Buffett calls for rich to stop class war

Written By: - Date published: 2:04 pm, August 16th, 2011 - 53 comments
Categories: capital gains, class war, tax - Tags:

Today Warren Buffett, the third wealthiest man in the world, has come out demanding his mega-rich friends play a part in the American economic recovery. He is recognised as one of the smartest and most successful investors alive, his words should not be dismissed lightly, especially as we approach our own election and grapple with the issue of tax reform.
Here are some highlights:
While the poor and middle class fight for us in Afghanistan, and while most Americans struggle to make ends meet, we mega-rich continue to get our extraordinary tax breaks.

Last year my federal tax bill — the income tax I paid, as well as payroll taxes paid by me and on my behalf — was $6,938,744. That sounds like a lot of money. But what I paid was only 17.4 percent of my taxable income — and that’s actually a lower percentage than was paid by any of the other 20 people in our office. Their tax burdens ranged from 33 percent to 41 percent and averaged 36 percent.

Back in the 1980s and 1990s, tax rates for the rich were far higher, and my percentage rate was in the middle of the pack. According to a theory I sometimes hear, I should have thrown a fit and refused to invest because of the elevated tax rates on capital gains and dividends.

I didn’t refuse, nor did others. I have worked with investors for 60 years and I have yet to see anyone — not even when capital gains rates were 39.9 percent in 1976-77 — shy away from a sensible investment because of the tax rate on the potential gain. People invest to make money, and potential taxes have never scared them off.

But for those making more than $1 million — there were 236,883 such households in 2009 — I would raise rates immediately on taxable income in excess of $1 million, including, of course, dividends and capital gains. And for those who make $10 million or more — there were 8,274 in 2009 — I would suggest an additional increase in rate.”

Rijab

53 comments on “Buffett calls for rich to stop class war”

  1. I’m looking forward to the article where he self-expropriates and gives it all back to the workers he has lived off all his life.

  2. No actually what he is saying is the following: “If we don’t give the plebs a few coins from our hideous decadent wealth their are going to revolt and they are going to make the killing of the wealthy during the French revolution look like a walk in the park and while during the French revolution you could still escape to England or the “New World” now there is no place to run!”

    • aerobubble 2.1

      Wealthy is supposed to be hard to make, tax cuts are for the feckless capitalists and
      all Buffet is saying is that Republicians are crybaby wimps. “Is Obama going to
      take away your tax cut, oh little baby don’t cry, it will make you a better man”.

    • Drakula 2.2

      Well let’s bring it on !!!!

      • Colonial Viper 2.2.1

        Yeah I’m getting impatient waiting for Société Générale or Bank of America to fail. Not long now, the egg timer is about done. Then its going to be a ride.

  3. I think that we should support Buffett in his proposal to increase taxation for the wealthy.  His comments are perfectly valid and it is good to see that even the wealthy realise that things are out of control.
     

  4. queenstfarmer 4

    Fair points, though I wonder if Mr Buffet will lead by example.

    It is notable that he is only calling for this at the end of his career, after amassing his fortune, and after pledging to give most of it away (which will decrease his taxable income to near zero anyway). I wonder if Buffet was calling for higher taxes at the time he made his first millions?

  5. randal 5

    wealth is not hard to make if you know how.
    Warren Buffet made his because his father was a stockbroker in Kansas and dealt in the wheat futures market.
    Warren Buffet learned it all from him.
    When his first wife left and he needed some pin money he made a few million in three mnths!!!!
    However Bufet says if he was put down in Afghanistan without a dollar he would be done for in a day so there yo go.
    Anyway the world has changed. rich people need more money because they know how much lyalty and kiss ass they can buy and thats al they care about. Its a Macworld now.
    all notions of doing public good have gone forever.

