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The 7 - Current Events & Politics - Warren Buffett on Tax Cuts
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spf
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#1 Posted on 5.5.03 1146.10
Reposted on: 5.5.10 1147.04
Buffett comes out against dividend tax cut (story.news.yahoo.com)

I wouldn't exactly call the second richest man on earth a fuzzy-headed liberal, but statements like "Asked about President Bush's plan to eliminate the tax on companies' dividends, Buffett said it would unfairly benefit rich people like himself, at the expense of ordinary workers. sure don't sound too close to the Bush position.

A couple of more quotes from the Chicago Sun Times version of the story here (suntimes.com)

''The idea that it creates all kinds of jobs and everything else, that's what sort of turns me off,'' Buffett said. ''That's like a manager saying we're going to grow our earnings 20 percent a year. They don't have the faintest idea, in my view, of how many jobs this is going to create. How could they? Economics is not that precise.''

''I don't think you can make it so unfair that a man living entirely on dividends will pay zero tax while a cab driver has to work 16 hours a day to barely feed a family,'' Munger said. ''I just don't think it works in a democracy.''
The Munger in the quote is Charlie Munger, VP of Berkshire Hathaway.
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Grimis
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#2 Posted on 5.5.03 1301.21
Reposted on: 5.5.10 1302.46
I never supported the cut in divident taxes because it would create job growth. I supprot it because it's not fair to tax the same income twice.


    Originally posted by spf2119
    ''I just don't think it works in a democracy.''

Someobdy needs to get this guy the memo that we live in a Republic, not a democracy.
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#3 Posted on 5.5.03 1320.58
Reposted on: 5.5.10 1323.29
I actually had a discussion about taxes with my girlfriend recently, and what she said blew me away. She is, in every respect, a liberal. But she just started a new job after a year of unemplyment, and her first check was rather small, and it only had a tiny amount in taxes taken out. Almost nothing. I explained to her that the smaller the check, the less in taxes are taken out- and when the dollar amount of your check increases, a higher percentage is withheld...so when she starts seeing normal sized checks, a higher percentage would be taken out.

What she said next stunned me - "That's not fair, why should you get MORE taxes taken out of your check, just because you make more?"

I honestly think that dividend tax relief will help stimulate growth, but the basic idea of the tax is wrong. Double taxation is unfair, no matter how much money you make. The "rich" are overtaxed in this country, and the reason nothing is ever done to fix this is because everytime it is suggested, the left are up and down the aisle screaming about "TAX CUTS FOR THE RICH! FOR THE RICH!" and how evil this is.

From an economic perspective, why should they NOT get a tax cut? It is not like they don't pay their share (more than their share, really)... and the money would go right back into the economy. If share holders have more money to invest, because the double tax on dividends stop, they will reinvest it. Do you honestly think they are going to shove it in a matress?

More money in the market translates to economic growth, and that means more jobs. It is a very simple concept.

Giving all of the tax cuts to the lower economic classes does not help anyone. Yes, they deserve their fair share of cuts, but a tax cuts does nothing if you are not working in the first place. I'd rather see the divident tax go away, and watch the unemployment rate drop, than cave to the whining about how the rich have enough money, blah blah. They earned it, it is theirs. Not the government's.
Leroy
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#4 Posted on 5.5.03 1505.09
Reposted on: 5.5.10 1514.25

    Originally posted by Pool-Boy
    From an economic perspective, why should they NOT get a tax cut? It is not like they don't pay their share (more than their share, really)... and the money would go right back into the economy. If share holders have more money to invest, because the double tax on dividends stop, they will reinvest it.


Nothing makes me sadder than the plight of the "poor" rich people who have to pay so much in taxes, especially on the basis that if the rich had more, they might - just might - be willing to toss some scraps down to the less fortunate. I guess the new BMW will have to wait... (and this is the year of the SUV, anyway).

Only an Orange County liberal can not work for a year and then complain about taxes. :-)

And given what's being done with our tax dollars this year, its not like the money isn't going back into the economy anyway. Who do you think is paying for those fat defense contracts?
godking
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#5 Posted on 5.5.03 1516.37
Reposted on: 5.5.10 1528.05
I never supported the cut in divident taxes because it would create job growth. I supprot it because it's not fair to tax the same income twice.

