Posted by Leonard Steinberg on November 27th, 2012

Warren Buffet has said what we have been YELLING in a recent New York Times editorial: Income of $ 250,000/year is NOT rich. Not in New York, or Los Angeles, or Miami, or San Francisco, or a host of other larger US cities. His piece addresses brilliantly the hard facts about taxation and solutions that simply make sense to get us back on track:

•  The FORBES 400, the wealthiest individuals in America, hit a new group record for wealth this year: $1.7 trillion, more than five times the $300 billion total in 1992.
• In 1992, the tax paid by the 400 highest incomes in the United States averaged 26.4 percent of adjusted gross income. In 2009, the most recent year reported, the rate was 19.9 percent.
• The group’s average income in 2009 was $202 million — thats a “wage” of $97,000 per hour, based on a 40-hour workweek.
• More than a quarter of these ultrawealthy paid less than 15% of their take in combined federal income and payroll taxes. Half of them paid less than 20%. And a few paid ZERO.
• Buffet prefers a cutoff point somewhat above $250,000 — maybe $500,000. And additionally Congress should enact a minimum tax on high incomes around 30 percent of taxable income between $1 million and $10 million, and 35 percent on amounts above that. A plain and simple rule like that will block the efforts of lobbyists, lawyers and contribution-hungry legislators to keep the ultrarich paying rates well below those incurred by people with income just a tiny fraction of ours. Only a minimum tax on very high incomes will prevent the stated tax rate from being eviscerated by these warriors for the wealthy.
• Buffet says we need to get rid of arrangements like “carried interest” that enable income from labor to be magically converted into capital gains. He is sickened that a Cayman Islands mail drop can be central to tax maneuvering by wealthy individuals and corporations.
• More importantly we can’t let those who want to protect the ultra-privileged get away with insisting that we do nothing until we can do everything. Our government’s goal should be to bring in revenues of 18.5 percent of G.D.P. and spend about 21 percent of G.D.P. — levels that have been attained over extended periods in the past and can clearly be reached again: this ratio of revenue to spending will keep America’s debt stable in relation to the country’s economic output.
• In the last fiscal year, we were far away from this fiscal balance — bringing in 15.5 percent of G.D.P. in revenue and spending 22.4 percent. Correcting our course will require major concessions by both Republicans and Democrats.

All of America is waiting for Congress to offer a realistic and concrete plan for getting back to this fiscally sound path. Nothing less is acceptable. Entitlements need to be adjusted to more realistic expectations. Budgets need to be cut aggresively without damaging the welfare of the most needy. Billions of dollars of waste has to be fought with the same gusto that we fight other wars. We need to become energy self-sufficient. We need to incentivize companies to keep money in the USA, and return the 2+ trillion dollars that have managed to escape our US economy.

No, I am not one to fight the wealthy at all: I am a true capitalist at heart. But dirty capitalism is where a select few benefit at the expense of others, and I do not subscribe to that. I think that is un-American. Why should a salaried person earning $ 1 million pay double the taxes of another person earning the same?

Surely this prudent, smart, practical Buffet-style policy will produce a robust economy, rampant growth, and ample opportunity to lower taxes in the future?