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A few words on the buffet rule
Ok, I heard this again on talk radio and have continued to mull about this in my head but when I can actually put something down on “paper” my thoughts are gone. So I’ll try to squeeze every ounce of whatever crawled through my brain in the last week or so and put it down.
The whole Buffet rule thing entered the political fray recently after we heard that his secretary paid higher taxes than him and Warren quickly jumped in to assert that it was not fair that he pay less of a percentage than her. I tend to think that any richy rich who makes waves telling us how it is unfair that he doesn’t pay enough taxes has a hidden agenda for saying it. That’s sorta like me walking around my neighborhood wringing my hands about how horrible it is that I can afford a house and so many others can’t. People would either accuse me of bragging or b.s.’ing or just being insane. But I guess we can leave to mind readers a diagnosis of why he said it. I have my own suspicions why but I’ll leave that for another post.
This is an instance where clear logical thinking can help us muddle through the assumptions common in political discourse. Is it fair that higher earners pay less of a percentage than lower earners? Good question. Let’s ask our sample politician below.
Sample Politician: I think it’s really unfair that Warren Buffet pays less of a percentage of taxes than his secretary.
Jeff: Why is that unfair?
Sample Politician: Are you nuts? Everybody knows the more you make the more you should pay in?
Jeff: Why?
Sample Politician: To give to the public welfare.
Jeff: You mean to the government.
Sample Politician: Ok, yeah, to the government.
Jeff: for what?
Sample Politician: Argh, you ask too many questions. But if you have to ask – it’s for the common good. Ya see, that money goes into a pot of money to help others – like fund the public fire department – and to help the needy like in welfare. You gotta problem with that?
Jeff: Well, lessee, if I have a million dollars and pay a higher percentage of my taxes to the government, do I get a larger share of government care? My house is not going to get better fire protection whether I have $1 million dollars or $2 million. I’m sure the cops are going to come to my house when things are stolen just as fast. So why am I being forced to pay more for the same service?
Sample Politician: ok, I get that. But your money is going into the public trough to help others who need it.
Jeff: Isn’t helping others charity?
Sample Politician: yeah, I guess.
Jeff: so what you want to do is force me to be charitable? What if I don’t want to be charitable and pay extra to help those in need? What if I want to buy high def tvs and whores?
Sample Politician: Well, if you aren’t forced to give that money up, you won’t give it to those in need.
Jeff: So my freedom to give to charity or not give ends where your determination of their need begins huh? I think we know the answer to that question. My next question is how you determined that the money us rich people give goes to the poor?
Sample Politician: well, there are social programs like welfare and food stamps. The money goes there.
Jeff: some money goes there, but does it all? You falsely believe it does because that’s what you’re supposed to believe. But look at all the government waste. Is it not possible that the government may take from us, in the auspices of charity, to give to projects not productive and actually wasteful, all the while patting themselves on the back as being so charitable and fooling dunces like you?
Sample Politician: That’ s not nice, but I get your point. You’re a jerk.
Jeff: Thanks. Let’s change the subject a bit. I’ve heard that having that much money and not paying more is unfair. Why?
Sample Politician: Because they have so much more than others; they should give more away.
Jeff: But that’s forced charity and I think you’ve already conceded that such charity is often wasted and pointless, and kinda conceded that people should not be forced to be charitable. Is having more money than others unfair?
Sample Politician: yes.
Jeff: Is every instance of having more money than others unfair? For instance, I make well over $10 an hour while my oldest son who is 21 makes less. Is that unfair? Different people where I work all make different wages. Is each difference an instance of unfairness?
Sample Politician: no, but you guys work for your wages and these millionaires often don’t.
Jeff: That’s awful presumptuous of you. You don’t know them personally and you can’t claim yourself an expert on how they make their money.
I wanted to stop this message before it gets too long, but I believe this type of conversation with anyone who in some way or another proposes a version of the he-has-more-money- and-therefore-should-pay-more-taxes mentality will reveal numerous flaws with the argument.
Ok, I heard this again on talk radio and have continued to mull about this in my head but when I can actually put something down on “paper” my thoughts are gone. So I’ll try to squeeze every ounce of whatever crawled through my brain in the last week or so and put it down.
