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What do you think of Obama's proposed Buffett Rule?

Discussion in 'Budget & Taxes' started by Meta777, Feb 2, 2012.

  1. Meta777

    Meta777 Moderator Staff Member

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    Obama has proposed a rule that would force higher income individuals to pay tax rates that are at least as high as middle income individuals.
    I'm wondering what everyone thinks of such a rule.

    Also, on a slightly related note,
    Senator Whitehouse is introducing a bill that would attempt to incorporate that very rule, known as the `Pay A Fair Share Act’
    A petition for the bill can be found at buffettrulebill.com

    -Meta
     
  2. Iriemon

    Iriemon Well-Known Member Past Donor

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    I think it should have been passed a decade ago.

    It is outrageous billionaires, trust fund babies, hedge fund managers and folks like Mitt Romney are paying less than half the rate as working folk.

    Anything you make over $1 million gets 30%, no ifs and or buts.
     
  3. DivineComedy

    DivineComedy Well-Known Member

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    Could there be a situation where one makes more than a million and their net worth is loaded with liabilities, like say debt for a new plant or something, and the simple rule would cause them to pay a higher percentage of their net worth in taxes than a complex rule (polynomial) taking into account liabilities (that actually provide jobs to the lessor tax brackets)?
     
  4. Iriemon

    Iriemon Well-Known Member Past Donor

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    What's the difference between him and a middle class family finding themselves underwater on their mortgage?
     
  5. DaveInFL

    DaveInFL Banned

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    I'll repeat what I put in a related post:
    Everyone promoting the Buffett rule use the tax rates which is incorrect. The issue is effective rates, which is what people actually pay after deductions and credits are applied.

    Here are the effective tax rates:
    http://www.taxpolicycenter.org/taxfa....cfm?Docid=456

    Here are the numbers for 2007 for effective tax rate on individual income tax:
    Top 1% 19.0%
    Top 20% 14.4%
    Second highest quintile 6.2%
    Third quintile 3.3%
    Fourth quintile -0.4%
    Bottom 20% -6.8%

    Nobody pays the top tax bracket, but the more you make, the more you pay.

    The negative rates mean those people receive checks from the govt as a result of child tax credits etc.

    As to Buffet, he is a liar and a pawn of the democrats. This started when Buffett claimed he paid less than his secretary, Debbie Bosanek, who suppossedly paid 35.8% of her income in federal income tax.

    As many suspected, that was a lie. Now Buffett claims the 35.8% is the combined federal income tax plus payroll tax. Even if it is, it is still unbelievably high. If it includes both employee and employer paid payroll tax, then her effective rate is 20%, still a very high figure unless she is one of the top 1%, is in some odd tax/income situation, or is simply incompetent with her taxes.

    Buffett refuses to release his income tax returns. Same for his secretary, who Buffett might be paying $1 million a year. For all we know, its all lies.

    Its great how Buffett wants people to pay more taxes, but he leaves his fortune to the Gates Foundation to avoid taxes.

    I'm all for a simple tax code, but the Buffett rule is stupid and is nothing more than class warfare. If they want a fair system, get rid of every single deduction and credit, and have a single rate.
     
    jor and (deleted member) like this.
  6. Albert Di Salvo

    Albert Di Salvo New Member

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    Berkshire Hathaway doesn't pay dividends. Buffet isn't going to pay income, capital gains, or estate taxes. He's a fraud.
     
  7. DivineComedy

    DivineComedy Well-Known Member

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    Simple, one might be making jobs and another might be a turd who deserves it. How do we find out?

    Isn't each situation different? Isn't that why we have deductions? Isn't that why the tax code is complicated?

    If the person got a bigger house just to sell it, flip it, and the market collapsed, and they were stuck with a Doctor's house and they were a truck driver and the house is worth less than what they owe, that is basically tough luck. If usurers gave more than a healthy debt load to a family without the full knowledge and consent of both spouses, then being underwater on a mortgage could be the result of not enough "safe and sound banking practices" and regulations to help them be safe and sound.

    When I was a Real Estate Agent in Georgia, where I used to howl at the moon in the words in what became Bernita's hood, I once told a Black Couple that ARM's were a bad way to go. I also once argued with a well to do Black Man that people should be able to build a house they could afford and if that was 800 square feet so be it, see James Bovard's "Lost Rights," the Black Man said he did not want a Poor (*)(*)(*)(*)(*)(*) (his word, not mine) living next to him, see Real Estate "Principle of Regression." Obviously some people have no ethics:

    "WILLIS: A truck driver, Bernita saved up $14,000 to close on a six-bedroom house. Purchase price -- $180 grand. She thought she got a deal on her first loan, a two-year adjustable rate mortgage at 8.375 percent. Her monthly payments -- $1,200." http://transcripts.cnn.com/TRANSCRIPTS/0803/28/siu.01.html

    "Your debt-to-income ratio
    36% or less: This is a healthy debt load to carry for most people.

    37%-42%: Not bad, but start paring debt now before you get in real trouble.

    43%-49%: Financial difficulties are probably imminent unless you take immediate action.

    50% or more: Get professional help to aggressively reduce debt.