    • mik e 5.1

      Berlusconi seems to be listening. He is closing loopholes on tax dodgers and raising tax on the wealthy.Some one has figured out what is needed

      • aerobubble 5.1.1

        It is the rich who work hard and know how to put money to productive use and make it grow… …this is backwards, people who take risks with money and are rewarded by the free market by growth become rich (they don’t start rich), then they spend or throw caution to the wind to get even richer. But wealth is “concentrated in the hands of those who can’t or won’t spend it.” capitalism comes to a grinding halt, the churn in the economy ends, the poorest are denied the aspiration of getting rich because the wealthy do not believe they should ever loss money. Now its
        entirely possible for everyone to eat, get heath care, a roof over their heads when government regulates the market to stop hoarding of money and insure everyone has economic power. We in one of the transition, when the powerful are wrong, when the man in a street is a jerk who thinks how they made money yesterday will work tomorrow, or worse know they really didn’t make a heap of money yet told and lived like they did and can’t deal with the psychological reality that they really are a loser. Key has to make a personal choice, either to be a winner or one of the biggest losers, a choice that if he dithers the outcome to NZ will be worse quite unnecessarily. Unfortuately poor education, easy career, have left a hollow prima donna who wins by being nice and amenable, but hard nosed when it counts tackling the wrong problem (the poor). We need leaders who don’t know everything and ask, not jerks like Key or the petty rich, we need people with backbone to talk to the rich about their prolific negative behavior.

  6. Craig Glen Eden 6

    When a truly rich guy comes out with this it really makes you realize how gutless and self serving John the con Key is? Asset sales anyone!

    • queenstfarmer 6.1

      Partial asset sales, yes

      • tc 6.1.1

        Nope, partial allows minorities to dictate direction under NZ law (profits over network re-investment as one example) they’re better off in public ownership especially when we’ve a gov’t that delights in punching large holes in it’s revenue base.
        All this and the nats have no idea how to ensure mum and dad end up owning them beacuse they don’t care having already done the deals with their backers. Little surprise they’re more cashed up than ever.

        • queenstfarmer 6.1.1.1

          Then according to your theory (which is incorrect), it would be better for the Govt to sell majority stakes, because then the Govt would be a minority shareholder and be able to “dictate direction”.

          • McFlock 6.1.1.1.1

            Um, no – that would be arguing that it’s better to put your ‘nads AND dick on an anvil, rather than just your dick. My interpretation of tc’s comment is that no part of your anatomy should be placed on the anvil in the first place.

            • Colonial Viper 6.1.1.1.1.1

              Although out of all the reasons I’ve heard National give for selling this shit off, yours is by far the best. Put all his kit on the anvil and see how qstf likes it when the auction hammer comes down!!! 🙂

            • queenstfarmer 6.1.1.1.1.2

              Yes I know that’s his position (no partial asset sales at all – enough already about nads!). I’m pointing out the silliness (not to mention outright incorrectness) of the suggestion that minority shareholders “dictate direction” – a view repeated many times here, in ignorance of the law and commercial practice.

              Think about it: shareholder A = 51%; shareholder B = 49%. According to this view, Shareholder B has control. But shareholder A could simply gift 2% of shares to B, and in doing so A would now be the minority with control of the company.

              • McFlock

                qsf – what is a “fraud on the minority”?
                It’s  been mentioned here before, but I’m not a companies lawyer. Mickeysavage seems to believe that this might stop a company wasting money (dare I say “pissing it away”, to continue the analogy) on things like the community welfare if the govt still maintains 51% ownership. MS is normally pretty reasonable. So what’s your take on it?

                • queenstfarmer

                  From my involvement with in several sometimes fractious start-ups I have some experience in this area.

                  The Companies Act does not have “fraud on minority”. It has shareholder prejudice, which is similar but different. That includes things like paying dividends to some but not all shareholders, issuing new shares for under-value, etc. It does not allow the minority to “control the board” as some seem to think (that’s simply ludicrous – if that were the case, you could gain strength by reducing your shareholding) – it simply means you cannot unfairly target some shareholders over others. It’s mainly about process. As long as the Board acts procedurally fairly (lets everyone have their say, provides information requested etc) and can provide sound reasons for its actions, that is all it needs to do.