The whole Buffet rule thing entered the political fray recently after we heard that his secretary paid higher taxes than him and Warren quickly jumped in to assert that it was not fair that he pay less of a percentage than her. I tend to think that any richy rich who makes waves telling us how it is unfair that he doesn’t pay enough taxes has a hidden agenda for saying it. That’s sorta like me walking around my neighborhood wringing my hands about how horrible it is that I can afford a house and so many others can’t. People would either accuse me of bragging or b.s.’ing or just being insane. But I guess we can leave to mind readers a diagnosis of why he said it. I have my own suspicions why but I’ll leave that for another post.
This is an instance where clear logical thinking can help us muddle through the assumptions common in political discourse. Is it fair that higher earners pay less of a percentage than lower earners? Good question. Let’s ask our sample politician below.
Sample Politician: I think it’s really unfair that Warren Buffet pays less of a percentage of taxes than his secretary.
Jeff: Why is that unfair?
Sample Politician: Are you nuts? Everybody knows the more you make the more you should pay in?
Jeff: Why?
Sample Politician: To give to the public welfare.
Jeff: You mean to the government.
Sample Politician: Ok, yeah, to the government.
Jeff: for what?
Sample Politician: Argh, you ask too many questions. But if you have to ask – it’s for the common good. Ya see, that money goes into a pot of money to help others – like fund the public fire department – and to help the needy like in welfare. You gotta problem with that?
Jeff: Well, lessee, if I have a million dollars and pay a higher percentage of my taxes to the government, do I get a larger share of government care? My house is not going to get better fire protection whether I have $1 million dollars or $2 million. I’m sure the cops are going to come to my house when things are stolen just as fast. So why am I being forced to pay more for the same service?
Sample Politician: ok, I get that. But your money is going into the public trough to help others who need it.
Jeff: Isn’t helping others charity?
Sample Politician: yeah, I guess.
Jeff: so what you want to do is force me to be charitable? What if I don’t want to be charitable and pay extra to help those in need? What if I want to buy high def tvs and whores?
Sample Politician: Well, if you aren’t forced to give that money up, you won’t give it to those in need.
Jeff: So my freedom to give to charity or not give ends where your determination of their need begins huh? I think we know the answer to that question. My next question is how you determined that the money us rich people give goes to the poor?
Sample Politician: well, there are social programs like welfare and food stamps. The money goes there.
Jeff: some money goes there, but does it all? You falsely believe it does because that’s what you’re supposed to believe. But look at all the government waste. Is it not possible that the government may take from us, in the auspices of charity, to give to projects not productive and actually wasteful, all the while patting themselves on the back as being so charitable and fooling dunces like you?
Sample Politician: That’ s not nice, but I get your point. You’re a jerk.
Jeff: Thanks. Let’s change the subject a bit. I’ve heard that having that much money and not paying more is unfair. Why?
Sample Politician: Because they have so much more than others; they should give more away.
Jeff: But that’s forced charity and I think you’ve already conceded that such charity is often wasted and pointless, and kinda conceded that people should not be forced to be charitable. Is having more money than others unfair?
Sample Politician: yes.
Jeff: Is every instance of having more money than others unfair? For instance, I make well over $10 an hour while my oldest son who is 21 makes less. Is that unfair? Different people where I work all make different wages. Is each difference an instance of unfairness?
Sample Politician: no, but you guys work for your wages and these millionaires often don’t.
Jeff: That’s awful presumptuous of you. You don’t know them personally and you can’t claim yourself an expert on how they make their money.
I wanted to stop this message before it gets too long, but I believe this type of conversation with anyone who in some way or another proposes a version of the he-has-more-money- and-therefore-should-pay-more-taxes mentality will reveal numerous flaws with the argument.
I have a question that no one can seem to answer for me, perhaps you've found something on this. If a person were to invest in a 401K/Roth IRA and end up with a $Million - would that be subject to the Buffet rule? If so, I think a lot of us have been duped for the past 30 years as we've socked away money for our retirement - 401K's are pre-tax and we will be subject to the tax rate at the time that we start to withdraw the money - this could be devastating to many people, regardless how much or how little we've accumulated over the years.
Roth IRAs are a tool whre you paid tax up front, then don't pay it later. Without a doubt, taxing them wouldn't be fair.