ALL ROMNEY DOES.
In previous economic systems such deliberate slosh would not have been allowed. Period. Any accidental overages would have been considered “droits to the crown” and placed at the sole disposal of the king. Our economic system reverses these practice and allows unfettered collection of moneys and has an elaborate, large and well oiled infrastructure that both nurtures and protects such monies. This is why the CEO should pay higher taxes. They benefit more, so they should pay more. The taxes the secretary pays neither help nor hinder the secretary in being a secretary. The taxes the secretary pays CLEARLY helps the millionaire to be a millionaire…
It is solely and completely governmental largesse that allows both Buffet and Romney to make the money they do…. which is to say that it is the tax burden upon the secretary is what allows the governmental such largesse. Absent the taxes upon the middle class (the secretary) then the government would not be able to keep Mitt Romney, Bill Gates and Warren Buffett living in the manner to which they have become accustomed and the system, and then the civilization, would collapse.
Grover Norquist understands this also, but he may just wanna watch the world burn…
If Mitt Romney is moving money from unproductive activity to productive activity, then he is doing the right thing. I suspect that most Democrats are temperamentally uncomfortable with this kind of ruthless action, and scared of the concept of risk. But growth depends on this so you’ll lose on that one.
If Mitt is just moving money around to take advantage of currency moves, spending program, tax advantages then I agree with your point. The solution to that is not to hobble him from moving his money, it’s to get the government out of pulling all those levers, especially on currency. If the impact of spending on the economy is 1, then the impact of taxes is 10 and the impact of money is 100. Take care of the money part and you’d be doing a great service to our economy.
You’re simply waving your hands. If this dogma were true, then our economy would be booming, because the right wing has applied it to our economic and tax system since the Reagan era.
The economy is not booming. This failed mythology doesn’t work, and doing more only digs us deeper into the hole we’re trying to climb out of.
Nobody said otherwise. The point, which you’ve missed quite adroitly, is that the government facilitates this methodology with extraordinary diligence, (one hopes) constant vigilance and a robust infrastructure… If the government did not so facilitate this, Mitt Romney would not be nearly as rich as he is. It is as simple as that: no government, no riches. The same goes for Warren Buffet.
So when Warren Buffet asks why he should pay taxes at a lower rate than his secretary you ask why we don’t simply lower the taxes of the secretary…?
And I repeat: Lowering the secretaries taxes is not done because the infrastructure to create and support [m/b]illionaires depends on the tax base; which base is currently supported by said secretary.
Or, put another way, Buffet’s wealth (and Romney’s) is only possible because of the government for which the secretary pays.
Your point about infrastructure, we’re just going to have to disagree on that one, I think new products come from innovation, you think it comes from the federal government. We just disagree, I have made new things in my life, worked in companies that were doing something new, they didn’t come from the government, and maybe you have never had that happen to you.
As far as the secretary you still have to prove that her life is going to be better off if you cut into investors’ money and motivation and give that money to Elizabeth Warren.
We’re not disagreeing so much as you’re (apparently) willfully trying to misconstrue my words. Products come from the people who make the products. But the government says: who gets to make the products; what products they build; how they will be built; what will happen to the producers who fall afoul of these rules.
Mitt Romney, and Warren Buffet, for all their greed, are not bank robbers: their money exists and has meaning only in a system that wasbuilt by other people
Your very ability to make something, whether or not that thing came directly from the government (and it does more often than you think) still comes directly from the government. Your ability to transport it across state lines relies on the government funded interstate highway system or the government funded rail system or the government funded ports systems. The internet we’re using right now was almost completely invented under governmental largesse. Warren Buffetts money exists amidst the legal system that encourages the widespread purchase of insurance and re-insurance. True conservatives, like Ron Paul, are oppposed, in principle and in fact, to insurance as an invitation to moral hazard.
