12-11-2016, 05:54 PM
(11-29-2016, 03:28 PM)Mikebert Wrote:(11-27-2016, 01:46 AM)Warren Dew Wrote:(11-26-2016, 12:07 AM)Mikebert Wrote:(11-25-2016, 01:49 PM)Warren Dew Wrote:(11-25-2016, 11:55 AM)Mikebert Wrote: The link you provided is paywalled. Here is one from Forbes:
http://fortune.com/2016/10/10/warren-buffett-taxes-trump/
It shows Buffet paid taxes:
Adjusted gross income: $11.6 million [$0.01 billion]
Deductible charitable contributions: $3.5 million
Total deductions: $5.5 million
Federal income tax paid: $1.8 million [$0.002 billion]
Buffet’s tax bill does amount to less than a tenth of percent of his net worth, but it is 30% of his his taxable income of 6.1 million.
The key word there being the "taxable" in "taxable income".
As discussed in my link, Buffet's net work increases by on the order of $10 billion - not million, billion - per year. By any reasonable psychohistorical or "cliodynamical" analysis, that counts as income, as it increases Buffet's ownership share and control of the world through his personal holding company. That fact that well over 99% of his income is nontaxable just proves my point. His effective tax rate is less than a tenth of a percent.
It is not income if it cannot be spent. First you assert billionaires don't pay taxes because they pay bribes to prevent it. Then you assert that one can have billions in untaxed income which somehow can bribe politicians without being spent. You are not making any sense.
It can be spent - at any time, Buffet can sell off some of his shares and spend the proceeds. Just because he chooses to save it does not make it other than income, especially from a generational dynamics perspective.
As for bribes, please reread my post; I said nothing about bribes, I just said "rich enough to buy politicians". He doesn't actually have to buy them. He can sponsor fundraisers with his rich friends, getting around campaign contribution limits. He can threaten to donate to an opposition PAC. He can use his control of Berkshire Hathaway to influence the flow of contributions and lobbying; after all, through Berkshire, he controls the boards of many large corporations. In politics, as in the military, the person's capabilities are more important than his actions, and Buffett has plenty of capability to interfere with politics should things not go his way.
Quote:People who do what Buffet does are why you want highly progressive estate taxes. If you never sell a rising asset you never pay taxes on the gains because they are not realized. When you die the asset is transferred to you heirs, and at that point taxes are paid if you have an estate tax. A fair system would tax billion+ estates at >90%. Then you would collect the taxes avoided while the person lived.
Irrespective of the situation you want, or consider fair, that's not the situation you have. In fact, what happens with finance billionaires like Buffett is that they put their money into nominally charitable trusts, so that it's never taxed, either for capital gains or by estate taxes. The trusts are controlled by Buffett while he's alive, and by whatever heirs he selects after he dies. He or his heirs can continue to control and build their wealth and power, giving themselves whatever money they want when they want it.
Quote:If you have a 401K or a Roth IRA, you enjoy Buffets situation. You net worth grows each year and you don't pay any taxes on this "income". If you then die before you ever withdraw any of it then this asset passes to your heirs and you never pay any taxes on it. If your estate is below a few million the transfer is tax-free and you too will have never paid any taxes on all that "income" you gained throughout your life.
False. 401k accounts have required distributions, on which capital gains taxes must be paid. Buffett is 86; had he had similar requirements on his fortune, he would have had to withdraw and pay taxes on billions of dollars per year for the past 15 years - paying billions, rather than millions, in taxes. That's hundreds or thousands of times more taxes he'd have paid.
And of course, we wouldn't "enjoy Buffett's situation" unless we had enough in our retirement accounts that their growth would be virtually unaffected by withdrawals large enough to allow us to live comfortably. In other words, we'd need hundreds of millions if not billions - which would make us part of the elites, not part of the general population.
The bottom line is that Buffett pays virtually no taxes on his billions, and never will, nor do others in the billionaire class.
401K withdrawals only occur if you live long enough. All of this is tax avoidance by delaying realization of gains. Rich people don't need their money for spending, as you astutely pointed out. The only value of larger fortunes is either status (e.g. money is how you keep score) or power, neither of which has to be spent to have value. Concentrated wealth is dangerous to the health of a republic, which is why the founders avoided entailment. Opposition to estate taxes, which your preferred party pushes relentlessly, is the modern equivalent of entailment.
Wrong about 401ks. If you don't live long enough, then your heirs have to start withdrawals. Taxes on them may be deferred until after death, but they cannot be deferred forever, the way Buffett's schemes do.
I agree that concentrated wealth is societally problematic. If he were actually likely to pay estate taxes, I'd be in favor of them. He isn't, though, so some other method of dealing with the problem is necessary.