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Rennol
RealPoor Guru
Joined: 11 Oct 2002
Posts: 3741
Location: Charleston, IL
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 Posted: 05/20/03 - 16:37 Post subject: Bush Tax Cut Plan: Voodoo Economics
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But don't take my word for it!
http://money.cnn.com/2003/05/20/news/buffett_tax/index.htm
Edit: added article to post:
| Quote: |
Buffett slams dividend tax cut
One of world's richest calls plan 'voodoo economics,' says it puts burden on low-income families.
May 20, 2003: 10:41 AM EDT
NEW YORK (CNN/Money) - Renewing his criticism of the dividend tax cut laid out by the Senate last week, Berkshire Hathaway's Warren Buffett called the proposal "voodoo economics" that uses "Enron-style accounting."
The Senate's plan for dividends to be 50 percent tax free in 2003, 100 percent tax free in 2004 through 2006 and then face the full tax in 2007 would "further tilt the tax scales toward the rich," Buffett wrote in an opinion piece in the Washington Post.
Buffett posed a hypothetical situation in which Berkshire Hathaway, which does not currently pay a dividend, paid $1 billion in dividends next year.
Through his 31 percent ownership of the company, Buffett said he would receive an additional $310 million in income that would reduce his tax rate from about 30 percent to 3 percent, while his office secretary would still have a tax rate of about 30 percent.
"The 3 percent overall federal tax rate I would pay -- if a Berkshire dividend were to be tax free -- seems a bit light," Buffett wrote.
Instead of the Senate's tax cut plan, Buffett proposed that it provide tax reductions to those who need and will spend the money in the form of a Social Security tax "holiday" or a tax rebate to lower-income people.
"Putting $1,000 in the pockets of 310,000 families with urgent needs is going to provide far more stimulus to the economy than putting the same $310 million in my pockets," Buffett added.
He closed the piece by saying that the "government can't deliver a free lunch to the country as a whole. It can, however, determine who pays for lunch. And last week the Senate handed the bill to the wrong party."
Warren Buffett sits on the board of the Washington Post Co (WPO: up $3.91 to $715.01, Research, Estimates). and Berkshire Hathaway (BRK.B: up $2.00 to $2451.00, Research, Estimates) owns a stake in the newspaper publisher. |
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WheresNWS
RealPoor Master of Posts
Joined: 19 Nov 2002
Posts: 6448
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Posted: 05/20/03 - 16:46 Post subject: Re: Bush Tax Cut Plan: Voodoo Economics
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| Rennol wrote: | But don't take my word for it!
http://money.cnn.com/2003/05/20/news/buffett_tax/index.htm
Edit: added article to post:
| Quote: |
Buffett slams dividend tax cut
One of world's richest calls plan 'voodoo economics,' says it puts burden on low-income families.
May 20, 2003: 10:41 AM EDT
NEW YORK (CNN/Money) - Renewing his criticism of the dividend tax cut laid out by the Senate last week, Berkshire Hathaway's Warren Buffett called the proposal "voodoo economics" that uses "Enron-style accounting."
The Senate's plan for dividends to be 50 percent tax free in 2003, 100 percent tax free in 2004 through 2006 and then face the full tax in 2007 would "further tilt the tax scales toward the rich," Buffett wrote in an opinion piece in the Washington Post.
Buffett posed a hypothetical situation in which Berkshire Hathaway, which does not currently pay a dividend, paid $1 billion in dividends next year.
Through his 31 percent ownership of the company, Buffett said he would receive an additional $310 million in income that would reduce his tax rate from about 30 percent to 3 percent, while his office secretary would still have a tax rate of about 30 percent.
"The 3 percent overall federal tax rate I would pay -- if a Berkshire dividend were to be tax free -- seems a bit light," Buffett wrote.
Instead of the Senate's tax cut plan, Buffett proposed that it provide tax reductions to those who need and will spend the money in the form of a Social Security tax "holiday" or a tax rebate to lower-income people.
"Putting $1,000 in the pockets of 310,000 families with urgent needs is going to provide far more stimulus to the economy than putting the same $310 million in my pockets," Buffett added.
He closed the piece by saying that the "government can't deliver a free lunch to the country as a whole. It can, however, determine who pays for lunch. And last week the Senate handed the bill to the wrong party."
