There is a lot of buzz about rich people paying more in taxes. Warren Buffet begged to pay more in taxes, as if he could not just write a check to the government if he wanted—it is even tax deductible. He complained that his "secretary" paid more as a percentage than he did. A little calculation led to the conclusion that this was true only if she made more than $250,000 a year. Buffet's executive assistant makes a salary, most of Buffet's income is in the form of dividends and capital gains. There is a natural difference between the two. Without factoring in inflation, a high marginal tax rate for capital gains can result in an actual loss once inflation is factored in.
Buffet also completely ignores the taxes his company pays. The reason for the lower rate for dividends is to avoid paying taxes twice on the same income. Buffet pays more than 40% of a good percentage of his income if this is factored in. The corporate tax rate is among the highest in the world. But if Buffet really wanted to pay more in taxes you think he would just pay the back taxes his company, Berkshire Hathaway, owes. It may be as much as a billion dollars.
Stephen King recently joined the chorus to pay more in taxes. In an article of profanity-filled Ad Hominum attacks, Stephen King begged for more taxes. I will not quote him as it is difficult to find a section that I wish to repeat. I would call for a boycott of his books if I actually read any.
If we did tax 100% of all income above $250,000, it would not balance the budget. Of course it would raise no money the second year. If one really wants to raise money sustainably, you have to tax the middle class. This is why the Bush tax cuts should and probably will expire next year. Even the "apocalyptic" Ryan budget only reinstates about 1/2 of the cuts. Obama proposes that 3/4 of the cuts be maintained. The truth is we need all this money. Tax the rich more? Sure. Tax the middle class, tax the poor, tax everyone…we have no choice.
Pretty, but very hungryBut even if taxes are raised, it will not be enough. The Beast is ravenous. It needs money to pay for the probable coming war on Iran. (I will be blogging on this tomorrow.) The Beast needs money to kill people overseas. (I will blog about this next Wednesday.)
I urge everyone not to feed the Beast any more than is required. A hungry beast is dangerous, so be sure to pay all required taxes, but as Judge Learned Hand (what a great name for a judge) said, there is no obligation not to structure one's life to minimize taxes.
I cannot follow my next piece of advice, as I live on a rock at 6700 ft., but if you can, grow your own food. Keep your expenditures low and get out of debt (this I can do, and am doing.)
Do not feed the Beast.