I categorically reject all the underlying assumptions in this thoroughly fallacious statement:
— I don’t have to prove anything. It is you who is attempting to assert that everybodies life is better off if Warren Buffet becomes wealthy beyond the dreams of Croeseus. I said nothing about improving the secretary’s life. I’m in agreement with Warren Buffet who says that it would be more fair and better for the system as a whole if he paid taxes at a rate closer to his secretary
— cutting into investors money is not equal to cutting into their motivation. That’s the whole and entire reason we use percentages to measure these things and not absolute terms. Romney, it is said, once went an entire year at Bain earning some 80% return on investment. Whether it was 50 dollars or 50 million, people were happy.
— Nobody is “giving money to Elizabeth Warren”. That’s just a crass bait-n-switch on your part. Not even a ‘nice try’ for that one…
Our lives must have been so different. Even if I stipulated that you were right about the government being the source of growth and innovation, I think that if you enforced that by taxing innovators to the level you want to, you would find innovation drying up.
People make new products and seek new opportunities for the return to themselves, in money which equals social advancement. They will never do it because you tell them to be nice or Elizabeth Warren hectors them into being civic. That is what you are asking, do you not see how foolish it is??!!
Buffett’s example of investing at past rates misses an important fact. There was a reason that investors invested even when the capital gains rate was higher: because a big chunk of the world was behind the Soviet bloc or in China which had a 100% capital gains tax. Western Europe had higher rates than the USA. Now they don’t have to put their money into the USA to get a return. Things are more competitive now.
… Cause I remember Mitt Romney saying he doesn’t know what he pays in taxes. He had to ask his accountants. Donald Trump similarly says he’s clueless about the amount of money and rate of money he pays in taxes. One would think that if taxes were so important Mitt Romney and Donald Trump would be right on top of the amounts and rates they pay. For all they knew, according to recent events and statements by both men, they might have be taxed at 50% AND THEY”D NEVER HAVE KNOWN IT
Also funny; the recent revelations that more than a few companies pay more for lobbyists than they do in taxes.
Also funny are recent economic studies detailing the fact that companies will pay more to avoid taxes than they would pay in actual taxes.
If innovation is hurt by taxes, then that should be a hurt that exists more than in the abstract. If they don’t feel that hurt then it is not, in fact, hurt. So if Mitt Romney and Donald Trump both state that they don’t know their tax rate we can conclude that they are either: A) bad business men or 2) tax rates don’t impinge upon their thinking as much as is commonly presumed.
And if innovation is hurt by taxation it is hurt more by tax avoidance: paying more to avoid taxes absolutely and firmly undercuts the argument you’re attempt to make … There is no way around that scab. If tax avoidance strategy costs more than the base taxes then base tax rates are less critical to a businesses success, it would seem… either that, or the business that end up paying more for lobbyists or more in generic tax avoidance, are just run by idiots. Straight up.
Hang on a second. You’re confusing the word “productive” with “profitable”. They are not one in the same.
Mitt Romney doesn’t care one way or another about “productive”. He really only cares about profit.
This is a common conservative trick, to presume that “productivity” is the ultimate goal. It is not. Profit is. If Romney has to choose between employing 1,000 workers who produce 1,000 units or 1 machine at 1/10 the cost but only capable of producing 500 units, he will pick the machine every single time. OK, so maybe he’ll buy 2 machines, but if he can’t, he’ll still go with the more profitable approach versus the more productive approach.
In fact, I think Romney would go with the machine even if the machine could produce 900 units at the same cost as the workers because the machine won’t ever ask for more money or threaten to unionize.
But it goes deeper than that. Romney, as a “rugged individualist”, doesn’t care about big-picture things like systems or society. He looks no further than his own situation. He doesn’t consider that if everyone replaced 1,000 workers with 1 machine, productivity would no longer matter because no one could consume what is being produced.
That is his – and any businessman’s – main flaw. They are so focused on profits that they can’t see the big picture. That is what makes a Romney presidency a disaster waiting to happen.
Any attempt to reorder investing goals to social productivity rather than profit inevitably results in price controls and tyranny more evil than than anything done for the profit motive.
You guys can’t even get people to choose wind power with all your hectoring and preaching. You think you’re going to browbeat them into investing that way?
One must, however, understand what it is that the rules are trying to achieve.
Happy days.
questions, why don’t you explain why they matter?
