The Truth About The So-Called “Buffett Rule”
On it's own, the so-called "Buffett Rule" is unlikely to do much to reduce the deficit.
As I noted yesterday, it’s been difficult over the past several months to determine exactly what President Obama means when he talks about the so-called “Buffett Rule,” or how he proposes that it be implemented. His State Of The Union Address certainly didn’t provide much detail, and neither did the five state barnstorming trip he completed yesterday. Senator Whitehouse of Rhode Island has one idea, but it’s unclear if that would have the support of the majority of the Democratic Caucus in the Senate, not to mention the President himself. More importantly, though, there seems to be very little discussion from the White House about what the actual impact of the so-called “Buffett Rule” would be:
President Barack Obama has left unanswered a major question about his Buffett Rule tax on millionaires: Just how much money would it raise?
Administration officials are not releasing projected revenues from the much-hyped plan named after billionaire investor Warren Buffett. During the State of the Union address, Obama tied his proposal — which would tax those earning $1 million at a minimum of 30 percent — to cutting a deficit estimated to top $1.1 trillion for the fourth straight year.
But for the moment, the White House wants to keep the attention focused on Obama’s argument that it’s unfair to tax Buffett’s secretary at a higher rate than her boss.
“I’m not going to give you a schedule of how broad individual tax reform would break down and what impact it would have,” White House press secretary Jay Carney said at the Wednesday briefing. “The president simply believes that as a matter of principle that unfairness ought to be changed.”
Republican lawmakers — noting the absence of real numbers — attacked the plan as a political charade, an attempt to score points in the November election instead of a serious policy to reduce federal debt. One outside analysis by the non-partisan Tax Foundation indicates the rule would generate another $36.7 billion a year in revenue — far from enough to make a serious dent in a national debt of $15 trillion.
“It’s a smokescreen,” Rep. Steve Scalise (R-La.) told POLITICO. “Barack Obama just wants to pit one group against another so he can raise more money to spend on a bloated government.”
Along with Sen. John Thune (R-S.D.), Scalise unveiled an alternative to the Buffett Rule in October, sponsoring a measure that would let the wealthiest Americans volunteer to pay more in taxes to specifically lower the deficit.
In the State of the Union, Obama pitted the Buffett Rule against being forced to carve up government funding for education, medical research and the military, saying it was choice between tax cuts for the wealthiest Americans and “investments in everything else.
“If we’re serious about paying down our debt, we can’t do both,” the president said.
The President is right on this particular point, of course. I’ve said numerous times here that serious deficit reduction has to include spending cuts, entitlement reform, and comprehensive tax reform. That tax reform may well mean changes that lead to someone like a Warren Buffett paying a higher percentage of their income in taxes, but it shouldn’t just be done by grafting yet another Alternative Minimum Tax scheme like the one that Senator Whitehouse proposes, or some change to the way Capital Gains are treated for people at differeing income levels that leads to the addition of a few hundred pages to the Tax Code. Or at least that’s how things should work.
Leaving aside the “class warfare” arguments that Republicans will assuredly make, there are other unintended consequences that could result from simply grafting a new rule on top of an already overly complicated, loophole-filled Tax Code, and how much it would actually contribute to deficit reduction:
On a broad level, the Buffett Rule on its own would only contribute to the complexity of the U.S. tax code, says Roberton Williams of the Tax Policy Center, a D.C.-based think tank.”The problem with the Buffett Rule is essentially [it’s] saying we don’t like the outcome of our basic tax system … So let’s make parts of it we don’t like better.”
Lawmakers have long enacted fixes like this in order to level the playing field between classes, says Williams, pointing to the Alternative Minimum Tax for an example. The result is a byzantine tax code that tries to do far more than just raise revenue. A tax code overhaul, while requiring a strenuous effort on the part of lawmakers, could likely be a better use of their time than enacting another add-on.
If a larger tax reform policy were to be enacted, could the Buffett Rule then be effective? If revenue-raising is the primary goal of the Obama administration’s new tax policies, it does make logical sense to aim for the rich. While the U.S. median income has fallen in recent years, the rich are making more and more money, as the CBO pointed out in an October report.