                  Directors personally have a range of duties, such as acting for proper purposes and not engaging in reckless trading, so a shareholder could complain that a director has breached their duties. That means suing the directors, not the company.

                  There are also minority buy-out rights that can allow an upset minority to force the company to buy back their shares for fair value, and then everyone goes their own separate ways.

                  • McFlock

                    S131: Duty of directors to act in good faith and in best interests of company

                    (1) Subject to this section, a director of a company, when exercising powers or performing duties, must act in good faith and in what the director believes to be the best interests of the company.
                    (2) A director of a company that is a wholly-owned subsidiary may, when exercising powers or performing duties as a director, if expressly permitted to do so by the constitution of the company, act in a manner which he or she believes is in the best interests of that company’s holding company even though it may not be in the best interests of the company.
                    (3) A director of a company that is a subsidiary (but not a wholly-owned subsidiary) may, when exercising powers or performing duties as a director, if expressly permitted to do so by the constitution of the company and with the prior agreement of the shareholders (other than its holding company), act in a manner which he or she believes is in the best interests of that company’s holding company even though it may not be in the best interests of the company.

                    So if the directors chose to build trains in NZ and save jobs at the expense of company funds, they would be breaking their obligations to the company unless the minority shareholders agreed? And the shareholders could sue their ass?

                    • queenstfarmer

                      Shareholders can sue directors at any time. It’s a just a question of whether they’ll win. You could buy 1 share in The Warehouse for $1.50 and try to sue Stephen Tindall if you wanted.

                      But it’s got nothing to do with what the shareholders think, nor is it an accounting issue. Directors are charged with management of the company (see section 128). The question is what “the director believes to be the best interests of the company”. So as long as the directors are subjectively confident they are acting in the best interests of the company (and of course the majority shareholder usually gets to appoint the most directors) then no claim is founded.

                    • McFlock

                      But the point is that if the sole shareholder [govt] stated that they wanted the directors to let the company take a hit for the wider economy, under a wholly owned subsidiary model they can issue such a direction. Under a majority ownership model this is not the case. You’re argument seems to be that if the government gets the directors to make the right winks and fibs, they’ll *probably* get away with it.
                       
                       

      • mik e 6.1.2

        At their value to earnings ratio not Half price or a third of the price for the power companies .Qstf. the power companies are cash cows returning 17.6% returns govt borrowing costs 5.5%.If you can’t figure out how dumb that is I can really believe you love sucking up to Keys failed policies

  7. Tiger Mountain 7

    Buffet is enunciating what keeps capitalists awake nights, their parasitic party is almost over. Pull your heads in a little bit guys! he is saying. But the basic marxist precepts remain, capital must expand aggressively, and ultimately monopolistically, driven by the tendency for the rate of profit to fall. Finance capital ever more a house of cards as the months tick by.

    Maybe not this year or the next, authoritarianism and widespread ideolgical malaise (individualism) may prolong things a little more but the planets resources and people can not take much more hammering.

  8. Rijab 8

    Obama’s response to Buffett’s suggestion, for those interested:

    http://www.businessinsider.com/obama-warren-buffett-is-right-on-taxes-2011-8

  9. Tom Gould 9

    Warren Buffett has been saying this for some time now, certainly before the GFC. This time, maybe because of the recent antics of the tea party whack-jobs, the MSM in the U.S. has finally heard him, or figured it might be worth reporting. Winds of change, perhaps?

  10. Colonial Viper 10

    Buffett plays the games in the markets as hard and as trickily as the next guy. He’s no saint.

    However, I don’t believe that he should donate to the IRS, as some of his detractors have been saying.

    Instead I think he should set aside an independent US$250M trust fund for those congressional candidates who refuse to take corporate campaign funds and who will push for progressive tax reform in the US.

    Edited: the US can close its entire budget deficit and more by going back to 1980 tax levels. Easy as pie.

