Some of the Wealthy Asking to Be Taxed

[dcarrigg]

I've noticed quite a few articles on this lately. It seems like the bullhorn might be starting to push for more taxes at the very top to help balance out Western deficits. At any event, I don't recall a trend like this ever happening, so it's interesting to keep an eye on:

August 23: Globe and Mail

Some of France’s richest people, including the billionaire heiress of L’Oreal SA and the head of oil major Total SA, urged the government to tax them more to help solve the country’s financial problems.

August 29: Guardian

Even an Italian got in the action, with the boss of Ferrari saying that as he was rich, it was only "right" that he stump up more cash.

Now, as both France and Spain consider introducing a wealth tax, a group of 50 rich Germans have joined the "tax me harder" movement by renewing their open call to Angela Merkel to "stop the gap between rich and poor getting even bigger".

September 9: New York Times

After the American billionaire investor Warren Buffett urged Congress last month to raise taxes on millionaires, the call echoed across Europe. Sixteen of France’s wealthiest individuals urged the government to raise their taxes. The Italian Formula One magnate Luca di Montezemolo publicly backed Mr. Buffett’s idea “for reasons of fairness and solidarity.” About 50 of Germany’s richest people have been campaigning for a higher top tax rate since 2009.

[aaron]

Re: Some of the Wealthy Asking to Be Taxed

I suspect some wealthy people have a conscience (most do, I am sure). But, being human they do not want to pay more than their neighbor in taxes. It is a competition/psychological thing.

I think Obama and the gang push this the wrong way. They talk about shared sacrifice when they should be talking about shared pain.

The economy and country are in the shitter. Shared pain is a better metaphor. Because, the rich guy could always say, "Hey, I paid a million dollars in tax last year. That is my fair share/sacrifice", but there is no pain. Giving up one of the two corporate jets is not pain either.

[dcarrigg]

Re: Some of the Wealthy Asking to Be Taxed

I suspect some wealthy people have a conscience (most do, I am sure). But, being human they do not want to pay more than their neighbor in taxes. It is a competition/psychological thing.

You are right there. Everyone wants a 'level playing field.' It's not fair if you 'volunteer' more tax dollars than your competitors. It must be even or altruism is a competitive disadvantage.

[Milton Kuo]

Re: Some of the Wealthy Asking to Be Taxed

It seems some of the rich are stepping up to do their parts to help out their respective countries. Now it's time for the politicians to step up and do their parts to help their countries: leave office.

[lektrode]

Re: Some of the Wealthy Asking to Be Taxed

It seems some of the rich are stepping up to do their parts to help out their respective countries. Now it's time for the politicians to step up and do their parts to help their countries: leave office.

+1

[Slimprofits]

Re: Some of the Wealthy Asking to Be Taxed

http://in.reuters.com/article/2011/0...59403320110918

By Alister Bull
WASHINGTON | Sun Sep 18, 2011 8:20am IST

Such a proposal, among suggestions to a congressional supercommittee expected to seek up to $3 trillion in deficit savings over 10 years, would appeal to his Democratic base ahead of the 2012 election but may not raise much in revenues.

White House Communications Director Dan Pfeiffer said in a tweet on Saturday the tax would act as "a kind of AMT" (Alternative Minimum Tax) aimed at ensuring millionaires pay a minimum rate of tax that at least matches that of middle-class families.

The "Buffett Tax" refers to billionaire U.S. investor Warren Buffett, who wrote earlier this year that rich people like him often pay less in tax than those who work for them due to loopholes in the tax code, and can afford to pay more.

Obama will lay out his recommendations in White House Rose Garden remarks at 10.30 a.m. (1430 GMT) on Monday and is expected to urge steps to raise tax revenue as well as cuts in government spending.

[Scot]

Re: Some of the Wealthy Asking to Be Taxed

These rich that are calling for higher taxes only desire to keep others from accumulating capital that might be directed to the creation of new companies that one day might compete with their own. They want to stay in power. A large tax on high income earners would simply protect the current wealthy from the up-and-comers.