Williams says at a certain point, there are diminishing returns on levying tax increases on the wealthy. Even the rich don’t have unlimited wealth, and Williams adds that, “to close the budget deficit by half, you’d have to raise top rate to about 90 percent from current 35”—a politically untenable rate, to put it mildly.
(…)
Of course, it is difficult to tell at this point exactly what effects the rule might have, or even what it might entail. It could make some headway toward “fairness” in high-income tax rates, but when it comes to deficits, the gains would be modest.
Logan adds, for example, that the tax deductions the White House has said it would eliminate for millionaires in areas like housing, healthcare, retirement, and childcare are “extremely minimal” for people making over $1 million. All told, he estimates the Buffett Rule would raise about $36.7 billion in revenue in its first year. That’s roughly 3.8 percent of the estimated federal deficit for 2012.
Another estimate, by the admittedly left-leaning Center For Tax Justice estimates that the “Buffett Rule” would garner an addition $50 billion in revenue per year, slightly higher than Logan’s estimate, but still just a miniscule percentage of both the Budget Deficit, not to mention the $3.6 Trillion in total outlays in the Fiscal Year 2012 Budget. On it’s own, it’s perhaps a start, but hardly sufficient to address the magnitude of the fiscal problems that we face and, in the long run, unlikely to really accomplish much of anything. Does anyone really believe, for example, that the additional $50 Billion (let’s go with the CTJ’s estimate just for the sake of argument) that this new tax would supposedly bring into Federal coffers would go toward deficit reduction? It wouldn’t, of course. The President and Congress, regardless of which party they belong to, would look at it as “new money,” and would find something new to spend it on. Absent a comprehensive deficit reduction package that includes all of the elements I outlined above, the “Buffett Rule,” or any other stopgap measure, isn’t going to accomplish much of anything in either the short or the long term.
In fact, all we have to do is look at history to see what is likely to happen:
The Buffett Rule would not be the first time the government demanded the well-heeled pony up their fair share. Congress passed the Alternative Minimum Tax in 1969, after then Treasury Secretary Joseph Barr testified that 155 Americans earned more than $1.2 million in today’s dollars and didn’t owe the government a dime in income taxes.
The AMT’s pull weakened with each edit of the tax code. Some have jokingly called it the “Bethesda tax,” since it now hits the upper middle class living places like the D.C. suburbs instead of those with extreme wealth.
After the State of the Union, Linda M. Beale, a tax law professor at Wayne State University in Michigan, blogged about that the Buffett Rule sounded familiar.
“Funny,” she wrote, “that is what the original Alternative Minimum Tax (for individuals, and one for corporations) was supposed to achieve.”
Of course, it’s rather apparent that the “Buffett Rule” has much more to do with 2012 election politics than it does with putting forward a responsible plan to fix our fiscal problems:
The White House, however, maintains that to focus purely on Buffett revenue is to miss the point. White House press secretary Jay Carney stressed to reporters on Wednesday that there are “millionaires and billionaires who pay taxes at a substantially lower rate” than poorer Americans. “The President simply believes that as a matter of principle, that unfairness ought to be changed.”
This may be smart politics. The polls would seem to indicate that it is. However, it’s not necessarily smart fiscal policy.
Photo via White House Flickr Feed
I’ve known enough software engineers and know enough about the Law of Unintended Consequences to predict that this “Buffett Rule” will have the same kind of effect as the Luxury Tax on yachts had: minimal revenues actually gained, while hefty pains will fall on those not intended to be affected by the tax.
Also see the Alternative Minimum Tax, which is NOT indexed for inflation.
At some point, simply patching the code (legal or computer) causes more problems than it fixes. At that time, it’s time to scrap it and start from scratch. I think we passed that point during the Carter administration.
As I linked earlier, economist Steve Rattner thinks he has the details on the tax plans. Why not talk about them?
The brutal truth is that Obama’s plan does slightly increase revenues, something you support.
On the other hand, Romney and Gingrich are willing to (respectively) cut and slash revenues in the face of this deficit and debt.
