Seriously, I am not an idiot and what I have read lately is causing me to reevaluate some things I have said here on taxes. I am not a politician so I am free to change my mind and be educated. Go figure.
I really do, as part of this education, want to better understand the differences between Buffet's 17% and Golub's 90%. I am not sure what Buffet is including in his 17%. I doubt it includes local or state taxes or real estate taxes, but cannot be sure. I am in a state with no local or state taxes, though there is a hefty real estate tax.
Still, even with these other taxes, 17% may become 30%, but no where near 80-90%. With the top federal rate at 35%, how in the hell is Golub paying 80-90%? Seriously! Maybe he is compounding the effects of income tax, capital gains taxes and estate taxes, but I would seriously like to see his calculations along with those of Buffet. Rhetoric gets us no where. And I have to believe a multi-millionaire like Golub (or billionaire)(he was after all CEO of American Express, Campbells Soup and AIG), can figure out a way to pay less than 90% in taxes, especially if Buffet is paying 17%. Seriously, Golub needs better accountants.
Now there is a lot of touting of 53% of Americans paying no tax. Here again, I would like some data. Perhaps they are making no money or not enough to be taxable. I suspect some (okay, a very small percentage) are millionaires with losses wiping out taxes or tax loopholes allowing them to pay nothing. Either way, the likes of Golub making millions saying those making a few thousand should share his pain is a bit hollow for me. Still, I want stats on how much the U.S. would make in taxes if we taxed the truly impoverished say 5% of their incomes. I have been in a place where I saved change to pay for meals and cannot imagine some in these situations (or undoubtedly much worse situations) to find 5% to pay in taxes to share the pain. They already have the pain - pain that Golub never has to feel.
Golub Challenge
Okay Mr. Gollub, here is my challenge. Let others manage your money and live in your mansion and control your money. You spend two years living off of $15,000 a year, living wherever you can afford and pay just $2000 a year to the federal government of that. If after two years of living that way - I have been there but paid more in tax - then you can decide whether those who cannot afford tax should pay it. Perhaps you have been there, but you do not act like it.
I am not saying coddle those abusing Social Security, Welfare or other programs. We need to actively investigate and end any frauds in these programs. They cannot continue with the fraud levels that exist. But fraud, tax evasion, and other illegal means of shifting the tax burdens to the honest folks need to be focused upon. Those cheating the system on both ends of the wealth spectrum need to be dealt with. But there are plenty of poor people who lived honorable lives and who have families to support and cannot help out the down and out Mr. Golub. I agree he should not pay 90% in taxes, but I have nothing that I can look at to calculate any rate for him anywhere close to this level.And you want fairness? Well everyone pays the same rate on the same level of income, deductions and credits aside. Someone making $10,000 a year pays the same % on that $10,000 as someone making $10 million does on their first $10,000 in income. Seems fair to me.
Seriously, I DO want data on which I can analyze this issue further. I read that there are a lot of studies showing that tax increases deter economic activity. which is a proposition I do not really doubt generally. I would like stats on this and whether this still holds in the face of situations like we currently face where massive deficits are deterring economic activity. One economist I follow who bangs the bell constantly on how taxes deter economic growth is now saying we may need to bring down the deficit with higher taxes first to get our act in order. This to me spells a long slow recovery. Shh, do not tell anyone, but I have been for four years expecting a farily long recession and a very slow recovery and the government has been fighting this idea at every possible point. Indeed, they have actively been making the problem worse, so it will take longer -much longer - to fix. It is time for us to take our medicine and, unfortunately, live a decade or so healing our wounds. No one wants to face this prospect - especially with millions of baby boomers trying to retire - but sometimes the truth hurts. Open up and let it in. It will set you free.
Tell Me I Was Wrong
In February of 2009, yes well over two years ago, I supported nationalizing our big financial institutions, breaking them up and selling them off. This incuded big financial institutions like Bank of America and Citigroup. I said at the time:
http://www.blogger.com/post-edit.g?blogID=6953117324755503703&postID=8978388727868507518
Sit back and think about it. How much better off would we be if the U.S. and EU had tried to do this to the extent possible. Most of these institutions, despite trillions in liquidity support - yes I said trillions - are dead weight to the economy and their shareholders and they are still threatening economies on both sides of the pond. They still have too many bad assets, including derivatives, in their possession. We empowered moral hazard and they have not, perhaps because of it, seriously reduced their leverage and exposures. They should be gone, and this was evident well over two years ago.Disclosures: none
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