Now a genuine wealth tax would require that all property be assessed, including public property (citizens considered owners of their city's or state parks, roads, etc). This would be much more desirable than a tax on income. It would put the burden on those that are little burdened, their wealth serving them, while allowing others to build capital for the creation of new wealth, which would provide in the future a greater source of tax revenue.

But it wont happen. People are too conditioned to confuse wealth and income. The current rich know that and are quite happen to exploit this ignorance. They want to become "old money" and be protected by the state from others that would displace them.

[DSpencer]

Re: Some of the Wealthy Asking to Be Taxed

You are right there. Everyone wants a 'level playing field.' It's not fair if you 'volunteer' more tax dollars than your competitors. It must be even or altruism is a competitive disadvantage.

I'm confused by this and some other comments. Are they asking to pay more in corporate taxes or personal taxes? When you say competitors do you just mean other rich people in the competition to be really rich?

I suppose that's possible. In my opinion the more logical explanation is they want to seem progressive or altruistic or something like that but in reality they don't want to put their money where their mouth is. Also if they want to narrow the gap between rich and poor it's very simple: pay themselves less and their employees more.

[cjppjc]

Re: Some of the Wealthy Asking to Be Taxed

I'm confused by this and some other comments. Are they asking to pay more in corporate taxes or personal taxes? When you say competitors do you just mean other rich people in the competition to be really rich?

I suppose that's possible. In my opinion the more logical explanation is they want to seem progressive or altruistic or something like that but in reality they don't want to put their money where their mouth is. Also if they want to narrow the gap between rich and poor it's very simple: pay themselves less and their employees more.

"They don't want to put their money where their mouth is." So very true. As to the question of pay, you ask way too much.

[Ghent12]

Re: Some of the Wealthy Asking to Be Taxed

I'm confused by this and some other comments. Are they asking to pay more in corporate taxes or personal taxes? When you say competitors do you just mean other rich people in the competition to be really rich?

I suppose that's possible. In my opinion the more logical explanation is they want to seem progressive or altruistic or something like that but in reality they don't want to put their money where their mouth is. Also if they want to narrow the gap between rich and poor it's very simple: pay themselves less and their employees more.

+1
That seems to be the most accurate assessment of the situation.

You know, some of the "tax loopholes" that some people complain about are, in fact, the only things that keep a lot of our "system" running. Just about every charitable cause benefits from those "tax loopholes," as do all for-profit businesses when they are allowed to count depreciation against their profit. I'm certainly not in favor of the fact that no single U.S. citizen can possibly understand the extent of the laws they are subject to without months to years of study, but those types of "tax loopholes" are certainly welcome in my view.

[photon555]

Re: Some of the Wealthy Asking to Be Taxed

These rich that are calling for higher taxes only desire to keep others from accumulating capital that might be directed to the creation of new companies that one day might compete with their own. They want to stay in power. A large tax on high income earners would simply protect the current wealthy from the up-and-comers.

Now a genuine wealth tax would require that all property be assessed, including public property (citizens considered owners of their city's or state parks, roads, etc). This would be much more desirable than a tax on income. It would put the burden on those that are little burdened, their wealth serving them, while allowing others to build capital for the creation of new wealth, which would provide in the future a greater source of tax revenue.

But it wont happen. People are too conditioned to confuse wealth and income. The current rich know that and are quite happen to exploit this ignorance. They want to become "old money" and be protected by the state from others that would displace them.

+1
I have read somewhere that Buffet made a lot of money buying up businesses at fire sale prices when the heirs had to liquidate to pay the inheritance tax. Does anyone know if this is true? Of course, he has called for the continuation of the inheritance tax. He won't be paying much of it, since he has set up tax exempt foundations for his fortune, that the name of Buffet may live forever. If there's one thing you can count on, it's that most people will do what they perceive to be in their own best interest, at least their short term interest. I'd like to hear what all of these "altruistic" people would say if a true wealth tax is actually proposed, and gets some serious traction.