Why would it matter if Ms. Warren is part of the 1%? Did someone pass a law saying that those in the 1% must be Republicans? Did someone pass a law saying elected officials can only look after their own interests and not the common good?
Maybe you can find an explanation by James Tarrant.
It is the tax system that is broken. Even if Elizabeth Warren is in the 1% (I don’t know), Elizabeth Warren is fighting to fix the broken tax system — Scott Brown (and Mitt Romney) are fighting to preserve it.
Mitt Romney gave one hundred million dollars to his children, and paid zero gift tax. The trust fund for his children will pay at tax rate of fifteen percent on income earned by that one hundred million — most of the rest of us pay twice that for income we earn. The point is that Mitt Romney obeyed the law — everything he did is perfectly legal; he stole it fair and square. The tax system is specifically and explicitly crafted to serve the wealthy, like Mitt Romney, Scott Brown, and perhaps Elizabeth Warren (who knows). THAT is what must change.
Elizabeth Warren is in this race to fix this catastrophically broken system. Scott Brown is in this race to preserve it. Those who recognize the abysmal failure of our tax system will vote for Elizabeth Brown.
Other members of the 1%…? JFK, RFK and the late Ted Kennedy, whom it is that held the seat to which E. Warren aspires… I would have voted for all of them (indeed, I voted for Ted Kennedy more than a few times…) and it looks increasingly likely that I’ll vote for E. Warren.
Not all members of the 1% are mercenary greedheads…. but it’s a safe bet that all mercenary greedheads are members of the 1%.
So… ah… what’s your point?
You have to be careful about allying yourself with the super-rich when they go on the attack against investment income.
Warren Buffett is not going to pay taxes on his gains even under the Buffett Rule. The Buffett Rule would attack his social competitors and the upper middle class, not him. That’s why he’s for it.
Attacking investment income of those who earn over $250,000, is an attack on the upper middle class. This damages those of us who depend on investment to help us have more productive jobs, and it serves the interests of the super-rich who want to keep their potential competitors out of Harvard and out of the country club.
Many nice-sounding ideas from the super-rich have the same purpose.
I assume you mean the Buffet rule would not affect him because he, like Romney, earns most of his money from investments. However, the Buffet rule would apply to both investment and earned income.
I also don’t see your rationale for how attacking investment income on those who gross income, including both earned and investment income would damaged anybody earning over $250,000, but less than a million. So if you earn say $400,000 from your job and another $200,000 in investments. Let’s see, um carry, the one, divide by number, ummmmmm, yes, $600,000 is less than One million. Buffet rule does not apply.
As with any progressive system it would probably only apply for the every dollar after the first million, meaning it is not a cliff tax.
Finally, I don’t know Warren’s income level, but I understand that most of her wealth is held in her home and maybe her stock. Until either are sold they are not income of any kind as this country does not have a “wealth tax” per se. Not knowing her husbands income it is hard to say, but based on what we know her income is, she does not make, from either standing continuously paying investments (like Romney’s) or income one million dollars. So, no the Buffet rule would probably not apply to her, but if it did, she, like Warren buffet would be willing to pay it.
When my employer puts money into the company to buy me a faster computer, it helps me do more work and make more money. It’s the same with investors.
The only people with the money to invest are those earning over $250K. The only way we’re ever going to retire is if the young employed people are productive enough to support the baby boom.
If you really wanted to help the poor people you would encourage the rich people to risk more of their money, not punish them for it.
Conservatives have been pushing that for the last 30 years. The rich get richer, the poor fall behind. Let’s try it some more!
I agree, but nothing to do with trickle down.
When your employer buys you a faster computer to help you do more work, it makes more money for your employer, not you. You’re right, it’s the same with investors. Investors use their wealth to create more wealth for them. Not for you. Not for me.
If the only people with money to invest are those earning over $250K, then we should do everything we can to increase the number of people earning over $250K. Making the enormously tall and incredibly thin spike at the top end of today’s wealth distribution even taller (by taking even more wealth from the rest of us) does nothing to increase the number of people earning over $250K — it simply widens the already gaping chasm (do you have ANY sense of just how tiny $250K is in comparison to the wealth we’re talking about here?) that separates the very wealthy from the rest of us. Instead, we should move wealth from that spike to the rest of us — lowering the peak, widening the spike, and lifting the rest of the distribution. The distribution is so flat that moving it up only a little bit adds a very large number of households at, for instance, the $250K level.