That's such a bollocks argument, though. The first tax is applied to the company itself and the second to the recipient of the dividend. It's not the same income at all - just the same monetary amount that's being taxed, which is a different thing.
cranlsn
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#6 Posted on 5.5.03 1526.50
Reposted on: 5.5.10 1529.01

    Originally posted by godking
    I never supported the cut in divident taxes because it would create job growth. I supprot it because it's not fair to tax the same income twice.

    That's such a bollocks argument, though. The first tax is applied to the company itself and the second to the recipient of the dividend. It's not the same income at all - just the same monetary amount that's being taxed, which is a different thing.



bollocks back at 'ya...

The shareholder IS the company, the stock is part ownership of the company, without the stockholders the company does not exist (barring private ownership).

So...the profits of the (stockholder's) company are taxed, then the stockholder's share of what's left is taxed again. He takes a hit on the profit, AND on his share of it. Double taxation.

godking
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#7 Posted on 5.5.03 1537.55
Reposted on: 5.5.10 1538.32
The shareholder IS the company, the stock is part ownership of the company, without the stockholders the company does not exist (barring private ownership).

Except by the laws governing corporations, that's not true. Corporations are independent legal entities - literally "imaginary people". The stockholder isn't the company. In real terms, the stockholder receives no visible loss from the corporation's taxation.

It's a cash grab, and attempting to justify it with cries of "unfair taxation" isn't going to mollify anybody except those who want to be mollified to begin with.
Corajudo
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#8 Posted on 5.5.03 1545.48
Reposted on: 5.5.10 1546.27

    Originally posted by godking
    I never supported the cut in divident taxes because it would create job growth. I supprot it because it's not fair to tax the same income twice.

    That's such a bollocks argument, though. The first tax is applied to the company itself and the second to the recipient of the dividend. It's not the same income at all - just the same monetary amount that's being taxed, which is a different thing.


But, it is being taxed twice. Once when the investor earns the money they use for the investment (because they obviously use after tax money for their investment). And then a second time when tax is paid on any dividend income from the investment. Furthermore, even if you ignore the double taxation of households, there is still double taxation. Since taxes are assessed first on the corporation's profits and then a second time when the households receives dividends, then the same income (or profit) is being taxed two times.

Additionally, if a company uses debt to raise money (rather than try and attract funds through some sort of public offering), then they can deduct interest payments from their income and reduce their taxes. However, if they choose to raise the money through issuing stock then they cannot deduct the dividends paid from their tax burden. So, it creates a (dis)incentive for the businesses to use debt rather than the stock market (which would be a more flexible and cheaper source of funds). So, I would argue that not only should we not tax dividend income, we should allow corporations to deduct any dividend payments from their before tax profit.

In any case, income is taxed twice both directly and indirectly. Moreover it is taxed twice from the perspective of the investor AND the firm.
cranlsn
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#9 Posted on 5.5.03 1548.08
Reposted on: 5.5.10 1552.01
OK...by current laws that's the standard.

But let's take it on down the line.

Say company A makes a profit....it gets taxed.

What's left is split into a dividend for shareholder...it gets taxed.

Let's say the shareholder takes what's left and leaves it to a son/daughter...it gets taxed. (God forbid it passes through a couple of generations.)

You see nothing wrong with this? I realize I'm combining issues here, but if you want to throw out the term "cash grab" how about looking back at Washington where they just can't seem to stomach the idea of any sort of asset changing hands without getting "their piece" of it?

I'm not pleading for the "poor" rich person...any number of people at varying levels of economic status can be the recipients of dividends, and the status quo is just wrong.
godking
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#10 Posted on 5.5.03 1614.30
Reposted on: 5.5.10 1616.13
Let's say the shareholder takes what's left and leaves it to a son/daughter...it gets taxed.

That's utterly irrelevant to dividend taxation, seeing as how the income belongs to another person entirely.