Warren Buffett sits on the board of the Washington Post Co (WPO: up $3.91 to $715.01, Research, Estimates). and Berkshire Hathaway (BRK.B: up $2.00 to $2451.00, Research, Estimates) owns a stake in the newspaper publisher. |
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I have a lot of respect for Warren Buffet, but is this even right? The bill that the senate passed only made the first $500 of dividend income tax-free and 10% of anything on top of that tax free. 90% of that $310 million would be taxed. So instead of paying $46,500,000 in taxes off of those dividends, he would pay $41,850,000 in taxes.
His secretary on the other hand, would be encouraged to invest the 10,000-20,000 required to yield a tax free $500/year income rather than allowing it to collect interest in her savings account.
I'm not an economics guru, but this sounds like spin.
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Rennol
RealPoor Guru
Joined: 11 Oct 2002
Posts: 3741
Location: Charleston, IL
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Posted: 05/20/03 - 17:00 Post subject:
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I don't know the specifics of the bill passed by the Senate, but I would think Warren Buffett would know them better than you. Perhaps if you want to go check you can find out for sure before dismissing his article as 'spin'.
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Akronn
RealPoor Master of Posts
Joined: 11 Oct 2002
Posts: 8752
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Posted: 05/20/03 - 17:19 Post subject:
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It was dismissed as spin as soon as it was realized it was anti-Bush.
Last edited by Akronn on 05/20/03 - 18:42; edited 1 time in total
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WheresNWS
RealPoor Master of Posts
Joined: 19 Nov 2002
Posts: 6448
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Posted: 05/20/03 - 18:15 Post subject:
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| Rennol wrote: | | I don't know the specifics of the bill passed by the Senate, but I would think Warren Buffett would know them better than you. Perhaps if you want to go check you can find out for sure before dismissing his article as 'spin'. |
Your appeal to authority is unconvincing, especially since Warren Buffet is a politically charged democrat. but I was wrong. That was the house bill that eliminated taxes on the first $500. The final Senate bill temporarily eliminates double dividend taxation altogether (for 3 years).
Another point regarding Warren Buffet's comments. It is likely that he already does not pay taxes on that hypothetical $1 billion, because accounting eliminates most earning (the taxed portion of corporate income), anyway. So by passing the dividend tax cut, it simply extends the benefit to the secretary, who can now invest in dividend paying stocks.
BTW. You seem to respect Warren Buffet. Can you name what business he's in without resorting to Google?
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Nuldaan
Sir Postalot
Joined: 07 Nov 2002
Posts: 1179
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Posted: 05/20/03 - 19:57 Post subject:
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I have to admit that I've never understood why dividends are taxed in the first place. Right from the start, that puts me in support of Bush's tax plan.
Now that you know where I stand, why is this quote anything new? Democrats (in fact all opponents to a dividend tax cut) have been saying the same thing for years. Why is it noteworthy that Warren Buffett would reiterate the same argument?
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Rennol
RealPoor Guru
Joined: 11 Oct 2002
Posts: 3741
Location: Charleston, IL
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Posted: 05/20/03 - 20:15 Post subject:
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I know that he is the CEO of Berkshire Hathaway, a respected company. I think this is a stock-trading company.. I am not 100% sure. I do know that the stock has never undergone a split and each share trades for more than I will make in a year for quite a while (hopefully not that long  )
I also know he is very wealthy. I read an interesting article regarding the inheritances' of wealthy people; Buffett is leaving his kids around $200,000 each: something he says is a good amount to "get started with", a good foundation for savings, house, whatever. However, he is not going to start them off in the category of "super rich", they will have to earn that for themselves.
He's a pretty respectable guy, IMHO.
And no, I didn't resort to Google, although I usually use Yahoo because that is the first search engine I used, and I am not a person that likes to change unless it is required
Regarding dividend taxes..well.. I will give some anecdotal evidence here because I have had a modicum of exposure to stock dividends.
When I worked in the banking industry (2 years universal banker/loan originator/teller/personal banker), quite often we would get people depositing dividend checks. These checks would frequently be 1 of 2 possible scenarios: 1) Small checks around $2.00 that I would joke with the customer about "They really love ya", or whatever. 2) Huge checks, several of them at a time, to people that already had significant relationships with us (Investment accounts with $100,000+).
In my experiences, most people that receive healthy dividends are quite wealthy. This automatically points me towards the line of thinking that there is no reason to eliminate the tax on them; because the people that would receive the benefit are already past the point where tax benefits cease.
