I don't even know where to start, honestly. I've made all these arguments before, multiple times...
There seems to be a lack of understanding regarding 'the rich' and what they do with their money. Most people don't seem to be able to see the world outside of the boundaries they currently live in. "If they raise my taxes I won't be able to buy a new flat screen tv, so they should tax the rich instead because their houses are already big enough and they don't need more money" ok, well, that's inaccurate. They may have more money than they know what to do with, but it's not coming at the expense of the little guy by any means.
Other people scoff at the notion that rich people provide jobs. Well, many of them don't do it directly. They're not buying new factories and staffing them with unemployed people picked up off the street. Why? Because it's a pretty shitty investment to do so. You're competing against established players and against Chinese labor. The odds of failure would be high.
So we come to the crux of the matter, the thing most people fear, hate, loathe, because of ignorance: investment. But they don't really hate it, they just listen to the left wing media rail against the excesses of Wall Street and how Main Street is suffering because of it. Whatever. Most people would like to start their own small business, be their own boss, make their own hours, build something with their own two hands, and ultimately have success. Millions of people do it every year, and a lot fail, most due to incompetence regarding how investment works. But we as a country and a globalized world absolutely need these people to take the risk every year. Without them, our economies would face negative growth.
The other form of investment is indirect investment, which 'the rich' do. I put 'the rich' in quotes, because every pension fund in the country does this as well, and most intelligent middle class citizens. If I go out and buy a bunch of municipal bonds today do you know how much I would pay in taxes on the interest? Zero. Say I bought a 20 year bond at 4% for Doesn'tmatter City, USA for $10,000. 10000(1+.04)^20 (compound interest is this easy to calculate, trust me, you can do it too) = $21,911.23 after 20 years. So I've doubled my money, less inflation, and paid no taxes. Why? Why am I not asked to pay taxes? Because when I bought that bond, Doesn'tmatter City was able to build a new road, or a new school, or pay for a new football stadium. Doesn't matter. Without floating that bond, DC wouldn't have been able to raise the cash to build that new thing. They offer the tax free bit because municipal bonds pay less interest than other forms of investment, it keeps DC's borrowing costs down, and because there is always the risk that DC will default on the bonds and the holders will be left with nothing.
When Warren Buffett says that he has a lower tax rate than his secretary, he's not lying, but he is being an ass. He pays himself $100,000 a year in salary for being the CEO of Berkshire-Hathaway. If his secretary is single and paid <$86k a year, she'll be in the 28% bracket while he is in the 25% bracket as a married man. But he's not talking about his salary, he's talking about his investments. Buffett is a long term holder of stock. When he invests, he is going to hold his stock for at least a few years before he does anything else with it. Because he generally does well on his investments, and because he holds long term, he ends up in the 10% capital gains tax bracket. If he's holding municipal bonds, his taxes compared to his income are even lower.
Why? Why does the government allow this to happen? Why haven't they rushed out the Buffett Rule and forced it through Congress like they did with Obamacare? Because investment drives the economy, and the lower tax rate encourages people to invest rather than seek higher salaries. Those investments come with the risk of stock market crashes, defaults on bonds, bankruptcies, acts of god, whatever, there is no investment option that is entirely risk free. Hell, the US government came within a few hours of default last year and millions of people would've had their treasury bonds become worthless.
So yes, the rich are worthless, we should tax them at a 90% rate and kill their children while we're at it too. All investment should be funneled through Congress so that 'the people' have their say in how all businesses run because
corporations are evil, not people.
And fyi, the democrats are laughing at all of you because they'll trade ten grand a year in taxes for your vote happily. They're invested like Buffett and can just hold another fundraiser to make up the loss. Vote blue!
Last edited by Jay (2012-08-13 07:26:46)