And yes, I support the estate tax. (So do Warren Buffet and Bill Gates.) The reason for the estate tax is because when it was put in place people wanted to ensure that America would never have an aristocracy - or at least to combat its growth as much as possible. It's a laudable goal.
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#11 Posted on 5.5.03 1615.18
Reposted on: 5.5.10 1617.32
    Originally posted by Leroy

    Nothing makes me sadder than the plight of the "poor" rich people who have to pay so much in taxes, especially on the basis that if the rich had more, they might - just might - be willing to toss some scraps down to the less fortunate. I guess the new BMW will have to wait... (and this is the year of the SUV, anyway).



That is my point exactly. Who exactly are you to say that they should be forced to pay a higher percentage in taxes than you? I don't care if they don't NEED the money, it is their money, not the government's. I am sure you have a lot of things that you do not need, but that does not give the government the right to come in and take it. Your crack about "oh poor babies can't buy a BMW" is not exactly a rational reasoning for tax policy. Double taxation is wrong, no matter who is getting the shaft, or how much money they have.


    Originally posted by Leroy

    Only an Orange County liberal can not work for a year and then complain about taxes. :-)


Low blow... and a highly inaccurate assumption. Where she is from (and how long she has been there) has nothing to do with her opinions. So now someone who has been unemployed does not deserve liberal compassion, since she allegedly lives in a conservative county, and does not think that the tax policy is wholly fair?

You read "Orange County" and think, oh, rich. Chalk another misconception up to over-generalizing. And I thought Liberals were the more open minded of the two parties, and did not stoop to arguments like that....


    Originally posted by Leroy

    And given what's being done with our tax dollars this year, its not like the money isn't going back into the economy anyway. Who do you think is paying for those fat defense contracts?



The war situation has nothing to do with the validity of a tax law. Besides- we are spending a lower percentage of our GDP than we ever have on defense. And how can you say that the tax money from a dividend cut would NOT go back into the economy? Where exactly would it go? If I own stocks from X company, there is a good chance that I have an automatic dividend reinvestment program. If not, I am likely going to reinvest it anyway. The individual shareholder is not going to take the money they make in dividends and buy a damed RPG. They are going to use it to make more money.

(edited by Pool-Boy on 5.5.03 1422)
MoeGates
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#12 Posted on 5.5.03 1626.04
Reposted on: 5.5.10 1629.04
Who cares if it's taxed twice? Republicans use this argument to justify the inheritance tax also (which, if they dropped there support of the repeal of it, would go a long way to convincing me Republicans actually believe the bullshit rhetoric they spout). It sounds good and fair and all, but is meaningless. If their problem was double taxation, they'd advocate eliminating the tax on the front end and doubling it on the back end, or vice-versa, however (I have no idea how this would be done) you manage to create a revenue-neutral solution. Likewise, they would just advocate treating inheritance as income (I think it should be treated as gambling winnings personally), which would solve that problem also.

But Republicans don't really cares if it's "taxed twice." That's just and end-to-the-means soundbyte. They care about the bottom line - how to pay less in taxes (I don't sweat them, who doesn't)? You can go back and forth about what "taxed twice" means forever, it makes no difference.

Pool-Boy sums it up best - the GOP position always comes down to "Rich people pay more in taxes, so they should get a bigger tax cut." That's a fine position (if one I disagree with). What annoys me is when they come up with all the bullshit to convince people it's a) good for everyone that rich people get tax cuts, b) rich people aren't really rich, and c) these things that just happen to give the rich the overwhelming majority of the money just happen to be the stuff that's intrinsically unfair.

Payroll taxes are what's really messed up in this country (and where the vast majority of low-income workers tax dollars go) and should be looked at. Make the S.S. payroll system flat and the taxation progressive and you'd solve all the problems.
Leroy
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#13 Posted on 5.5.03 1740.53
Reposted on: 5.5.10 1742.20

    Originally posted by Pool-Boy
    Your crack about "oh poor babies can't buy a BMW" is not exactly a rational reasoning for tax policy. Double taxation is wrong, no matter who is getting the shaft, or how much money they have.


Well, my crack about "poor babies and BMW's" was not meant to be rational reasoning - it was meant to be a joke.

But since humour is out of the question - Moe pretty muched summed up my feelings on this issue - no need to restate it.


