Tuesday, January 31, 2012

Can we get this straight?

Can we get three obvious things straight right now?

1. Tim Tebow is on God's side, not the other way around. Stop badgering him with idiocy.

2. A corporation is not a person, the left keeps parroting in hyperventilating about the SCOTUS decision in Citizen's United. We get that. That's not the point. What is the point is this: if a corporation is taxed, like a person is taxed, they should have the right to affect the taxer, like a person has a right to affect the taxer. Taxation with representation is a basic American understanding. If you want to tax the instituition, you should understand that they want to contribute to the campaign of representatives, like people do.

3. Warren Buffett does not pay less taxes than his secretary.

President Obama is engaging in pure demagoguery with his Buffet Rule on tax reform. From the State of the Union address:

President Obama on the Buffett Rule: “Now, you can call this class warfare all you want. But asking a billionaire to pay at least as much as his secretary in taxes? Most Americans would call that common sense.”


Common sense to most people says that Warren Buffett, one of the five richest men in America, does not pay less taxes than his admittedly well paid secretary. Buffett pays millions. Secretary pays thousands.

That's in straight dollars.

What Obama means, but doesn't say because he's trying to fool you, is the Buffett pays a lower tax RATE than his secretary. That's because his secretary pays at a rate for INCOME TAX of 25% or so, and Buffett pays at a rate for CAPITAL GAINS TAX of 15% or so because he does not draw a salary and his income is from interest income on his investments.

That's a distinction that many Americans do not make, and that Obama does not want you to make.

Is this because Warren Buffett is a bad man? No. Is this because Warren Buffett is rich and rich people are bad people? No.

Capital gains tax rates are lower than income tax rates because Congress set the rates this way.

Is this because Congress is corrupt and was bought off by rich people to get lower rates? I wouldn't discount that idea. But stop dragging Buffett's secretary into that argument.

The reason capital gains tax RATES are lower than income tax RATES is because we are trying to influence behavior with the tax codes. In this case, we are trying to encourage investment - which creates jobs. It goes with the saying that "what you subsidize, you get more of". In this case, we are subsidizing investments with a lower tax rate because investments are a good thing. Raise the rates to the same rates as income tax and you might disincentivize investment, and get less investment, and get less job opportunity. Is that what you want to accomplish with your class warfare demagoguery, Mr. President? Less investment and less job opportunity?

People, think through this nonsense. Don't reward the demogogues. Leave Tim Tebow alone. Quit hyperventilating about Citizens United. And stop falling for Obama's Buffett Rule nonsens. Wake up.


  1. 1. agreed
    2. Corporations are legal people created to protect individuals from liability for corporate actions. That doesn't mean they can or should be treated the same as corporeal people. Lots of "people" are taxed and have no influence on the political process (resident aliens, non-resident aliens, for example). Most people just want to see corporations limited in the amount of money they can inject into campaigns so we don't have a government completely beholden to corporate interests.

    3. The entire point is that Buffett, Romney, and others pay a far smaller percentage of their income in taxes that the vast majority of people. The differing treatment of capital gains is the problem. It used to be, in a US that seems farther and farther away by the minute, that unearned income was taxed HIGHER than earned income. It got ridiculous, however, and those with income from capital gains rebelled by finding ways to hide or otherwise limit that income. So Congress, as is typical, overreached in attempting to correct that problem. In order to encourage the wealthy to invest in the US, Congress DRASTICALLY lowered the tax rate on unearned income, creating the idiot situation that if you work for your money you pay a higher tax rate than if you do not work to earn your money. Insane.

    The whole concept of a progressive income tax is that those who have the least need a far higher percentage of their income for basic needs - food, clothing, housing. As you earn more, the more disposable income you have. It's this disposable income, beyond that needed for essential food, clothing, and housing, that is intended to be taxed. Those who are blessed with more have more with which to pay taxes. It's not that hard to understand.

  2. Hi Melinda.

    I wouldn't call it "unearned" income. That's a loaded term. They put their money at risk, put time into managing it, etc. I would call it investment income. Investment is a good thing.

    Bottom line, you get more of what you subsidize. You get less of what you punish.

    If we want to make a change in tax policy, then make that case straight up in Congress. Say we're broke, and we can't afford to subsidize investment, and we're willing to risk the effects of dis-incentivizing investment to get more revenue. Obama should stop with the class warfare demonizing of "millionaires and billionaires".

  3. i agree with everything you said. wrote. put there.

    it's like any other spin - buffet, obama, and kardashian pay a lower tax percentage while paying millions. anyone who has a problem with that should learn how to earn millions and then give up at least one of them. then let me know what you have to say.

    regardless of that, it still burns me up that sam walton pays millions in taxes, as does apple, while big oil pays nothing. i don't want to hear about money reinvested in research and development because every other company does that too. i'm just damn tired of big oil running this country and setting environmental policy.

  4. Everyone is in agreement that the "Warren Buffet" rule refers to the effective tax RATE. The only disagreement on the subject is that marginal tax rates should be *similar* (progressive view) or remain *dissimilar* (conservative view). As it turns out, most Americans, as evidenced by the election results, believe the progressive viewpoint.