THE AUDACITY OF HOPE by (barack obama!)
hardcover pg 189/193:
buffett had invited me to omaha to discuss tax policy. more specifically, he wanted to know why washington continued to cut taxes for people in his income bracket when the country was broke.
"i did a calculation the other day," he said as we sat down in his office. "though i've never used tax shelters or had a tax planner, after including the payroll taxes we each pay, i'll pay a lower effective tax rate this year than my receptionist. in fact, i'm pretty sure i pay a lower rate than the average american. and if the president has his way, i'll be paying even less."
buffett's low rates were a consequence of the fact that, like most wealthy americans, almost all his income came from dividends and capital gains, investment income that since 2003 has been taxed at only 15 percent. the receptionist's salary, on the other hand, was taxed at almost twice that rate once FICA was included. from buffett's prespective, the discrepancy was unconscionable.
"the free market's the best mechanism ever devised to put resources to their most efficeint and productive use," he told me. "the government isn't particularly good at that. but the market isn't so good at making sure that the wealth that's produced is being distributed fairly or wisely. some of that wealth has to be plowed back into education, so that the next generation has a fair chance, and to maintain our infrastructure, and provide some sort of safety net for those who lose out in a market economy. and it just makes sense that those of us who've benefited most from the market should pay a bigger share."
we spent the next hour talking about globalization, executive compensation, the worsening trade deficit, and the national debt. he was especially exercised over bush's proposed elimination of the estate tax, a step he believed would encourage an aristocracy of wealth rather than merit.
"when you get rid of the estate tax," he said, "you're basicaly handing over command of the country's resources to people who didn't earn it. it's like choosing the 2020 olympic team by picking the children of all the winners at the 2000 games"
before i left, i asked buffett how many of his fellow billionaires shared his views. he laughed.
"i'll tell you, not very many," he said. "they have this idea that it's 'their money' and they deserve to keep every penny of it. what they don't factor in is all the public investment that lets us live the way we do. take me as an example. i happen to have a talent for allocating capital. but my ability to use that talent is completely dependent on the society i was born into. if i'd been born into a tribe of hunters, this talent of mine would be pretty worthless. i can't run very fast. i'm not particularly strong. i'd probably end up as some wild animal's dinner.
but i was lucky enough to be born in a time and place where society values my talent, and gave me a good education to develop that talent, and set up the laws and the financial system to let me do what i love doing - and make a lot of money doing it. the least i can do is help pay for all that."
it may be surprising to some to hear the world's foremost capitalist talk in this way, but buffett's views aren't necessarily a sign of a soft heart. rather, they reflect an understanding that how well we respond to globalization won't be just a matter of identifying the right policies. it will also have to do with a change in spirit, a willingness to put our common interests and the interests of future generations ahead of short-term expediency.
more particularly, we will have to stop pretending that all cuts in spendig are equivalent, or that all tax increases are the same. ending corporate subsidies that serve no discernible economic purpose is one thing; reducing health-care benefits to poor children is something else entirely. at a time when ordinary families are feeling hit from all sides, the impulse to keep their taxes as low as possible is honorable and right. what's less honorable has been the willingness of the rich and the powerful to ride this antitax sentiment for their own purposes, or the way the president, congress, lobbyists, and conservative commentators have been able to successfully conflate in the mind of voters the very real tax burdens of the middle class and the very managable tax burdens of the wealthy.
nowhere has this confusion been more evident than in the debate surrounding the proposed repeal of the estate tax. as currently structured, a husband and wife can pass on $4 million without paying any estate tax; in 2009, under current law, that figure goes up to $7 million.
for this reason, the tax currently affects only the wealthiest one-half of 1 percent in 2009. and since completely repealing the estate tax would cost the u.s. treasury around $1 trillion, it would be hard to find a tax cut that was less responsive to the needs of ordinary americans or the long-term interest of the country.