    Source: Gerri Detweiler, author of The Ultimate Credit Handbook"
    http://www.usnews.com/usnews/biztech/tools/modebtratio.htm

    "BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM DivisIoN OF BANKING SUPERVISION AND REGULATION Date: September 30, 2005:"
    "Another parameter that could be combined with LTV ratios to determine capital requirements might be a capacity measure such as a debt-to-income ratio." http://www.federalreserve.gov/BOARDDOCS/PRESS/BCREG/2005/20051006/Basel1Amemo.pdf

    "Fed to discuss max 50% debt-to-income ratio for borrowers, prohibition on 'stated-income' loans to subprime borrowers, and other new rules" (May 29th, 2007, 3:38 pm) http://mortgage.freedomblogging.com...ns-to-subprime-borrowers-and-other-new-rules/

    That is front ratio not back ratio.

    If you read the PDF files of the fed discussion you know that some wanted 42% but did not feel they had the laws to do it.

    My Democrat congressperson did not even respond to this suggestion, twice:

    "No creditor shall issue debt to any household which could exceed a 36% debt to income ratio, without the written knowledge and consent of both spouses or domestic partners in the household and each and every creditor the household already owes."

    {Not perfect, but at least a point for debate.}

    2004 Democratic Platform:

    "Average family debt is higher than ever. And as they lose the struggle to make ends meet, one out of every seven middle class families may be bankrupt by the end of the decade...over time, fiscal discipline saves families thousands of dollars on their mortgages and credit cards.”

    What absolute fracking stupidity, Federal Fiscal Dicipline, their balanced budget, has no legal effect whatsoever on what DTI (front or back ratio) a bank or creditor thinks is safe and sound banking practices!

    When the bank gives you a mortgage they figure your DTI, back ratio, but then you are on your own and they support getting screwed by their own kind, Credit Cards, which Bank of America started the practice, because you put money down, you fail due to preditory lending, Credit Cards, then the bank comes in a scoops it up and some States had to pass laws to make the banks cut the grass. Banks do not support my suggestion either as was evident with the under 21 credit card issue they were against. What about those over 21? Was Bernita the truck driver, when buying a Doctor's house with an ARM, over 21?

    I admit, Obama has done some good things on this, Consumer Financial Protection Bureau, all for it. But, is it enough? They need laws and regulations to say what is safe and sound banking practices to go with it, regulations on DTI (front and back ratio), otherwise all they will be doing is handing a Bernita a cute brochure that says watch out for preditory lenders, like she would know what one is. And I know, most Republicans are against any regulations. I either vote for a congregation working toward ECONOMIC PARITY, or one working to break up families and leave us at the mercy of preditors.

    Now due to a lack or regulations people who were responsible are suffering, because of the Real Estate "Principle of Regression" that demanded the poor build a bigger house than they wanted, and nobody is forcing the bank to cut the grass of the house next door that is abandoned and in foreclosure. The Black Man I argued with back when Reagan was president deserves to get fracked in the ass by this situation of Bernita's failure in his hood, and "Principle of Regression" and uncut grass next door, as I have zero sympathy for his uppity ass.

    *****

    With the calls for less deductions I hear from the same side, and calls for simple rules like that Buffett Rule, I would not want to knee-jerk into saying, "sounds great," when the two concepts combined by a mixed Congress might present a situation that is more detrimental to job creation. Different businesses have different deductions and liabilities a tiny brain like mine can only speculate about. What I would like to see is more analysis, maybe random samplings or data of returns from a range of people, and calculations of the effects. I am also not buying propaganda from any "Republican" site that has an agenda. A sound bite, and Flat Tax is fair or a Fair Tax is fair type sounding fair, just does not cut it.

    I want more data to make an informed decision.
     
  8. Meta777

    Meta777 Moderator Staff Member

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    I suppose that would be possible, though I believe it is unlikely.
    Either way, should someone get a tax break just because they buy something that they can't really afford?
    Besides, if the factory they bought was really worth what they paid, they should be able to pay off liabilities using the profits.
    Allowing someone to collect profits without them paying for it seems unfair in my opinion.

    That said, I do like the idea of a simple polynomial tax system.

    -Meta
     
  9. Meta777

    Meta777 Moderator Staff Member

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    What you have posted appear to be the average effective individual income tax rates for 2007.
    Also, your link seems to be broken, but here are tax rates through 2006,
    http://www.cbo.gov/publications/collections/tax/2009/all_tables.pdf

    Assuming income tax were the only tax (which it isn't),
    would it be wrong for me to say that if someone in the second quintile is paying a certain amount,
    that someone in the high quintile should not pay less than that?

    Its hard to know exactly what an individual makes and pays unless they release their tax returns.
    You can know what you're paying though.

    Do you file tax returns, if so, then what effective rate do you pay?
    If its higher than 14%, then there is a multimillionaire out there who pays a smaller percentage than you.

    Define class warfare.

    -Meta
     
  10. Iriemon

    Iriemon Well-Known Member Past Donor

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    Romney pays and effective rate of 14% and Buffet pays an effective rate of 17%.

