Why did Warren Buffett state that he pays 17.5% in taxes while average people pay over 25%?

Question

He stated that the tax code is weighted heavily in favor of the rich and it needs to be changed. He is the 3rd richest person in the world and recommends a progresive, consumption tax. He compared his income tax rate to his office employees. They averaged 30% to his 17.5%. He said he does NOT use accountants and files his own. He said accountants would find more shelters and would have him at an even lower rate due to the current tax code.

Morning Joe (Scarborough) (MSNBC) - Oct 30 TODAY

Mel (below) He comes across as a nice guy. I'm sure I'd hate to face off with him over a business deal. He'd probably eat my lunch. LOL

It was VERY decent of him to make this statement.

Answer 1

Return on capital investments are taxed at a lower rate then regular income. This is to spur investment, but yes, it really does help the rich, as they can arrange their income to be largely the results of long-term investments.

Many municipal bonds are tax free. Again, the rich with lots of cash can generate tax-free income with muni's.

So since the rich generate their income form various investments, and many of these investments have lower tax rates than ordinary income of the same amount, it is easy for the rich to pay a lower tax rate.

He may be paying a lower rate, but Mr. Buffet is paying millions more in taxes than his employees paying a higher rate.

Answer 2

He does seem like a decent guy.

He's right. I heard an ad where Romney is saying that he wants to get rid of these taxes so he would pay even less in taxes.
It costs a certain amount for schools, infrastructure, roads, security, etc. Everyone should pay something.
I called the post office today about a complaint. It was great.
The person I spoke with was professional and caring. Government can work.

We need to change the tax code, most definitely. The middle class pays the most for sure, in terms of percentage of income.

Answer 3

It's because of regressive elements in the tax system. If you work for wages or a salary, for instance, you fork over a fair chunk for social security from the first dollar you make. But, that tops out after a while. The more you make after you've hit that top contribution amount, the lower the overall percentage you pay in total taxes. There are other regressive taxes, as well, like sales or 'consumption' taxes, which hit debtors (typically poor and middle class) much harder than savers (typically 'rich').

In addition, the Bush tax cuts reduced the double-taxation on dividends, by lowering the marginal tax rate on dividends and long-term capital gains. The more you engage in saving and investment, the greater the proportion of your income can come from those sources, which will also contribute to you paying a lower tax rate, overall. (Though, of course, at that point, you're still paying a lot more total dollars out than a less affluent individual who's still shelling out for Social Security).

Ending regressive taxes, like social security (and, thus, ending the programs they fund) would go a long way towards changing that.

Answer 4

I saw on ABC This Week w/ George Stephanopoulos at the round table they discussed this. There was a bill regarding Alternative Middle Tax or the like that went up to President Clinton who vetoed it. It left the Upper crust at a lower bracket and added taxes onto the middle class. A complete revere of the intended measure. He also neglected to address Capital Gains Taxes as promised during the campaign years.

I shall search for a link. Ty.

Edit: Seems it has been a Bi-Partisan event
http://www.wsws.org/articles/2000/jul2000/tax-j29.shtml

and keep in ming the new " Mother " of all tax bills is coming our way.... includes alot of cuts and divisions and some hits on those like Mr. Buffet as the aisle turns!!

Answer 5

I agree, the tax code needs to be adjusted. This is my solution for the personal tax portion of the tax code.

Single - 25% taxes
Married - 25% taxes
Married w/children or single parent - 15%

State taxes are a different story. Given my druthers state taxes would mirror federal as far as percentage goes. However the percentage would apply to the amount collected by federal taxes.

So if a person pays 25% federal taxes.Then the state taxes would be 25% of the federal taxes. So on and so forth.

There, problem solved. No more tax shelters, no more tax deferment plans. Bang done!

Answer 6

Since 99.9% of us will never reach his tax bracket, we will have to take him at his word.
But it seems like the more I earn, the more I get squeezed for taxes. If a Democrat is elected next year, I may as well stop working so hard. Our federal government should not tax the living daylights out of us just because a Dem Congress would be able to get a Dem president to raise taxes.

Answer 7

Some people speak common sense, free of rhetoric or the hidden vested interest. Buffet seems, at least in this statement, to be one such individual. It is obvious that everyone should pay equal taxes, but that certainly, even if they don't, the working poor should not wind up paying more than the rich.
------------
People with a billion dollar income a year paying taxes proportional to the working class... what a scandalous concept... oh, it's pinko to the core.... LMAO neocon nitwits...

Answer 8

Well, the government's got to allow the rich to get richer and the poor to get poorer somehow

Answer 9

This is a sad reality of American tax policy.

Corporations and their owners are regarded as not only "people" in the legal sense, but people with superior rights to normal Joe Blow citizens.

At least Buffet is honest enough to admit that he could get even MORE out of the American tax system. The Pro-Big Biz NeoCon economic policies have literally crippled this country and it's working middle class.

For these reasons I have always liked Steve Forbes idea of a flat tax...though I am admitedly uneducated as to its details.

Answer 10

Warren Buffett understands finance and the way it runs the World unlike most people as you can see from the idiot answers here - oh he gives to charity etc. - and I would imagine he is feeling guilty after a lifetime of milking normal people for all they've got - having said that I praise his honesty and it's encouraging that such a rich powerful man can strike such a potentially powerful blow against the American establishment - if they cover it properly in the news which they won't it will be marginalized and suppressed.