As is said in the article, there is no such thing as a free lunch. What is able to be determined, is who pays for the lunch.
In this case, the lunch is our nation's budget, our $2 million cruise missiles, our F-22's, our roads, schools, all of the things that make the U.S. what it is, compared to the rest of the world. Who is to pay for these? Most of the wealth in this country is held by a small fraction of the population. People who earn $35,000 a year are trying to provide for their present and future. People who earn $3,000,000 each year have their present and future secured. These are the people who pay for the lunch.
Last edited by Rennol on 05/20/03 - 20:29; edited 1 time in total
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Rennol
RealPoor Guru
Joined: 11 Oct 2002
Posts: 3741
Location: Charleston, IL
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Posted: 05/20/03 - 20:26 Post subject:
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BTW, WheresNWS, Buffett has 2 T's
I got it wrong once too.. then I thought to myself "Man, it would suck for people to call you Warren Buff(insert pronunciation A here)."
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Eduin
Sir Postalot
Joined: 14 Oct 2002
Posts: 1046
Location: Glasgow
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Posted: 05/23/03 - 13:12 Post subject:
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Rennol,
Dividends are taxed because they are considered Income, where the money comes from and its previous tax status is a *seperate* question. The idea that all income should be taxed is one of equitability, it means that no matter how you make your income - dividends, rentals, salary, you still contribute to the cost of running the society in which you live.
For sure, there is a strong argument that dividends should be a *pre-tax* expense just as commercial rentals are but it is seperate to the argument of what should happen to dividend income after it is paid. It *has* to be taxed or you can earn your living outside the system (given a basic capital base). For referrence, if you are a private landlord, you are paying tax on your rental income and this money was already taxed (as it is mainly salary based) when the rentee paid their income tax on that salary.
The argument Buffett is putting forward is seperate again. He's saying that given that tax is double paid on dividends, that's not really a problem, the economies of share based industrialised countries have run fine with this for centuries. He is arguing that if tax is to be cut, it can be done in a more socially progressive way, where the main beneficiaries are low income families not the already wealthy.
Regards,
Eduin
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WheresNWS
RealPoor Master of Posts
Joined: 19 Nov 2002
Posts: 6448
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Posted: 05/23/03 - 13:24 Post subject:
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| Eduin wrote: | | He is arguing that if tax is to be cut, it can be done in a more socially progressive way, where the main beneficiaries are low income families not the already wealthy. |
We non-socialists equate wealth redistribution with theft on a grand scale.
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Eduin
Sir Postalot
Joined: 14 Oct 2002
Posts: 1046
Location: Glasgow
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Posted: 05/23/03 - 14:05 Post subject:
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| WheresNWS wrote: | | Eduin wrote: | | He is arguing that if tax is to be cut, it can be done in a more socially progressive way, where the main beneficiaries are low income families not the already wealthy. |
We non-socialists equate wealth redistribution with theft on a grand scale. |
Implementing a tax cut which benefits the wealthy and not the poor IS STILL f*****g REDISTRIBUTING WEALTH, you docile f*****g c**t.
Regards,
Eduin
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WheresNWS
RealPoor Master of Posts
Joined: 19 Nov 2002
Posts: 6448
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Posted: 05/23/03 - 14:36 Post subject:
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| Eduin wrote: | | WheresNWS wrote: | | Eduin wrote: | | He is arguing that if tax is to be cut, it can be done in a more socially progressive way, where the main beneficiaries are low income families not the already wealthy. |
We non-socialists equate wealth redistribution with theft on a grand scale. |
Implementing a tax cut which benefits the wealthy and not the poor IS STILL f*****g REDISTRIBUTING WEALTH, you docile f*****g c**t.
Regards,
Eduin |
c**t...nice argument.
Anyway. 2 points:
1) The tax cuts already exist for the wealthy in the form of corporate write-offs, so the dividend tax cut actually benefits others (the primary recipients of dividends are the retired)
2) You have it backwards. A tax cut benefiting the rich is not redistribution of wealth. It just allows them to keep more of their wealth that is currently already being redistributed.
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Kbarr
Guest
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Posted: 05/23/03 - 17:01 Post subject:
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The only thing I cared about was this. Was holding my breath actually, glad it went my way.
| Quote: | | The House of Representatives approved a $550 billion tax cut plan Friday, but did not eliminate the exclusion from federal income tax of up to $80,000 in salaries that American citizens earn overseas. |
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