Our task is to dramatically increase the number of people earning $250K. That means moving wealth from the stale and barren cellars where it sits today to the wallets and bank accounts of the 99%. Some of the 99% will spend it (causing the consumer economy to recover), some of those earning $240K will find themselves at $275K, and a new generation of entrepreneurs will have access to the $50-100K seed money that allows new companies to sprout from formerly barren wastelands — rather than from rapacious venture capitalists who so dominate the investment scene today.
Those of us who want to help all of us will force the rich people to pay their fair share, rather than using their wealth to further plunder the rest of us.
OK I agree with this:
I am not sure that the Buffett Rule or anything else you or Elizabeth Warren have proposed will do that, besides create some very highly paid new positions in Washington DC.
Forcing already-wealthy hedge fund managers to use the same tax tables as the rest of us for their income is not an “attack” on anybody. Forcing the already-wealthy to pay the same estate/gift taxes that the rest of us pay is not an “attack” on anybody.
The attack came when the very wealthy carved out enormous tax breaks for themselves while bankrupting the country and destroying the housing market. The very wealthy have been waging class warfare on the rest of us for decades — the rest of us have finally and belatedly begun to fight back. The right wing has been slashing taxes on the wealthy for decades, and the result was economic catastrophe. When the very wealthy belatedly demand a balanced budget, after sending deficits through the stratosphere with their giveaways to themselves, it is the rest of us who pay the price in reduced or eliminated government goods and services.
Addressing the obscene increase in wealth concentration that has destroyed the American economy is not a “nice-sounding idea from the super rich”. It is, instead, a revolution based in fairness and common sense.
Elizabeth Warren gets it. Scott Brown does not.
Then the Buffett Rule should eliminate the charitable transfer of shares, which is how Warren Buffett will pass $4 Billion on to his children and not pay estate taxes.
Mitt Romney holds a profit interest in Bain, as part of his enormous “retirement” compensation package. It is that profit interest on which he pays at the 15% capital gains rate (like most hedge fund managers).
He transferred $100M of that profit interest to the trust fund for his children. That profit interest is valued at zero for gift tax purposes, even though it is worth $100M. There is nothing “charitable” about that.
The tax-free $100M gift from Romney to his children exemplifies the way that the very wealthy wage class warfare on the rest of us.
If our society was functioning properly the space between us and Mitt would be much smaller.
bleatings about the unfairness of life in America from my colleagues here, I am still awaiting an anwser from E.Warren. :):)
pathetic and overdone is the only thing I can think of. You don’t want to address the question. Why?
Whose position is better? If you think it’s Brown then explain how over the past decade how it worked.
The point is that you don’t want to address it, you instead want to deflect, change the question. Why don’t use make a useful counter-argument to this post.
You can’t, because I think you would have already done so.
You’ve been asked here many times to do so, don’t run away, stand up and make an argument.
: )
“why don’t you”
Perhaps she joins the rest of us in attempting to ignore your snarky and rude ad hominem attack.
The AMT was put in place in 1969 to ensnare 155 millionaires who paid no taxes, it now reaches well down into the middle class, including myself, who a number of years ago had a good year with a former company, and despite an already hefty tax bill that year.
Note that the AMT is particularly a problem in high tax (blue) states because it limits deductions and it has never been indexed. The US can’t live without the revenue now, so there’s always talk but no action.
So I guess that didn’t work out the way it was envisioned and doubt this proposal will as well.
Not sure why someone should get out of paying taxes by adding to Harvard’s billions
While I have reservations about it, a flat tax seems infinitely more fair that a graduated tax that works upside-down. As long as the wealthy pay Congress for the laws they will enjoy preferred status with regard to the tax laws. Or other laws.
Most telling was former senator Dodd castigating the powers in Washington as he might a taxi-dancer that didn’t deliver. You get the bucks, you do the dance.
Do we believe tax laws are promulgated in a manner different than any other federal law?
