Warren Buffet the Marxist

[_Analytics]

I am amused by the T.V. ads that show average working-class people severely distraught about the proposal of those making over $250,000 having their marginal tax rate increased from 36% to 39%. In united solidarity of how this will cause unconscionable wealth redistribution, they look the camera in the eye and solemnly declare, "I am Joe the Plumber."

One of the key insights of Karl Marx was that it isn’t just hard work and ingenuity that creates wealth—it is also a function of the natural resources, capital, and society. When workers and capitalists get together to create useful goods and services, the spoils aren’t necessarily divided fairly or wisely, but rather are divided according to what the various parties can negotiate for themselves. Too often, what the workers earned and deserve is less than what they can negotiate.

The most Marxist views of Obama that I could find are his views on taxation, which he happens to share with the ultra-successful capitalist, Warren Buffet. To shake this up a little bit, imagine a political ad that goes as follows:

Warren Buffet sitting in a sensible Omaha office: “I did a calculation the other day. Though I’ve never used tax shelters or had a tax planner, after including the payroll taxes we each pay, I’ll pay a lower effective tax rate this year than my receptionist. In fact, I’m pretty sure I pay a lower rate than the average American. And if McCain has his way, I’ll be paying even less.”

A sober, distraught announcer explains: “Buffet’s low rates are a consequence of the fact that, like most wealthy Americans, almost all his income comes from dividends and capital gains, investment income that since 2003 has been taxed at only 15%. The receptionist’s salary, on the other hand, was taxed at almost twice that rate once FICA was included.”

Buffet then says: “The free market’s the best mechanism ever devised to put resources to their most efficient and productive use; the government isn’t particularly good at that. But the market isn’t so good at making sure that the wealth that’s produced is being distributed fairly or wisely. Some of that wealth has to be plowed back into education, so that the next generation has a fair chance, and to maintain our infrastructure, and provide some sort of safety net for those who lose out in a market economy. And it just makes sense that those of us who’ve benefited most from the market should pay a bigger share.”

The distraught announcer weighs in: “But John McCain thinks the people who have benefited most from the market should pay an even smaller share than they already do and wants to make the capital gains tax even lower. But even worse, McCain wants to repeal the estate tax.”

Buffet: “When you get rid of the estate tax, you’re basically handing over command of the country’s resources to people who didn’t earn it. It’s like choosing the 2020 Olympic team by picking the children of all the winners of the 2000 Games.”

Sober announcer: “But John McCain wants to create a permanent aristocracy where command of the country’s resources is allocated to people who didn’t earn it.”

Buffet: “Not very many billionaires share my views. They have this idea that it’s ‘their money’ and that they deserve to keep every penny of it. What they don’t factor in is all the public investment that lets us live the way we do. Take me as an example. I happen to have a talent for allocating capital. But my ability to use that talent is completely dependent on the society I was born into. If I’d been born into a tribe of hunters, this talent of mine would be pretty worthless. I can’t run very fast. I’m not particularly strong. I’d probably end up as some wild animal’s dinner.

“But I was lucky enough to be born in a time and place where society values my talent, and gave me a good education to develop that talent, and set up the laws and the financial system to let me do what I love doing—and make a lot of money doing it. The least I can do is help pay for all that.”

Distraught announcer: “But John McCain thinks that the CEOs and traders that made hundreds of millions of dollars looting Wall Street, Main Street, home owners, and American families deserve every penny they made, and should pay a lower tax rate than average Americans.”

Barack Obama: “I’m Barack Obama and I approve this message because Analytics adapted the content [sans the distraught announcer] from page 190-191 of my book The Audacity of Hope.” And I am Warren the Billionaire.

Analytics, staring somberly at the camera: I am Warren the Billionaire.

[_Jason Bourne]

Well the beautiful thing is if Buffet feels this way he can give all his money away, as he has done for a large part of it. Most of his wealth will not go to estate tax but rather it will go the the Gates Foundation. Charitable contributions reduce amounts subject to the estate tax.

[_Analytics]

Well the beautiful thing is if Buffet feels this way he can give all his money away, as he has done for a large part of it. Most of his wealth will not go to estate tax but rather it will go the the Gates Foundation. Charitable contributions reduce amounts subject to the estate tax.

Great point. If you don't want to pay the estate tax, there are plenty of loop holes.

[_Jason Bourne]

Great point. If you don't want to pay the estate tax, there are plenty of loop holes.

I am not sure I would call it a loop hole. Buffet took total advantage of what you call a loop hole. So if he really thinks the estate tax is so great and an effective way to leave about half his wealth to the government so it can benefit those in the USA less fortunate than he was why did he give it all away and not go that route? Rather, he said "I like that Gates guy and his foundation is a great thing! It will help many people around the world. I will give my money to him. All of it except some I want to leave to my kids and some I want to keep to maintain my lifestyle."