nevertheless, after some shrewd marketing by the president and his allies, 70 percent of the country now opposes the "death tax." farm groups come to visit my office, insisting that the estate tax will mean the end of the family farm, despite the farm bureau's inability to point to a single fam in the country lost as a result of the "death tax." meanwhile, i've had corporate ceo's explain to me that it's easy for warren buffett to favor an estate tax- even if his estate is taxed at 90 percent - he could still have a few billion to pass on to his kids - but that tax is grossly unfair to those with estates worth "only" $10 or $15 million.
so let's be clear. the rich in america have little to complain about. between 1971 and 2001, while the median wage and salary income of the average worker showed literally no gain, the income of the top hundredth of a percent went up almost 500 percent. the distribution of wealth is even more skewed, and levels of inequality are now higher than at any time since the gilded age. these trends were already at work throughout the nineties. clinton's tax policies simply slowed them down a bit. bush's tax cuts made them worse.
i point out these facts not -- as republican talking points would have it -- to stir up class envy. i admire many americans of great wealth and don't begrudge their suceess in the least. i know that many if not most have earned it through hard work, building businesses and creating jobs and providing value to their customers. i simply believe that those of us who have benefited most from this new economy can best afford to shoulder the obligation of ensuring every american child has a chance for that same success. and perhaps i possess a certain midwestern sensibility that i inherited from my mother and her parents, a sensibility that warren buffett seems to share: that at a certain point one has enough, that you can derive as much pleasure from a picasso hanging in a museum as from on that's hanging in your den, that you can get an awfully good meal in a restaurant for less than twenty dollars, and that once your drapes cost more than the average american's yearly salary, then you can afford to pay a bit more in taxes.
more than anything, it is that sense, that despite great differences in wealth, we rise and fall together--
*****
and i like what i read there. i do not feel poor people are entitled, in any way, to money hard-earned (or even inherited) by the wealthy. but what i do feel, experience and see, is this dangerous truth, that our system is currently set up so that the rich get richer and the poor, poorer
the more money you have the more you can earn; the less you have, the more you are penalized/taxed from an already reduced/shrinking amount
and i can't pretend to understand our tax system, and math is not my best subject, and i'm not knowledgable on the world's economy
but my mind does always turn to % as a fair solution. that we are taxed, in each income bracket, the same percentage
because i think 20% (or 10, or 30 or whatever) % of total income allows the wealthy to remain that way, without robbing the already struggling middle and lower classes.
THEN, you know, being the incredible problem solver i am..
i think, there should be an amount where, once you achieve said amount of wealth, your % drops as a reward
oh, i don't know really -except that what we've been doing is definitely NOT working and we need to implement real change. and my heart leans towards looking at what's best for america vs. the individual.
posted by SHE @ 1:09 PM
5 Comments:
Interesting passage, bbf.
And I agree it's not about giving money away to people who have the capacity to work but who don't want to. It's about making things fair. If you're rich, why shouldn't you pay more taxes?
I'm not saying make it so the rich are poor by any means. But when you have billions, is that extra $100,000 or so going to kill you? If my kids had millions of dollars in their trust funds, I would expect they should share some of it---more than their pals who have savings accounts of less than $1000,00 for example.
How about making it possible for infants to get medical care? Is that such a bad thing?
Give me a break. People are just so damn selfish some times.
Obama has a proven track record of community service and that is a plus in my book. He has the right idea. Don't get me wrong--there are things I don't like and of course, things I distrust (he's a politician, after all). But he has "audacity." I like that. I've got a little myself. I hope he can do what he says he can.
To hope, my friend!
kmg/bbf: it's complicated isn't it..
'If you're rich, why shouldn't you pay more taxes?'
my heart always jumps back one step for anything that sounds like
"you have big money.. so therefore we're entitled to it"
i've read some very compelling cases that make me think otherwise.. for certain people who have WORKED, 7 days a week, 14 hours a day.. two jobs, etc
to get rich.
they've made great personal sacrifices; put in blood, sweat, tears & years
many of whom who put in these hours to the benefit of others.. creating jobs which support other families, provide health & retirement benefits, etc
do we want to take those people and make it feel/look like we are punishing their efforts/sacrifices because guess what
now that you've made it..
you're going to PAY for it in higher taxes; that's your reward.
i think we need to be very careful about rewarding, not punishing..