“Taxation with representation ain’t so hot either. –Gerald Barzan
that is affecting our economy: the cost of living. I think it is a greater factor in the discontent of working people, even more so than taxes. It is the extreme cost of living that is destroying families and destroying our economy. The cost of housing, whether you own or rent, the cost of food, fuel, health care, utilities and even clothing. It has been climbing by leaps and bounds while wages have been stagnant and jobs are being lost to lower wage jobs. There has to be something that can be done about it. If the cost of living continues to rise at unacceptable rates, this economy will never recover. I read your book “The Two-Income Trap” years ago, so I know you get it. Perhaps most political figures believe as Scott Brown does that working people earn around $250,000/yr. That is just so hilarious, no wonder they think that we should be doing just fine with how much basic needs cost in today’s world. The other problem is how inflation is measured, providing a false perception that there has only been modest inflation.
Thank you for bringing the issues of daily financial struggles to the table. Adding a little more context, we saw the “sexual revolution” of the 60s-70s perverted into another mechanism for cheaper labor (women:men; $.76:$1.00) and increased profits for the owning class. Stress and materialism have undermined the fabric of society resulting in greater poverty, violence, victimization and ultimately more control of the masses by the owning class.
My question to Ms. Warren is what is your position on the Federal Reserve Bank? Does this country need the Fed? Does is operate for the benefit of The People or The Fed? Would you support a democratization of the Federal Reserve Bank? Elections and accountability of the regional Fed Reserve Banks boards as well as “the” Fed?
not Main St. Every time Ben Bernanke pulls another Q E, prices go up, probably because the dollar drops but if anything that hurts the Main St economy not helps it. I’m in no way an expert on this but I guess the strategy behind a low dollar is that prices of our exports are more appealing, but in the meantime it drains the Main St economy of discretionary income. I’m just not sure how much more we are going to be able to cope with it. It’s not working, I can’t see how this economy is ever going to turn around if we continue with this failed strategy. I think the Fed has way too much control and really has no idea what it’s doing. I would also like to hear Elizabeth Warren’s position on this.
I think they are looking at aggregates, which means the prices of everything. When you talk about inflation or deflation, these are Keynesian terms which only apply to the whole economy (After reading about Keynes himself I doubt he would have held onto these definitions as long as his disciples have.)
So they see that the price of housing has collapsed, they wind up ballooning the price of something else, so the aggregate — the total “price” of the economy, doesn’t fall as well.
I agree on the rest of this, they raise prices of gas, it raises wealth in Texas but kills the economy here, and so prices don’t rise because everybody here is going bankrupt. But it’s not inflation because the aggregate hasn’t risen so there’s no problem in their view.
yes, you’d be right. It would drain discretionary spending and that would be the only effect. That’s not how the economy works though. It’s not a static thing.
A dropping dollar increases exports. Increasing exports helps “Main Street”. It increases employment and business activity.
The only way that works is by using the weak dollar to cut the pay of employees in export companies. That’s why the products are cheaper. This is what happens in all the countries that devalue their currencies to export to the USA. Eventually the workers with initiative get sick of the fact that their savings are continually rendered worthless and they cannot build up capital to start their own businesses. Then these countries export workers to the USA.
rolling down the hill to more lower wage jobs to compete with the global economy, lower standards of living for most and a very grim looking future for our children. I sort of thought that was what was happening, but hoping that it couldn’t possibly be true.
we are not on the fast road to becoming like China.
of course, it’s far more complex, but the strategy seems the same.
From Chrystia Freeland
“The U.S. criticism of China rests on a fundamental critique of its economic model – an authoritarian system which suppresses domestic demand and artificially lowers the price of its exports.”
Hmmmm, “suppresses domestic demand and artificially lowers the price of exports”. No matter if in the U.S. there is not an intentional effort to do this, you can’t say it’s not happening, because it is. And maybe it’s very intentional.
globally and it’s not going to be pretty or prosperous for many Americans.
What in the world is the alternative to “competing globally”?
And the world is many times better for it.
about Buffet paying less taxes than his secratary would stop.
We all know that we have a capital gains tax which allows people to pay 15% rate on their gains. We have a graduated income tax schema where people pay higher income taxes as you make more money.