And so he did it.

Oh by the way, he made sure each of his kids got a billion or so each as well.

[_Analytics]

Great point. If you don't want to pay the estate tax, there are plenty of loop holes.

I am not sure I would call it a loop hole. Buffet took total advantage of what you call a loop hole. So if he really thinks the estate tax is so great and an effective way to leave about half his wealth to the government so it can benefit those in the USA less fortunate than he was why did he give it all away and not go that route? Rather, he said "I like that Gates guy and his foundation is a great thing! It will help many people around the world. I will give my money to him. All of it except some I want to leave to my kids and some I want to keep to maintain my lifestyle."

I was being at least a little bit facetious when I called it a loophole.

In any case, I don’t see Buffet as being the least bit hypocritical. From his actions, it is clear that he believes that one ought to leave the bulk of their estates to charitable foundations such as that of Bill and Melinda. The estate tax is a great incentive to get the ultra rich to do just that, is it not?

[_Jason Bourne]

In any case, I don’t see Buffet as being the least bit hypocritical. From his actions, it is clear that he believes that one ought to leave the bulk of their estates to charitable foundations such as that of Bill and Melinda. The estate tax is a great incentive to get the ultra rich to do just that, is it not?

Yes it is as in gives them more say in where it goes. If it were me, choosing between to government and charity I would pick charity.

[_dartagnan]

I am amused by the T.V. ads that show average working-class people severely distraught about the proposal of those making over $250,000 having their marginal tax rate increased from 36% to 39%. In united solidarity of how this will cause unconscionable wealth redistribution, they look the camera in the eye and solemnly declare, "I am Joe the Plumber."

I think the reason people are distraught is simply this: they don't believe Barack Obama when he says he will not raise taxes.

Democrats tax and spend, despite their campaign rhetoric. That is their trademark. Obama has changed his ideas several times over the past few months and has said he won't be able to do much of what he said because of the current crisis. Most critical thinkers can see this upcoming train wreck for what it is, especially in light of Obama's ignorance on economic matters.

Take for example the debate he had with Clinton back in April. He said he would raise taxes on people making between 200 and 250k, he hadn't decided yet. Then Charles Gibson pointed out that he spoke on increasing capital gains taxes. Obama said he wouldn't increase it more than what it was during the Clinton Administration. But even still, increasing it to 28% would almost double the current rate of 15%. Obama agreed.

Gibson informed Obama that if history tells us anything, increasing the CG tax results in decreased revenues for the Federal purse. When Bush lowered the CG tax, revenues went up. Meaning, the government got more money from taxes.

So Gibson asked him, given these facts, "why raise taxes at all"?

Excellent question!

I mean, if the idea is to get more money to fund federal programs, decreasing taxes would mean more money to pay for them.

And what about Obama's answer? You won't believe this.

His answer was that it simply isn't fair that some people make so much money. It is "fair" to take away what they earn, even if this means reducing federal income.

I mean what an idiot. If ever there were a time the federal government needed to increase its income, it is now. But Obama is more worried about some people making more money than what he thinks they deserve. Is this responsible?

[_dartagnan]

I looked up an interesting article that reported that debate comment as it happened back in April:

Read and listen very carefully to this. The higher priority for Obama isn’t to raise revenue; it’s to ensure fairness. In order to do that, he will have the government take a bigger share of the gains and redistribute them through social programs to others. The pretense of having more money acts as a veneer for good, old-fashioned redistributionism.

And his example shows his bias. He talks about billionaires paying a different rate than secretaries on income, but that’s purposeful. The idea behind a lower capital gains tax is to encourage risk-taking. The secretary in this parable garners an income at much lower risk because investors have taken a risk in creating her job. When the risk succeeds, it generates much more taxable income across the board. When it doesn’t, the investors lose a lot of money.

If the risk carries a heavier tax burden, less money will go towards investment. People will instead put their money into safer, less risk-intense areas, such as savings or low-yield bonds and commodities such as gold. That will create fewer opportunities for employment, which translates across the board into less revenue for the government as well as a stalled economy. The surest way to start an economic disaster is to increase penalties for investment.

Obama’s blindness on capital gains reveals a hard-Left mindset. He sees investors always profiting and never losing, while the people who work at jobs created by successful investment as victims of this exchange rather than the beneficiaries of it. Obama wants to use the heavy hand of government to take away the rewards of risk from those who invested, and instead redistribute it to those who took no risk to create economic growth. In doing so, he will kill the engine that drives the American economy.

Obama either fails to understand how a free-market economy grows, or simply doesn’t care. Either way, it makes him a dangerous choice for the Presidency.