we need to inspire, and create INcentives, not disincentives.
that said, i think on this:
"But when you have billions, is that extra $100,000 or so going to kill you?"
it's why i always find myself going back to %'s as being more just
write now, the way taxes are set up feels a lot like the situation for a high population of divorced moms
so, sounds fair at first, write, if i tell you
divorced parents each pay 50% for any of the children's activities
50/50. very fair
only, for a high population of divorced mom's, the income discrepancy means that 50% of his salary and 50% of her salary are two very different things
and that's how taxes FEEL.. like you can make it sound fair..
but reality behind the scenes is that people with lower, much lower incomes, are chippin in their half,
only their half is really 7/8 of what they earn, and for wealthy people, their half is 1/8.
something like that.
but if you say to someone earning 30,000 a year, that their obligation is 10%
and someone making 300,000 a year, their obligation is 10%
etc.
i see that as fair and workable.
AND if you are making 300,000 and up, and create jobs so that others are earning
you should absolutely be rewarded in very tangible ways
and you know who else should be rewarded
MOMS/DADS who stay home with their young ones and parent -which is quite the job!
big tax benefits! i say..
seems strange to me for parents to work, earn money, then give that money to someone else for watching/raising their infant/toddlers (which, i must turn myself in, was something at one time i was quite willing to do.. better than no children at all)
oh! i could go on and on about my layman view on taxes
solve all the problem of the world.
i'm going to fit in very nicely with the seniors at my local donut shop
some of the wisest people i've ever eavesdropped on
and oh!
i think this too..
about running a business
back to % as being the most fair.
so that the top person(s) earns whatever..
and the lowest salary in a company, is a % of what the top person makes
and everyone - from grunt workers, to customers service, to sales, to mail-clerks, to innovators, researchers, etc
always earn the same % of whatever the top person earns
because ALL of those people are needed in order for the top person to earn what they do
this seems fair w/built in incentives
but in today's business world.. the support team for the high earners remains the same, while the high earners keep adding, adding, adding on to their profits
reagan's noble "trickle down" theory doesn't seem to work
but i've decided i will make a great ceo one day,
and show people how this can be done
"to hope indeed my bbf!"
"hopes & dreams" love, ~s.
I think you are right! The % idea is most fair. Problem is, that's not the way it works for whatever reason.
I'm not saying anyone is entitled to anyone else's money. What I am saying is it has to be fair. Why do rich people get better tax shelters than poor people? That's absurd. We don't want to discourage wealth, but we can't have greedy people running the country. And unfortunately, that's what happens more time than not. Look who runs the government--wealthy lobbyists.
I'm irritated with the whining in this country. I watched a movie over the weekend, "Beyond the Border." The horse grooms from Mexico worked 13, 14, 15 hours a day and earned something like $250.00 a week. Then this rich guy comes along in the movie and complains how as a horse buyer, he has to walk around in the heat and examine the horses. Then these same people buy the horses for 2+ million dollars!! You want me to feel BAD for that guy? I'd just as soon let the horse poop on him.
Sorry, but I have a problem with people who don't do good with the money they have. Money is a gift and like power, should be used wisely. Yes, enjoy it. Yes, be careful who you give it to. But don't be a selfish leech on the planet. We have plenty of THOSE!
Don't know what to say about the child support thing except I've always found it better to have a third party (DCSE in this county) deal with it. It avoids courts, fights, hard feelings, and all kinds of things that are bad for kids and parents alike.
"why during church do I look at the women and try to figure out how much effort it would take to get them naked"
LMAO!
Becuase your mind wanders?
I used to have the most horrid thoughts as a child in church because I was bored. I thought it would spice things up if I did something like ran up to the alter naked. Then I'd feel bad and cofess it the next week. "Bless me father, for I have sinned. I had dirty thoughts."
kmg/bbf: -thank you- you know i love how you make your points.. with intelligence and humor too
and mr 8" & kmg/bbf: that is so funny! your naked/church stories..
my prayers are no better,
dear Lord,
can i please look better in his imagination than i do in real life,
pretty please,
here's $5. ~amen
Post a Comment
<< Home