Many Republicans, like myself, have strongly urged others to revamp the tax code and fix many of the breaks/gimmicks/loopholes to make taxes simpler and easier to follow, as well as eliminate these huge loopholes that people use. Why can’t we do it? Why didn’t Obama do it when he controlled both Houses of Congress?
What is the conventional wisdom on increasing the Capital Gains tax rate? How many people here would be investing in Wall St if Cap Gains taxes went up? How many large investors would look elsewhere to put their money. Carried interest has a purpose and smarter people than me seem to indicate that it helps drive business investments and venture capitalist’s investment in companies.
I think this statement is disengenuous…
Mitt pays 14% on gains, not income. Mitt pays higher than 33% on his income. There is not “specially protected” int he tax code unless every person who buys stock in Google and then sells it making a gain is a protected person. Mrs Warren, did you make any capital gains last year and did you pay a 15% CG tax? Did President Obama, John Kerry, Gov Patrick…? Or if save your money and invest it in a start up company and make a gain. Do you understand MA is the beneficiary of so many VC companies investing in biotech/pharma startups on 495 and 128, each hoping to cash in on wonderful drug discoveries, all of them funded by VCs who will pay a 15% carried interest tax… how many high paying jobs do they create? Be honest!
Good question….
Look, capital gains are reported on the income page of the 1040. They add to “Adjusted Gross Income”. There is nothing “disingenuous” about calling capital gain “income”, and it is perfectly accurate (even if inconvenient) to say that taxpayers whose income is dominated by capital gains pay a a lower rate (14% or less in Mr. Romney’s case) than if their income is dominated by “regular” income like wages and salary.
A better example of “disingenuous” is your strawman about people buying stock in Google and making a gain on its sale. How many people are in a position to buy so much stock that the capital gain from their portfolio dominates their income? The answer is, of course, almost none. How many people are in a position to construct retirement plans payable in “profit interest”, valued at ZERO for gift tax purposes, and then thus able to give a ONE HUNDRED MILLION DOLLARS to their children with ZERO gift tax? The answer is, again, almost none.
Investors do what they do because they make money on their investment. While it’s true that some very small investors (smaller even then angel investors) are influenced by the capital gain tax rates, most large firms play for much higher stakes. The people squawking most loudly about keeping the carried interest provisions are hedge fund managers and similar parasites. Those are NOT the people who built all those marvelous biotech/pharma startups you refer to.
The success that Mitt Romney likes to talk most about, like Staples, happened during the very early venture capital period of his involvement with Bain. The ENORMOUS WEALTH that he collects comes from his, and their, later private equity period. The two are very different — but I think you know that.
Let me try to reinforce his points. The “capital gains” vs. “income” issue is a smoke-screen. Warren Buffett’s job is investing. It’s a respectable job, but there also isn’t any reason for the government to give big preferential treatment to one profession over others — which is exactly what is going on here. If “conservative” still meant what it did a few decades ago, conservatives would be leading the charge to get rid of this tax code embarrassment.
Re: (johnd)
Ever stop to think that those “smarter people” have a myopic, selfish interest in preserving the system? Here’s a demolition of their argument from a more patriotic member of the 0.01% (who is himself a VC btw):
I also want to take on seascraper’s challenge to “prove” that taxing Buffett’s income at a higher rate would make the general public (represented by Buffett’s secretary) better off — in spite of the fact that he is actually the one who needs to do the proving, and that his drawing an equivalence with “giving money to Elizabeth Warren” is rather despicable (as petr has already observed). Here goes:
There are two ways to come at this question, (1) analytically, (2) study history. Either way you end up with overwhelming evidence that societies that play favorites with the wealthy class — that have to stoop to tax bribes to “motivate them” — end up going down the toilet.
From the analytic side, Nick Hanauer lays out several common sense reasons in the link I provided. I could add several points he left out, but they all boil down to the fact that catering to the rich is ultimately anti-competitive! Successful economies rely on broad based, healthy competition, not elitism.
As for historical precedents, they are everywhere. Check out any banana republic for starters. Or go back 240 years and study our own history — a strong part of the motivation for independence was the desire to escape an elitist economic system.
