When I used to hear the super wealthy like investor Warren Buffet say that income taxes should be increased and that he wouldn't mind paying higher income taxes, I always thought, "Be my guest! No one is stopping you from writing an extra check to the federal government every April 15th." Of course that never happens.
The truth of the matter is that increasing the marginal income tax rates for the wealthy (what is really meant when tax increases are discussed) would do little to change the amount of taxes paid by the ultra rich like Mr. Buffet. The reason is simple. Income taxes are paid on "earned" income i.e. salaries and bonuses while the vast majority of the income of the very wealthy like Warren Buffet comes from passive income - dividends, capital gains and interest - which would not be affected. How generous to offer to pay higher rates on taxes you don't pay! Those really paying the higher taxes would be...that's right, the middle class who derive most of their income from wages.
Now I see in the news that Buffet, Bill Gates, Ted Turner and several others who frequently voice their willingness to pay more taxes have joined The Giving Pledge which is a campaign for the wealthiest individuals and families to pledge to give half their wealth to charity. I applaud the generosity of The Giving Pledge donors as I have always believed that charitable giving is a far better way to do good than paying taxes to a bloated, wasteful and overly bureaucratic government.
But I have to ask, "Why are Buffet et al giving their fortunes to charity instead of paying more in taxes like they advocate?" Could it be that they believe as Leona Helmsley once said, "Taxes are for the 'little people.'?
So my son was in the play "You can't Take it with you". In the play, the Grandfather is visited by the IRS for not paying his income tax. The Grandfather's rebuttal to the IRS man was "What do I get for the money?" That is the trillion $ question. And while I'm on this....how does one define "Rich"....By the gov't standard I am "RICH"....but with 2 kids in college, used cars and mortgage payments, I'm hardly "RICH".
ReplyDelete