Meager Income

Pay Off Debt, Retire Comfortably on Meager Income, Win the Lottery, Not Necessarily in that Order

Warren Buffett Says Tax the Super-Rich

Posted on | August 14, 2011 | No Comments

The New York Times published an op-ed written by Warren Buffett titled: “Stop Coddling the Super-Rich” today.  I’m sure if you are reading a personal finance blog you’ve already read what he had to say.

I haven’t personally seen his 1040 but i’ve read before that his salary as Chairman and CEO of Berkshire Hathaway is only $100k a year.  While $100k is quite a bit of money that is quite modest by CEO standards these days.  Additionally, he receives several Millions of dollars in dividends and incurs capital gains taxes as well.  I’ve always found it ironic that he’s become very wealthy due to dividends yet Berkshire does not pay out a dividend.  Due to this preferential treatment of dividends and capital gains his tax liability last year was a meager 17%.  It still equates to a significant tax bill though: $6,938,744!

I was intrigued by the statistic below on income inequality:

Since 1992, the I.R.S. has compiled data from the returns of the 400 Americans reporting the largest income. In 1992, the top 400 had aggregate taxable income of $16.9 billion and paid federal taxes of 29.2 percent on that sum. In 2008, the aggregate income of the highest 400 had soared to $90.9 billion — a staggering $227.4 million on average — but the rate paid had fallen to 21.5 percent.

Currently our highest tax bracket begins at $379,150, he recommends adding two new brackets for those making a million or more and another for people who earn at least 10 million a year.

He also recommends increasing the rates on dividends and capital gains and removing the preferential treatment hedge fund managers receive in the form of carried interest.  I think we should just treat it all as income and let the tax bracket you fall in determine your tax.

He’s started an interesting dialogue.  I hope the Super Committee in congress is listening.


Leave a Reply

  • Recent Tags

  • Categories

  • Recent Posts