Taxes for the rich will be higher - (Obama and Buffet)

Written by Tim T.

Investment news, USA. Warren Buffett, one of the richest people on the planet (the third place in the world by Forbes rated for 2011 with a fortune of $ 50 billion) and the most generous philanthropist in history ($ 37 billion in charitable donations in June 2010) again stirred up the audience with his article in The New York Times.

Why Buffett decided to go against the billionaires and what to expect investors of the U.S.?

The largest investor of our time have long criticized the tax system in the United States, and this time as an argument gives data on the share of income that he and his staff at Berkshire Hathaway pay in taxes. Thus, in 2010 he paid $ 6.9 million income tax, which accounted for 17.4% of the amount received for the period of income. At the same time, the tax payments of its employees made an average of 36%:
• Buffett’s proposal. Such obvious injustice investor proposes to solve by not lowering taxes for the poor, and by raising taxes for the rich. According to Buffett, the White House should stop to take care of American billionaires and multimillionaires, comparing them with endangered species, and to take civil responsibility for the fate of the country. To do this, he said, to raise tax rates for those with income over $ 1 million a year, and such households in the U.S. there are nearly 237 000. At the same time, taxable income must be present items such as dividends and capital gains. Those who earn $ 10 million per year or more should provide increased rates.

80-year-old billionaire has not forgotten to remind the authorities that his experience with investors already 60 years and during that time there have been times when taxes were significantly higher than that, however, did not prevent him and other investors to put money in economy. After all, fears of capital outflow and reduce investment are the main counterargument when discussing raising taxes authorities.

What can help the U.S. budget and union President Obama and Buffett?

Buffett's initiative was supported by Democrat Barack Obama. On one of his speeches, the American president stated that the current tax system is unreasonable in the present circumstances. If you increase taxes for the rich, it will help cope with the budget deficit and allow more effective management of public debts, which are now a critical mass:
• How to reform the tax system, the United States? Even during the debates on raising the limit of public debt proposed to strengthen the Democratic Party Taxation earning over $ 250 thousand a year, but Republicans have not missed this proposal in the budget package. According to Bloomberg, Buffett's call to raise taxes with a new strip of vulnerability in the $ 1 million is a sign of solidarity with the Democrats, who obviously need support in the struggle against the powerful Republican opponents;
• whether to leave the taxes for the rich at the same level? However, the problem with taxes for the rich is not as simple as it seems. What is important is not so much the tax rate, how many sources that are subject to these taxes. Knowing that Buffett's extraordinary sense of humor, which often allows him to make fun of themselves, may be questioned in some of his words and so they should always check with the economic point of view, Digging deeper. One of the jokes of the investor says: "I'm actually wearing expensive suits, just to me they look cheap";
• counts Wall Street Journal. Here and there turns out the same thing: he says he paid taxes on 17.4% of the amount of their income - it's obviously "cheap suit". Having considered his "wardrobe" in more detail, it becomes clear that they are there, really, just expensive. This is because the bulk of the taxes Buffett pays out dividends, as well as from the profits from sales of securities. And these revenues, as its transition to a personal account visionary investor, subject to a variety of corporate repeatedly taxes, and already there with them again removed 15% of the income tax already. Thus, by counting the Wall Street Journal, as a result of Buffett lost 45% of their income. And his staff at this time to pay taxes only on their salaries. Now it is clear that in fact the billionaires are paying more than the rest, as they have repeatedly taxed sources of income;
• U.S. middle class and contributions to the budget. In light of this situation on a national scale, too, looks different. With regard to the same holding company Berkshire Hathaway employees should note that, by paying to the state, according to Buffett, 33-41% of their income, they are not so middle class that could be ranked as poor rather than the rich. All of these people, with huge salaries, with himself and the rest of Buffett millionaires, billionaires provide the largest portion of total revenues in the U.S. income tax;
• Data Revenue Service United States. Thus, according to the U.S. Internal Revenue Service (IRS), the richest 1% of U.S. taxpayers in 2009, introduced into the treasury of the country 33% of the total federal income tax, which, in general, it seems logical and fair, as the amount of their income impressive. But in fact the amount of their income is only 20% of the total, that is, the share of taxes in more than one and a half times the share of income received by them. Justice was in fact misleading, and that further confirm the figures: The next 4% layer of rich Americans collected 20% of the income tax, but earned only 13% of total revenues. Again, more than half as much advantage in favor of taxes;
• The role of taxpayers to the U.S. budget. In sum, the above-mentioned 5% of taxpayers provide 53% of collected income tax - more than all the remaining 95%. Here are the 5% and set the bar at $ 200 thousand annual income and that of Democrats want to tax more. Simplicity - the key to success: it is much easier to increase pressure for 5% of the population, which without it works effectively and develop the economy, than contribute to the growth of income (that is the base for future growth of taxes) of the remaining 95%.

Comparison with the lower tax revenues in general look sad. Thus, low-income, 35% of taxpayers brought into the coffers of 1% of all income surtax, earning the same time, 4% of total revenues. Thus, the odds are in favor of income is four times that in comparison with the top five percent of aggravated tax "fairness" is not in the direction of the rich.

Circuit collected taxes: who pays and who gets it?

If you look where they are going the taxes collected, it appears that they are returning to some extent, to those who pay them less often. Citizens who receive less total income and pay, respectively, smaller amounts of tax revenue received back the money in the form of various exemptions and deductions. Thus, half of all taxpayers pay almost nothing in the federal treasury, and some of them receive income in excess of that due to the upper half of the wealthiest taxpayers.

Several million Americans who tops the list of wealthiest taxpayers, in addition to its direct profits to the state have also indirect benefits for the country:
- They are qualified to perform the work;
- Create new jobs;
- Make important discoveries, and much more, thus developing the national economy;
- Is the heart and brain of the nation, and the importance of these bodies for the economy as an organism, it is difficult to overestimate. And if a country wants stability and prosperity for many years, then this 5% of taxpayers have to create all conditions for work, including tax, and behind them will improve their lives and the remaining 95%.

Therefore, when Congress again face the question of who is to increase the tax burden, it is worth remembering that the "fair" at first sight path is not always correct.

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