Isn’t your position actually closer to Obama’s? For all your bluster?
@Jenos Idanian:
Illogical, Captain. You don’t have the opportunity to choose “no tax plan,” you only have an obligation to optimize your tax plan.
That is, unintended consequences are already in place. We favor over-investment in homes, and discourage savings, for instance.
@Jenos Idanian:
How many software engineers do you know that are earning over $1 million a year?
@Brummagem Joe: It’s called an “analogy,” numbnuts. Based on the fact that both software and laws are called “code.” And that’s just the first parallel; there are many, many more.
@john personna: What part of “start from scratch” did you not read or understand? Did your brain just shut off at the “scrap it” phrase or something?
@Jenos Idanian:
You’re right, we are helpless, we can do nothing but continue to shine the shoes of the rich and hope for crumbs from their table.
You know what 50 billion is? 50 billion more than we have right now. It’s a start. And it’s widely supported among people who, you know, might actually have to pay it. Including me in 2012.
You know what else 50 billion is? Over the course of 20 years it’s a trillion. More if the rich just keep getting richer.
@Brummagem Joe:
There were some good years there …
@Jenos Idanian:
Just saying “start from scratch” at the end doesn’t magic away “unintended consequences.”
Now, if you are making a flat-tax or sales-tax Hail Mary pass … just remember that conservatives love to low-ball those. It’s the perennial game of “name a number you like and pretend it works.”
Pretend a completely different tax system lets everyone pay less, and somehow manages to take in more.
@john personna:
I think the problem is that 17-17-17 just doesn’t sound as good as 9-9-9. Just doesn’t have the same flow.
@Jenos Idanian: It’s called an “analogy,” numbnuts.
So you don’t actually know any software engineers making over a million and can’t even answer a simple question without hurling ad homs around.
Doug, the problem for Republicans is you can’t fight something with nothing. And what serious revenue raising initiatives are they proposing? Philosophically I agree the Buffett rule is not the best way to go about eliminating a totally unfair allocation of the tax burden and it’s very unlikely to ever be enacted but in the meantime it’s a very powerful means of drawing attention to the issue. It’s not hard to understand. The obvious way to go is allow ALL the Bush cuts to expire which is going to produce around 200-250 billion of revenue, nudge the top marginal rates into the low forties, raise capital gains to around 20-25% and eliminate the carried interest loophole.
“know enough about the Law of Unintended Consequences”
Why are there only unintended consequences for tax increases and not tax cuts?
Steve
@Brummagem Joe: Yes, it’s a simple question. And it’s a stupid and irrelevant one. Convince me that it’s relevant, and I’ll reconsider. Bet you can’t — my point was that software engineers are used to dealing with cadged-together code, and every now and then just dump the old stuff and start from scratch. One example that comes to mind is Apple dumping their old operating system when they moved from OX 9 to OS X.
Here, I’ll spell it out for you. I’ll try to use small words, too, but no promises.
The existing tax code is of utterly mind-boggling complexity. It is a melange of tiny changes, all instituted over centuries. (a “temporary” tax to fund the Spanish-American War was only rescinded a few years ago, for example.) Much like equally complex computer code, each of those tiny changes almost always causes bad effects that no one foresaw or wanted. So it’s no great stretch to say that implementing such a specific, targeted change as the “Buffett Rule” will almost certainly cause other problems.
Further, people who find themselves targeted for higher taxes are infamous for finding ways to avoid them. I mentioned the “luxury tax” on yachts that was supposed to make things “fairer” on the idle rich. Instead, they just started buying and registering their yachts overseas, and the main consequence was to devastate the American yacht industry — putting out of work a lot of highly-skilled and well-paid American craftsmen.
But since it was done in the name of “fairness,” those poor slobs should just suck it up, right? “Sorry we blew away your jobs — we weren’t aiming at you, but the rich bastards. Here, have some unemployment and retraining. Maybe you can get some ‘green energy’ jobs before all those companies go belly-up, too?”