    It is absolutely outrageous that billionaires and trust fund babies and Mitt Romney living off their wealth income are paying lower effective rates than people who earn their income
     
  11. Iriemon

    Iriemon Well-Known Member Past Donor

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    Sure, that's my point. What is the difference between a middle class family underwater because of their mortgage and the example you gave?
     
  12. DaveInFL

    DaveInFL Banned

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    Thanks for the new link. Thats the same table the tax policy center used but with 2007 included.

    The table shows that the more a person makes, the more they pay in taxes.

    There are individuals that pay less than the effective rate in the tables, and individuals that pay more. As long as people are honest, I don't have a problem with them paying what they owe.

    Personally, I think the tax system should be abandoned and a single flat rate applied. No deductions, credits, perks, favors. Whatever you make, whatever the source, XX percent goes to the govt. Thats fair and pretty foolproof.

    I pay taxes, my effective rate last years was a bit over 25%. One of my companies is a S-Corp, and its finances flow down to my personal tax return. I'm one of those business owners that pays taxes on "income" that isn't really income but assets of the business.

    For example, as a responsible employer I want to make sure I can meet payroll in January, and I want to have money in the bank on December 31. That money, even though it will be used to pay employees in January and never goes into my pocket, flows down to my 1040 and looks like income to the IRS and is taxed.

    If a millionaire pays less than I do, good for him. He isn't breaking the law or being unfair.

    The millionaire isnt the problem, its the tax system and the politicians.


    For political gain, instigating and inflaming conflict between 2 classes of people. Manipulating a group of people by creating and building upon a sense of envy and jealousy and unfairness within that group, so that the resulting anger is directed towards the politically desired result.

    Its generally based on negative emotions and arguements, with the aim of tearing down and denigrating the targeted group.

    Its political bribery. The politican promises to take from one group and give the takings to the "disenfranchised" group.
     
  13. fmw

    fmw New Member

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    Capital gains are taxed at lower rates for everyone, not just the wealthy. The fact that Warren Buffet has all of his income as capital gains makes him a huge exception to the rule. For most people, capital gains rates are a positive thing, just like they are for Warren Buffett. This argument is specious for that reason. It is political trash talk designed to instigate class warfare.

    The government keeps trying to find more money to spend and we need to get them to find ways to spend less. It couldn't be more simple.
     
  14. Iriemon

    Iriemon Well-Known Member Past Donor

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    You've admitted Buffet is an exception to the rule because is income comes from investments.

    Wouldn't Mitt be an exception too?

    Wouldn't in fact any trust fund baby or hedge fund manager who get their income in the form of investment income be exceptions?

    Why should we have unfair exceptions? How is that "class warfare"?

    Tax revenues are proportionately the lowest in 60 years and $800 billion lower than in 2000.

    We need to find ways to generate more revenues.

    It couldn't be more simple.
     
  15. Iriemon

    Iriemon Well-Known Member Past Donor

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    Exactly. Millionaires or billionaires paying a 10 percentage points less than you isn't a problem with the millionaire or billionaire, its a problem with the tax system.

    Which is exactly why we need to change the tax system to impose a minimum tax rate on millionaires and billionaires, as Obama proposed.
     
  16. DaveInFL

    DaveInFL Banned

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    Obama's bandaid isn't smart, its just politics. The solution is to trash the entire tax system and put in a very simple flat tax. No deductions or credits or special situations or social engineering.

    I could go with a 3 tier tax rate, say 5%, 10%, 15%. But no deductions or credits, and all income is treated the same.
     
  17. DaveInFL

    DaveInFL Banned

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    Obama's bandaid isn't smart, its just politics. The solution is to trash the entire tax system and put in a very simple flat tax. No deductions or credits or special situations or social engineering.

    I could go with a 3 tier tax rate, say 5%, 10%, 15%. But no deductions or credits, and all income is treated the same.
     
  18. Iriemon

    Iriemon Well-Known Member Past Donor

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    I wholly agree with simplying the tax code and cutting out the loopholes and special provisions that allow guys like Buffet and Romney to pay a lower rate of tax than many middle class families.

    A flat tax is also a great idea. If you are the 1%. Much less so for most everyone esle.

    A 15% top tax rate would be woefully insufficient and would even come close to the historical revenue average over the past several decades, much less cover expenditures even after massive cuts.
     
  19. fmw

    fmw New Member

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    The class warfare derives for some people wanting a free ride on the backs of other people mostly because of jealousy. Yes all of these people are exceptions. You have a plan for developing a national program with no exceptions? I'm not against doing away with captital gains tax rates. It will hurt businesses' ability to raise capital and grow the national wealth but that's OK with me.



    They have been borrowing a lot of money, haven't they.

    There you go. Suck even more wealth from the productive side of the economy so the government can waste it. That's a real sound argument to me.
     
  20. Iriemon

    Iriemon Well-Known Member Past Donor

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    No one is talking about free riders. We are talking about why folks like Mitt should get a special low privileged rate rate.

    That's what happens when you slash revenues and spend more.

    Worked great when Clinton was president. The economy kicked ass and a record deficit was changed to a surplus.
     

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