One last thing: We’ve gone a long way down the rabbit hole, coming back up is not going to be painless. The super-rich have had their way for such a long time, that I won’t be surprised if some of them sit on their money and pout should the tax laws change. So don’t expect happy days to come back over night. But that is not a good reason to keep heading on down. It ain’t pretty at the bottom.
…you do realize the entire theme of this thread is to change what you are describing, right? Nobody is claiming that there are special breaks only available to Mitt Romney and nobody else. We want all income taxed at the same rate whether capital gains, carried interest, or traditional wages. What’s disingenuous is your implication that Obama could have done anything he wanted when we on paper controlled both chambers of Congress, at least one of which contains a few too many DINOs and one of which had a 60-vote default rule which Dems achieved very briefly, but again counting a couple of DINOs.
… You do realize that:
Short Term Capital Gains are taxed at the the same rate as traditional wages
Dividends are taxed at the corporate level at the corporate tax rate (35%) before they are paid out and then taxed at the capital gains rate of 15%
Carried Interest is taxed at the same rate as the underlying security (15% if Long Term, like income if short term)
If it takes me 10 years to make a $100k profit on an investment, should I pay the same rate I would if I made that in income over one year? I always struggle with this question.
Should dividends not be taxed at the corporate level and just taxed like Income on the personal level? I have no issue with this one.
…about how much Elizabeth Warren or others paid on capital gains? If the capital gains rate is 15% and Elizabeth Warren has capital gains then I assume she paid 15% on those gains – so what’s your point? Is it impossible for you to fathom that the same person can on the one hand be benefiting from the current system, but on the other hand realize the unfairness of said system and resolve to do something about it? Seascraper, you clearly take the government for granted if you don’t think success was ever aided and abetted by government, however indirectly. The point of the Buffet-secretary comparison is not for a direct increased compensation for the secretary if Buffet is allowed to keep more of his money. The point is that if Buffet pays more, then first it’s inherently fairer, and second we’d have more money for the things we can only do collectively such as infrastructure.
People have their own motives, which may not always be the most civic-minded. That is precisely WHY we have government. James Madison famously said that if men were angels no government would be necessary. It is the government’s role to enact laws to counterbalance that tendency. There need to be rules so that the strong do not overwhelm the weak.
on Capital Gains or Carried interest? Is it something all previous Presidents, Senators and COngressmen, rich Democrats and Republicans… have been benefiting from for decades? My point in responding to Mrs Warren’s claims are that even she is commiting the same apparently egregious offense that Mitt Romney is, except opponants seem to want to point it out as a detriment to his characketr while those same people are doing it (once again reminding me of words uttered in Casablanca by Claude Rains as Capt. Renault…
What does the Democratic leadership want to do to fix this? Does President Obama want to raise Capital Gains tax rates? Let’s do it then.
Although I am curious how it gets done if Pres Obama could not get it done with his large majorities in Congress in 2008, 2009. That was his opportunity, not now.
We’re really talking about having a special “long term capital gains rate” that’s lower than the rate for ordinary income. All complications aside, that started in 1922 at 12.5% and was doubled to 25% for 1942-1980. Reagan got that cut to 20% until 1986 when it was raised again to 33% for four years in the late 1980s. It was cut again to 28% in the 1990s and then again to 20% in 2000. Bush cut it to 15% starting in 2003.
I’d like to see the rate raised across the board (30% sounds good top me). BUT, to be clear, that is not at all what the President is proposing. Obama is proposing a 30% *total* income tax rate for millionaires only. For people who’s income is more than $1 million a year and who’s entire income long term capital gains, that’s essentially a doubling of their tax rate. It does not, however, apply to long term capital gains earned by those making less than $1 million a year. A lot of middle-class folks have some income from long-term capital gains but make less than $1 million and their tax rates would be unchanged And, for millionaires, the 30% rate isn’t fixed and would be offset/lowered in proportion to “earned” income taxed at more than 30%.
The Buffet rule, theerfore, would effect a lot less people than a direct capital gains tax increase. And would be a lot easier to pass.