@steve: Because tax cuts — i.e., “we’re going to let you keep more of your own money” — are a lot less likely to screw over people. Plus, we always have all those liberal class warriors we can count on to argue how we desperately need to give the government more money and more power all the time, so we can count on them to find the flaws.
The only problem is the signal to noise ratio — to distinguish actual problems from their normal whining.
@Jenos Idanian:
No one dispute either complexity of the existing tax code or the existence of the law of unintended consequences. Neither of these is the issue here which is an unfair allocation of the tax burden. What are Republicans proposing to correct this inequity? Zilch.
Ah, where were all these small government “conservatives” when Bush was vastly expanding the power, size, and cost of the federal government? Probably busy rationalizing cutting taxes at the same time costs were skyrocketing, and telling themselves it would all work out somehow.
@Brummagem Joe: That depends on who defines “fair.” It’s an entirely subjective term. Is it “fair” that a significant portion of the populace pays nothing to support the government, while one guy (say, Mitt Romney) pays millions and millions? It it “fair” that not everyone pays the same percentage of their income? Is it “fair” that people who work for a living and make a salary pay a higher rate than those who invest money and run the risk of losing everything?
We’re not even talking the same language. You’re taking control of the discussion by seizing a key word and imposing your own definition. Just calling your beliefs “fair” doesn’t make that settled — let alone accurate.
And I don’t mean that as an insult, but to note the “meta” nature of the discussion. I’m simply challenging your basic premise.
@anjin-san: Personally, I was quietly bitching while thanking God at least Bush wasn’t as bad as Gore or Kerry would have been. And every now and then, the bitching got fairly loud.
@anjin-san: I was also applauding Senator Obama when he fiercely opposed jacking up the debt ceiling… back when it was just a little over what it is today. What’s it done since he became President Obama — gone up about 60%?
Correction: “back when it was a little over half what it is today.”
@Jenos Idanian:
We can argue about the definition of fair all day but most reasonable people (and I’m sure a large part of the electorate) can recognise there is something basically wrong when a hedge fund manager in NYC making $5 million a year (most of it either capital gains or carried interest) is paying a lower share of his income in taxes than a teacher earning 65k in Milwaukee. You’re welcome to argue otherwise and that clearly is what the GOP will doing over the next months. As it happens I’m a retired rentier so some of my income is taxed at 15% (unfortunately not quite on the scale of Romney’s) so I’m well aware of the arguments. But at bottom it’s philosophically indefensible as the GOP is going to find out. In fact by nominating Romney with his PE background and swiss bank accounts they have in one step ensured that the issue of economic fairness is going to be on the front burner during this election and beyond. The whole economic debate was start to shift in that direction anyway but this is going to crystalise it imho.
@Jenos Idanian: What’s it done since he became President Obama — gone up about 60%?
This might not be unconnected with the fact that tax collections as a consequence of the Bush cuts and the recession, are at historic lows (around 15% of GDP) while obligations that Bush assumed and the recession have caused certain expenditures to inrease. If you’re going to make superficial remarks like this I really can’t take you seriously.
And what changed between the time Obama was a Senator, and the day he became President? Bush led us to the brink of a honest to goodness depression. Let’s hear a critique of Obama’s economic policies that does not rest on the fantasy that all was well when Obama took office, and he proceeded to screw the pooch, as opposed to the reality that we were in an economic crisis of historic proportions the first time Obama sat down at his desk in the oval office.
We should also factor in Bush cooking the books on the deficit by keeping various wars off of them (a practice Obama eliminated), and the fact that Bush took office and quickly turned a surplus into a deficit which reached historic proportions under his leadership. Economic events do not take place in a vacuum, trends are important.
Then it should be easy to post a few links where you took Bush to task on this issue. Standing by.
Jenos has an emotional but not uncommon reaction to tax. He doesn’t like it, so it should be lower. This simple outlook has been at the center of GOP campaigns forever, but only became disconnected from spending in the “deficits don’t matter” Bush years.
Now we’ve got Nordquist ready to impeach to keep taxes low.
@Brummagem Joe: …there is something basically wrong when a hedge fund manager in NYC making $5 million a year (most of it either capital gains or carried interest) is paying a lower share of his income in taxes than a teacher earning 65k in Milwaukee.