Below were some comments, including this one, which I found informative:

Hedge fund manager vs his secretary. Hmmm, just a down and dirty overview.
1) HFM has years of experience in creating wealth for others, including small folks like us who invest in their offerings.
2) $29 billion is not entirely cash income, a majority is in stocks and other vehicles that defers taxation;
– if the instruments crash, upon cashing in, he has less, or nothing and even perhaps capital loss
– flipside, instrument soars and he reaps enough to offset any amount of taxation
3) His secretary is not some run of the mill secretary, bank on it that she pulls 6 or even 7 digits. From her POV, even at a higher rate of taxation, she still pulls more than her sisters at “lowly” corporate offices.

Obambi’s logic doesn’t compute.

HFM vs OPP’s capital gains and/or death taxes. In other words, why are Warren Buffett, Soros and others so pro-death taxes? Follow the money.
1) Joe Six-pack gets slapped with a capital gains and/or estate tax when pappy passes. J6 has a deadline to pay. Result?
–Fire sale of pappy’s estate upon which WB, GS & pals swoop in gaining assets for as little as 10 cents on the dollar.
–Family wealth is siphoned off
–Govt get initial profit and again when #2 happens
2) Having made an “investment”, HFMs sit on asset until they can get the highest return on investment.
3) What does it matter to WB if he pays 15%, 25% or even 50 or 75% in capital gains? He still has earned more money than he could have if assets were originally sold at going market rates.

Bottomline, our current tax structure is a lose-win-win-win. -Joe Six-pack loses.
-HFM wins, on our backs naturally.
-Politicians win contributions and buys votes for control of the treasury to perpetuate the scam.
-Government wins revenue on an asset taxed multiple times to pay for pork.

When it comes to higher taxes, it is a briar patch, where the insiders continue to gain as us proles become equally poorer.

To wit, do the Clintons care that 1/3 of their income went to taxes? Heck no! The 2/3s they’re left with is far more than they would have had in real jobs, let alone stayed at the pinnacle of Arkansas politics. The income wasn’t so much earned as it was a payoff for being insiders. The difference between Jim Wright & Bill Clinton is that JW self-published and Slick got a free-market publisher to do it for him.

Stifling regulations, OTOH, force corporations to move overseas, thus sheltering ever more $$ from the US Treasury and simultaneously cutting jobs.

[_Analytics]

Gibson informed Obama that if history tells us anything, increasing the CG tax results in decreased revenues for the Federal purse. When Bush lowered the CG tax, revenues went up. Meaning, the government got more money from taxes.

So Gibson asked him, given these facts, "why raise taxes at all"?

Excellent question!

I mean, if the idea is to get more money to fund federal programs, decreasing taxes would mean more money to pay for them.

And what about Obama's answer? You won't believe this.

His answer was that it simply isn't fair that some people make so much money. It is "fair" to take away what they earn, even if this means reducing federal income.

I mean what an idiot. If ever there were a time the federal government needed to increase its income, it is now. But Obama is more worried about some people making more money than what he thinks they deserve. Is this responsible?

I hate to say it, but you took his response totally out of context. Clearly, you can tell from his response that he didn't buy into Gibson's Laffer-curve assertion that higher taxes would lower revenue; Obama's response included the statement,

And what I want is not oppressive taxation. I want businesses to thrive and I want people to be rewarded for their success. But what I also want to make sure is that our tax system is fair and that we are able to finance health care for Americans who currently don't have it and that we're able to invest in our infrastructure and invest in our schools.

And you can't do that for free, and you can't take out a credit card from the Bank of China in the name of our children and our grandchildren and then say that you're cutting taxes, which is essentially what John McCain has been talking about. And that is irresponsible.

You know, I believe in the principle that you pay as you go, and you don't propose tax cuts unless you are closing other tax breaks for individuals. And you don't increase spending unless you're eliminating some spending or you're finding some new revenue. That's how we got an additional $4 trillion worth of debt under George Bush. That is helping to undermine our economy, and it's going to change when I'm president of the United States.

Clearly, he didn't say or imply that it simply isn't fair that some people make so much money. He didn't say it is "fair" to take away what they earn, even if this means reducing federal income. He obviously didn't buy into the argument that lowering the tax rate increases tax revenue.

Gibson pushed back, restating the assertions that lowering the capital gains tax increases revenue. Obama responded,

Well, that might happen or it might not. It depends on what's happening on Wall Street and how business is going. I think the biggest problem that we've got on Wall Street right now is the fact that we've got a housing crisis that this president has not been attentive to and that it took John McCain three tries before he got it right.

And if we can stabilize that market and we can get credit flowing again, then I think we'll see stocks do well, and once again I think we can generate the revenue that we need to run this government and hopefully to pay down some of this debt.

If you are so naïve that you think the Laffer-curve theory is proven then you can criticize Obama for not buying into it, but you are absolutely wrong for claiming that he wants to make the world fair and is willing to take in lower tax revenue if that's the price of punishing success.