    Originally posted by Pool-Boy
    Low blow... and a highly inaccurate assumption. Where she is from (and how long she has been there) has nothing to do with her opinions. So now someone who has been unemployed does not deserve liberal compassion, since she allegedly lives in a conservative county, and does not think that the tax policy is wholly fair?

    You read "Orange County" and think, oh, rich. Chalk another misconception up to over-generalizing. And I thought Liberals were the more open minded of the two parties, and did not stoop to arguments like that....



Well, given that grew up in Irvine, better known as the 7th layer of Hell (I lived there for a little over 17 years) - I'll hit Orange County liberals with all the low blows I want (the fact that I used to be one notwithsatnding). In other words, it was a joke...

Your're not, by chance, the guy who defaced my "Friends don't let friends vote Republican" bumper sticker (7-8 years ago, Black Ford Ranger)?
Grimis
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#14 Posted on 5.5.03 1919.48
Reposted on: 5.5.10 1927.19

    Originally posted by MoeGates
    Make the S.S. payroll system flat and the taxation progressive and you'd solve all the problems.

A start, but I have a better idea. Elimiante hte payroll tax, morphy it in with a new flat income tax with no loopholes...
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#15 Posted on 5.5.03 2028.31
Reposted on: 5.5.10 2029.04
You know, a lot of us (at least the more active talkers in here) seem to be in favor of something akin to a flat tax and the elimination of loopholes. So, uh, why don't we go find a candidate or two who takes this stance??

-Jag
Grimis
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#16 Posted on 5.5.03 2103.51
Reposted on: 5.5.10 2104.12

    Originally posted by Jaguar
    So, uh, why don't we go find a candidate or two who takes this stance??

We did. His name was Steve Forbes. Neither hte pressn or the party seemed to want to give him the time of day in 96 and when he tried to reinvent himself as some kind of Bauer-esque conservative that didnt't work either.
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#17 Posted on 5.5.03 2107.07
Reposted on: 5.5.10 2119.34


    Payroll taxes are what's really messed up in this country (and where the vast majority of low-income workers tax dollars go) and should be looked at. Make the S.S. payroll system flat and the taxation progressive and you'd solve all the problems.


Or, you could let people direct their own retirement accounts and eliminate dependency on paltry monthly checks.
Nate The Snake
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#18 Posted on 5.5.03 2133.18
Reposted on: 5.5.10 2135.31

    Originally posted by Grimis
    I never supported the cut in divident taxes because it would create job growth. I supprot it because it's not fair to tax the same income twice.


      Originally posted by spf2119
      ''I just don't think it works in a democracy.''

    Someobdy needs to get this guy the memo that we live in a Republic, not a democracy.



This is sorta off-topic, but considering the fact that we DO live in a republic and not a democracy... doesn't all our carping about "making the world safe for democracy" and all that ring sort of hollow? I mean, yeah, "constitutional republic" doesn't have quite the same ring to it, and it's got far, far too many syllables for the average person to really get behind, but still. (:
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#19 Posted on 6.5.03 0051.24
Reposted on: 6.5.10 0051.29
The flat tax only hits the people in lower tax brackets, as they no longer get out of paying taxes. If they have to pay taxes, no questions asked, they get screwed (relative to the current system) because they are not anywhere near the 15% that has been offered.

Look at it this way - Forbes is very wealthy. He is at least in the 38% tax bracket. He proposed a tax where he would pay 23% less tax. Why do people think this is a move to help the common guy?

It sounds fair, because it is fair - but the problem is that most people would be hurt by it because they have had their vote bought with lowered taxes. The top % of earners have been written off by liberals who take their money and disperse it to a large group of lower income people. In exchange, they get their support. You can buy off a much larger group of poor people with the funds, so it makes up for the rich people that you piss off.

It's why the system will never change. The rich are the one minority that society accepts it when they are discriminated against.

If 9 people all get a dollar, and one guy loses 9 bucks, he's going to be outvoted every single time. That's democracy for ya.

(edited by Guru Zim on 5.5.03 2252)
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#20 Posted on 6.5.03 0243.39
Reposted on: 6.5.10 0246.17
The term "democracy" has come to mean "constitutional republic" in political science for some time now.
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