    • QoT 10.1

      That idea is total genius.

      • Colonial Viper 10.1.1

        🙂

        And it should be a trust fund which supports both Republican and Democratic candidates. It might even extend support to promising independent candidates in order to break the two party stranglehold in the US.

    • queenstfarmer 10.2

      the US can close its entire budget deficit and more by going back to 1980 tax levels. Easy as pie.

      It’s as easy as people voting for politicians who will raise taxes. Until such time, it’s not going to be that easy.

      • Colonial Viper 10.2.1

        I’m hearing ya.

      • mik e 10.2.2

        Yeah in the 1980s the rich paid a larger share of the tax burden good idea Qstf why not tell your boss Key or Brash.Since then both private and govt borrowing has exponentially blown out bar a few short years 1994 till 2000. being the worlds fore most super power is the main reason the US has had massive budget deficits. the other reason is tax cuts for the rich by Reagon & the Bushes.Look at this weeks time magazine debt goes up when republicans are in power not unlike NZ under National.Berlusconi has figured it out its a wonder no other right whinger has yet.

        • queenstfarmer 10.2.2.1

          No dispute about that (except the “your boss Key or Brash” bit – you seem a bit obsessed and perhaps envious of my independence?), though I would add spending blowouts, which have contributed more to the debt than tax cuts have. Eventually all countries need to live within their means, and that means either cutting spending, or increasing taxes.

          • Colonial Viper 10.2.2.1.1

            The other thing to do is for governments to not borrow money at interest, but to print it free of interest and free of debt. The supply of money can then be directly tightened or loosened as economic circumstances and the economic cycle requires.

          • mik e 10.2.2.1.2

            Your dependence shines through Qstf like your masters you have forgotten how to grow an economy. the other solution!

        • Deadly_NZ 10.2.2.2

          Well lets hope that shonkey has lost a bundle on the bank of America taking a hammering his 55mil could be halved. Now there’s a really good excuse for a party!!

    • RedLogix 10.3

      It’s easy to forget that when Bill Clinton left office the US Federal govt was in a healthy surplus. Essentially it was GW Bush’s tax cuts and military spending that tipped the US into this crisis.

      We forget also that the US is still the world’s largest economy. It is not a poor or fundamentally unproductive country. Just three actions would eliminate this debt crisis remarkably quickly:

      1. Restore taxes to 1980 levels.

      2. Reduce their grossly bloated military exependiture.

      3. Reform their insanely wasteful and expensive health system.

      All three items are plain and obvious, yet politically none can happen.

      • Colonial Viper 10.3.1

        The US has lost perhaps four to five million manufacturing jobs since 2000.

        Yes, the US could still be extraordinarily strong but the jobs and know-how that their elites chose to export to China etc. are not returning.

        I’ve posted this before but its worth looking at. A talk to uni students given by a former head of the World Bank.

    • millsy 10.4

      Closing down the several hundred-odd military bases in Europe, Korea and Japan would help too.

  11. randal 11

    it that aint easy.
    there are calls that only people can make what ever the programme says.
    just as well.
    or we would be at the mercy of the machines.
    maybe we are already are?
    nah just kidding kiddies.
    but phil will win.

  12. Afewknowthetruth 12

    Here we go again. A whole load of commentary and comments which completely ignore the fundamentals.

    1. America, and Americans in general, got rich because easily extractable coal and oil suppported industrial growth, which supported everything else, including industrialised agriculture. Both oil and coal are past peak in the US.

    2. America remained rich because it was not devastated by wars, unlike most other developed nations.

    3. Americans got even richer because they were able to manipulate world markets and currencies using the dominance that resulted from the Second World War -Hollywood, the IMF and all that.

    4. Americans got rich because they trashed their environment somewhat faster than most others.

    All the games that made America superfically rich are over or rapidly coming to an end.

    In reality it was all just an impossible dream, a crass superficiality which is now turning into a nightmare.

