June 27, 2010 by D Stack
A sentiment I’ve frequently heard expressed of late is that it is time for America to tighten its belt. We give too much away to people who don’t deserve what they get. We can’t raise taxes any further. Raising taxes on the wealthy and corporations will cost Americans jobs. One of my senators, Republican Scott Brown said as much in his Facebook page this weekend.
I find the idea that the wealthy and corporations are being taxed too high very curious. In a 2007 fundraiser for Hillary Clinton, the third wealthiest person in the word at the time, Warren Buffet, indicated that as a percentage of his income, he paid less in taxes than did his secretary.
Speaking at a $4,600-a-seat fundraiser in New York for Senator Hillary Clinton, Mr Buffett, who is worth an estimated $52 billion (£26 billion), said: “The 400 of us [here] pay a lower part of our income in taxes than our receptionists do, or our cleaning ladies, for that matter. If you’re in the luckiest 1 per cent of humanity, you owe it to the rest of humanity to think about the other 99 per cent.”
Mr Buffett said that he was taxed at 17.7 per cent on the $46 million he made last year, without trying to avoid paying higher taxes, while his secretary, who earned $60,000, was taxed at 30 per cent. Mr Buffett told his audience, which included John Mack, the chairman of Morgan Stanley, and Alan Patricof, the founder of the US branch of Apax Partners, that US government policy had accentuated a disparity of wealth that hurt the economy by stifling opportunity and motivation.
So fair enough there are tough choices to be made, But is asking the wealthiest among us to pay at least the same percentage in taxes as the middle class that horrible an idea? I’m not even referring to a progressive tax which I support – rather I am referring to ending the regressive tax scheme whereby he very wealthiest are able to manipulate their income so they pay a smaller percentage of their income in taxes than do the middle class.
Of course it is not just wealthy individuals who manipulate the tax code. The odds are pretty high that you paid more in income taxes than did General Electric or ExxonMobil in the year 2009. I’m not talking as a percentage of income, I’m referring to actual dollars. Did you pay more than zero dollars in taxes for the year 2009, due this April 15 past a few months ago? If so you paid more than General Electric or ExxonMobil did combined for the tax year 2009. This is not an uncommon practice – many companies manipulate their income such that their tax burden in the United States is zero. Nothing. Zilch. Nada. Probably less than those “illegals” who get blamed for every problem in the United States. (Sources: New York Times –
Study Tallies Corporations Not Paying Income Tax, August 13, 2008; Forbes Magazine – What America’s Biggest Corporations Pay in Taxes How can it be that you pay more to the IRS than General Electric?
So are we really dealing with a scenario in which corporations and the very wealthy are taxed too much? Should not this be a starting point for reform?