Wednesday, July 18, 2007

Is Bush Smarter Than Bill Gates or Warren Buffett

Please read the article from Warren Buffett. It is very telling.

Guest post by Mike

Republicans often accuse Progressives of not being successful, or of even hating the success of others and wanting to unfairly penalize them. They also accuse Progressives of not knowing what is best for the economy or society as a whole, they claim to know more than us how run the economy.

So I ask if we are talking economics or success in business or just plain being smart who would YOU rather listen to, some of the most brilliant and successful businessmen in the world like Bill Gates, Warren Buffet, George Soros, Ted Turner etc......who say they don't WANT or NEED tax free dividends or tax cuts and it would benefit the economy and society FAR MORE and be FAR MORE fair to give them to the poor and middle class; or would you rather listen to GWB and Dick Cheney a couple of ne'er-do-wells, who failed at most everything they have ever done and have been dead wrong about essentially EVERYTHING.

According to GWB, its fair for a billionaire to pay less than 1/10 the percentage of his income in taxes as a working class person struggling to raise a family...............Oh, one more thing the economy has consistently done MUCH better under Democratic administrations in almost every measurable metric, so it would seem it is the Democrats who REALLY know what is best.

"The taxes I pay to the federal government are roughly the same proportion of my income about 30% as that paid by the receptionist in our office. My case is not atypical, my earnings,like those of many rich people, are a mix of capital gains and ordinary income nor is it affected by tax shelters (I've never used any).

As it works out, I pay a somewhat higher rate for my combination of salary, investment and capital gain income than our receptionist does. But she pays a far higher portion of her income in payroll taxes than I do. She's not complaining: Both of us know we were lucky to be born in America.

Now the Senate says that dividends should be tax free to recipients. Suppose this measure goes through and the directors of Berkshire Hathaway (which doesn't now pay a dividend) therefore decide to pay $1 billion in dividends next year. Owning 31 percent of Berkshire, I would receive $310 million in additional income, owe not another dime in federal tax, and see my tax rate plunge to 3 percent. And our receptionist? She'd still be paying about 30%,which means she would be contributing about 10 times the proportion of her income that I would to such government pursuits as fighting terrorism, waging wars and supporting the elderly. Let me repeat the point: Her overall federal tax rate would be 10 times what my rate would be.

When I was young, President Kennedy asked us to "pay any price, bear any burden" for our country. Against that challenge, the 3 percent overall federal tax rate I would pay if a Berkshire dividend were to be tax free seems a bit light. Administration officials say that the $310 million suddenly added to my wallet would stimulate the economy because I would invest it and thereby create jobs. But they conveniently forget that if Berkshire kept the money, it would invest that same amount, creating jobs as well.

The Senate's plan invites corporations indeed,virtually commands them to contort their behavior in a major way. Overall, it's hard to conceive of anything sillier than the schedule the Senate has laid out.

Indeed, the first President Bush had a name for such activities: "voodoo economics." The manipulation of enactment and sunset dates of tax changes is Enron-style accounting, and a Congress that has recently demanded honest corporate numbers should now look hard at its own practices. Proponents of cutting tax rates on dividends argue that the move will stimulate the economy.

A large amount of stimulus,of course, should already be on the way from the huge and growing deficit the government is now running. I have no strong views on whether more action on this front is warranted. But if it is, don't cut the taxes of people with huge portfolios of stocks held directly. (Small investors owning stock held through 401(k)s are already tax favored.)

Instead, give reductions to those who both need and will spend the money gained. Enact a Social Security tax "holiday" or give a flat sum rebate to people with low incomes. Putting $1,000 in the pockets of 310,000 families with urgent needs is going to provide far more stimulus to the economy than putting the same $310 million in my pockets. When you listen to tax cut rhetoric, remember that giving one class of tax payer a "break" requires now or down the line that an equivalent burden be imposed on other parties.

In other words, if I get a break, someone else pays. Government can't deliver a free lunch to the country as a whole. It can, however, determine who pays for lunch. And last week the Senate handed the bill to the wrong party. Supporters of making dividends tax free like to paint critics as promoters of class warfare. The fact is, however, that their proposal promotes class welfare. For my class."

Warren Buffett