    ‘play a part in the American economic recovery.’

    There will be no recovery of the economy, of course, only some kind of recovery from the economy.

    • neoleftie 12.1

      interestingly America has to ‘close the gaps’ between the developed and developing countries,in a global sense, to allow for both security and more importantly to expand the market.
      The western world needs fresh investment, growth and market opportunities or the bubble will burst…globalisation is simply exporting security and freeing up markets so the ruling elites can generate more wealth.
      Long live pax america.

      • Colonial Viper 12.1.1

        Not sure how to break this to you but you are more than 10 years late for delivering advice and the window has closed. 2005/2006 was probably the last chance for the US.

        interestingly America has to ‘close the gaps’ between the developed and developing countries,in a global sense, to allow for both security and more importantly to expand the market.

        America does not actually have to do any of the above. It is not up to America where markets expand (the growing middle classes in India and China). The developing countries are closing their own gaps as the US falls behind, and year by year, America is going to increasingly struggle to pay for its war machine.

        Some estimates say that China’s economy will be larger than the US before 2020.

        The western world needs fresh investment, growth and market opportunities or the bubble will burst…

        No you got it all wrong! In a capitalist system investment goes where the best growth and cost prospects are. That’s in Asia. The market opportunities are in Asia and the US is not positioned to benefit from them. NB most US headquartered multinationals build their goods outside of the US now. Even if all these Asian markets were to grow, very little of the benefit and the employment will actually occur in the US.

        Bubbles long burst. Watch the USD self destruct over the next few years.

        globalisation is simply exporting security and freeing up markets so the ruling elites can generate more wealth.

        You can’t export security. You can export weapons, and you can set up friendly regimes, but that is not the same thing.

        Globalisation was all about breaking down the power of sovereign states and advantaging capital over labour. “Freeing up markets” was not the objective, it was merely a means.

        • Bill 12.1.1.1

          Yup. There ain’t no ‘western world’ and ‘other world’ as far as global finance (ie global power) is concerned.

          Got to keep the kiddies believeing they’re on the ‘winning side’ for as long as poss. though, eh?

      • Afewknowthetruth 12.1.2

        neoleftie.

        May I suggest that you would do yourself a favour if you stopped parroting capitalist mantra. Growth is not the answer: growth is the problem. Captialists demand growth to prop up their fractional reserve monetary system. Growth is not possible in an energy-depleted, environmentally-degraded world which is past peak oil.

        I suppose if I were to say it every day for the next ‘x’ years people would eventually get it. I’m not sure that I have the time and energy to do that.

        The bubble is bursting and there is nothing that can be done to prevent it.

        The sensible thing to do would be to prepare for the inevitable, i.e. the collapse of western civilisation, the collapse of industrialised agriculture, and the food shortages that will accompany the collapse. Most people seem quite incapable of doing that, for some reason. Hence , most people will get ‘wiped out’ when the ‘tsunami’ eventually hits.

        .

  13. Jenny 13

    From my inbox;

    An email from Vaughn Gunson, tax justice campaigner, reporting on the ongoing political campaign to regain tax justice in this country.

    Hi Tax Justice supporters,

    On our website is a photo essay of the presentation of the Tax Justice petition to Parliament today. Go to http://www.nogstonfood.org/2011/08/16/598/

    There’s a good story on the NZ Herald website, go to http://www.nzherald.co.nz/politics/news/article.cfm?c_id=280&objectid=10745488

    We’ve had extensive radio coverage all day, with more interviews upcoming this afternoon.

    The petition hand-over may feature on either TV3 or TV1 News (or both) tonight.

    It’s been a good positive conclusion to this phase of the Tax Justice campaign, built around the petition and the hard work of volunteers around the country.

    There’s more work to do to build a broader Tax Justice coalition that can put pressure on the politicians to act in the interests of grassroots Kiwis.

    Regards,

    Vaughan Gunson
    Tax Justice campaign coordinator
    (09)433 8897
    021-0415 082

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