[_dartagnan]

I hate to say it, but you took his response totally out of context. Clearly, you can tell from his response that he didn't buy into Gibson's Laffer-curve assertion that higher taxes would lower revenue; Obama's response included the statement...Clearly, he didn't say or imply that it simply isn't fair that some people make so much money. He didn't say it is "fair" to take away what they earn, even if this means reducing federal income. He obviously didn't buy into the argument that lowering the tax rate increases tax revenue

Of course this is what he said. He has said it numerous times since. I don't see how you can seriously argue the context changes what he explicitly stated. When Gibson declared the Laffer "assertion" as a matter of fact, Obama responded by saying well, "maybe" it would (apparently ignorant of the evidence that it most certainly would), and then added his "purposes of fairness" rationale.

What the hell else could he be referring to if not the notion that some people have too much and others have too little? That is essentially what he is doing. He is deciding what people have too much money, according to his personal judgment, and he is redistributing it to those who he thinks don't have enough. There is no other way around this.

This is precisely how he responded to Joe the plummer. Why would I have to pay higher taxes? he was asked. Obama responded that it would be "good to spread the wealth around." Obama and many democrats like him simply don't understand the economic system in America. For them, wealth is not earned or created. They just seem to think it is something that is simply "there," and that it is the job of a "fair" president to "spread it around."

"Purposes of fairness" is his lame duck rationale that plays to the hearts of the ignorant and those who feel a sense of economic injustice from the system. This is precisely what he has on his official website when explaining his rationale for increasing taxes on those making 250k.

Now let's look at the context that you mentioned:

And what I want is not oppressive taxation. I want businesses to thrive and I want people to be rewarded for their success.

Well, talk is cheap. His actions speak louder. He says he'll increase taxes, but because he says it won't be an oppressive tax increase, we're supposed to just say, OK?

But what I also want to make sure is that our tax system is fair and that we are able to finance health care for Americans who currently don't have it and that we're able to invest in our infrastructure and invest in our schools.

Uh huh, here we go again with that word, "Fair." It is a subjective and relative term that he presumes to be able to nail down with precision, according to whatever it is he has in mind. No wonder so many of his followers consider him a messiah.

And you can't do that for free

Of course not, but it would be easier to manage with more funds, would it not? This is the point Obama doesn't get. If Obama really wants more revenues then he'd leave capital gains alone as they are. Obama's problem is that he is going against history. Over the past century there have been only three major periods where tax cuts took place, all of which proved financially successful for the federal purse (Harding-Coolidge cuts of the mid-1920s; the Kennedy cuts of the mid-1960s; and the Reagan cuts of the early 1980s.)

Also, what's his idea of "financing healthcare"? Is he trying to slide in Clinton's universal health care program under the radar?

I believe in the principle that you pay as you go, and you don't propose tax cuts unless you are closing other tax breaks for individuals.

What a ridiculous "principle" to be tied down to without serious economic reasoning. I can't cut Ted's taxes unless I increase Bill's taxes? In a 2001 radio interview Obama said:

"The Supreme Court never ventured into the issues of redistribution of wealth and sort of basic issues of political and economic justice in this society...I think one of the tragedies of the civil rights movement was that the civil rights movement became so court-focused, I think there was a tendency to lose track of the political and organizing activities on the ground that are able to bring about the coalitions of power through which you bring about redistributive change, and in some ways we still suffer from that."

If you are so naïve that you think the Laffer-curve theory is proven then you can criticize Obama for not buying into it

I'm not naïve, I simply understand what history has taught us. Increasing capital gains tax will result in lower revenues. When is the last time an increase in capital gains tax has resulted in increased revenues for the government?

but you are absolutely wrong for claiming that he wants to make the world fair and is willing to take in lower tax revenue if that's the price of punishing success

Good grief Analytics. No wonder you're voting Obama. You are in complete denial about everything wrong about him. He can say "I want to rape your Mom" and you'd dissect the context and figure out a way to make him sound intellectual and harmless.

I'm not wrong in what I said because that is exactly what he said. He wasn't vague or ambiguous and nothing in the context changes this. When pressed to answer for his higher tax rate on certain groups, this was the explanation he gave Joe the plummer. When pressed to answer for it in the debate in April, this is how he explained it as well: fairness. On his own website, he explains his reasoning for the tax increase on the "rich" to be a simple matter of "fairness."

If you think this is a bone headed interpretation of what he said, then do us all the service of explaining what exactly you think he meant by "fairness." You haven't even begun to explain how he could have meant "fair" in any other way. He made it explicitly clear with Joe the plummer. "Spread the wealth around" it will be "good for everyone" he said. Well, how is it good for Joe if he is taxed more? Isn't he included in "everyone"? Or maybe Obama thinks that by taxing therich, he'll make them feel better about themselves for giving up so much more of tehir earnings? His rationale makes no sense and insults us.