[Thailandnotes]

Re: Some of the Wealthy Asking to Be Taxed

inheritance or estate taxes don't apply to the first 5 million being transfered to heirs. After that the maximum rate is 35%, down from 55 % in 2001. The popular notion that businesses or farms are or were lost because the heirs can't pay estate tax is bogus. Less than 1 % of Americans face estate taxes. The Tax Policy Center estimates only 3,300 estates will face any estate taxes in 2011. The 35 % tax on money after 5 million still encourages the super rich like Buffet to set up chairities while Mars, Campbells, Gallo etc. spend the gazillions on K street hoping for total repeal. I've posted this before...a good wiki read...Andrew Carenegie...http://en.wikipedia.org/wiki/Andrew_Carnegie

[dcarrigg]

Re: Some of the Wealthy Asking to Be Taxed

inheritance or estate taxes don't apply to the first 5 million being transfered to heirs.

Don't forget that thanks to the Dec. 2010 tax compromise, now the limit is $10M for a married couple ($5M each instead of $5M total).

[mesyn191]

Re: Some of the Wealthy Asking to Be Taxed

There is that whole "Giving Pledge" thing that Buffett and Gates have been pushing too. I think Gates may actually be serious about it since he actually gives away huge amounts of his money, but for the most part it and stuff like this will go nowhere even if Buffett is serious too. For every 1 or 2 billionaires or multi millionaire who sign the pledge there seem to be several who are perfectly fine with the way things are.

[c1ue]

Re: Some of the Wealthy Asking to Be Taxed

I suspect some wealthy people have a conscience (most do, I am sure). But, being human they do not want to pay more than their neighbor in taxes. It is a competition/psychological thing.

It might be competition, but it might also simply be a sense of fairness.

Rather than revel in their unfair position, some people seek to fix the source of unfairness.

Other people, banksters for example, choose to create and promote iniquity.

These rich that are calling for higher taxes only desire to keep others from accumulating capital that might be directed to the creation of new companies that one day might compete with their own. They want to stay in power. A large tax on high income earners would simply protect the current wealthy from the up-and-comers.

I really doubt having higher taxes in any way disadvantages potential competitors any more than they are already disadvantaged in having far, far less money.

People become wealthy not via income, but via business creation. Outside of Russian natural resource oligarchs, large landowners like the Pritzkers, and large existing business owners like Buffet and the Waltons, the only other source for large wealth creation has been technology: Gates, Brin/Page, etc.

A higher tax on income doesn't impede business creation in any way except possible startup funding.

I'm confused by this and some other comments. Are they asking to pay more in corporate taxes or personal taxes? When you say competitors do you just mean other rich people in the competition to be really rich?

Personal. Buffet has repeatedly pointed out that he as an individual pays far less in taxes percentage-wise than anyone who works for him.

You know, some of the "tax loopholes" that Buffet complains about are, in fact, the only things that keep a lot of our "system" running. Just about every charitable cause benefits from those "tax loopholes," as do all for-profit businesses when they are allowed to count depreciation against their profit. I'm certainly not in favor of the fact that no single U.S. citizen can possibly understand the extent of the laws they are subject to without months to years of study, but those types of "tax loopholes" are certainly welcome in my view.

This is an incorrect characterization of what Buffet has actually said.

What he's said has been specifically to single out payroll taxes (i.e. FICA) and dividend tax rates.

Neither of these fall into the category of either loopholes or legitimate business capital exemptions.

I have read somewhere that Buffet made a lot of money buying up businesses at fire sale prices when the heirs had to liquidate to pay the inheritance tax. Does anyone know if this is true?

Completely and categorically untrue.

For one thing, most of Buffet's business acquisitions specifically desire to retain existing management. He isn't a Neutron Jack corporate looter, but rather seeks to spend his capital to acquire successful businesses which continue to be successful.

You rarely can do that if you boot out the people who built it to start with.