Here’s a rebutting argument: said hedge fund manager doesn’t have a guaranteed salary, and could lose his shirt in a single year. Further, his activities generate a lot of economic activity (in theory), promoting the general growth of wealth. He’s taking risks that could benefit himself, his clients, and the economy generally. So we should incentivize him to do that.
On the other hand, the Milwaukee teacher is part of a seriously failing school system, and thanks to her union has little incentive to make things better. So maybe that 65K is a wee bit too generous.
Finally, I (“the taxpayer”) am directly paying that teacher’s salary, while the manager gets his income from his clients and risking his own money. I feel a bit more proprietary towards what she makes, and really don’t give a faded fart what he does — only one of them is getting paid out of my pocket. Her income is my business, his isn’t.
(Pardon the sexist language, but I played to the stereotypes to make the use of pronouns clearer. I probably should have reversed them and used Chelsea Clinton — who worked for a hedge fund for some time — as my example.)
We can play this game all day. Ace of Spades commented on this a while ago. You have your blind spot; you think your opinions are so reasonable and self-evident, you can’t readily grasp that there are other ways of thinking about it. Conservatives, on the other hand, are endlessly bombarded with the liberal perspective, so we can understand it enough to recognize it and its underpinnings — and how to spot the unstated assumptions it’s built on.
Again, not trying to be disagreeable. I can, if you like, but I would rather not. Christ, I have to regularly remind myself how anjin is a lying sack, and attempting to reason with him is an exercise in futility.
@john personna: The federal government currently borrows 40 cents of every dollar it spends. The amount it owes is equal to the entire Gross Domestic Product of the nation. In 2010, it spent over 3.5 trillion dollars.
To insist that the cure to the problem is to feed it even more money isn’t “emotional,” it’s effing insane.
@Jenos Idanian:” Here’s a rebutting argument: said hedge fund manager doesn’t have a guaranteed salary, and could lose his shirt in a single year. ”
You clearly have no idea what a hedge fund manager does. I’ll give you a clue…. 20/2…He’s not in the slightest danger of losing his shirt…..and hedge fund managers generate a lot of economic activity?…..How exactly?
“Again, not trying to be disagreeable. I can, if you like
You’ve already been disagreeable
@Jenos Idanian:
The reason the fed is borrowing record amounts is a product of a) record low tax receipts stemming from the recession and the bush tax cuts and b) contractual obligations assumed by the Bush admin and recession related extraordinary expenditures on things like unemployent payment…..for someone with such a high opinion of his own intellect you show an extraordinary inability to connect dots.
@Brummagem Joe: The reason the fed is borrowing
ie. Federal govt.
@Brummagem Joe: What happens to a hedge fund manager who loses money in their fund? They risk losing their clients and their jobs.
What happens to a public school teacher who does an equally incompetent job? In most cases, thanks to their unions, not a goddamned thing.
What happens to a hedge fund manager who makes a lot of money for their fund? They get bonuses and raises.
What happens to a public school teacher who does an outstanding job? In most cases, thanks to their unions, not a goddamned thing.
(The above statements about teachers refer to the near-impossibility of firing most inept public school teachers and the endless fights against applying metrics and setting up incentive pay for teachers. See the fights against charter schools and institutions like New York City’s “rubber rooms” for examples.)
@Jenos Idanian:” What happens to a hedge fund manager who loses money in their fund? They risk losing their clients and their jobs.”
Ah so now they are not actually going to lose their shirt but just perhaps their job like say a quality control engineer in Milwaukee earning 65k a year and paying a higher rate of tax. So now having proved you are clueless about the nature of hedge fund management you now want to talk about teacher unions. The subject under discussion is inequities in the tax system….remember?
So tax rates should be determined by job related risk, as you define it?
How about cops and firefighters – they risk their lives on the job. Certainly then they should have a lower tax rate than a fund manager, who is risking only job/client loss. A teacher who works in a ghetto school is risking their safety when they go to work, guess they get a lower tax rate than a teacher in a high wealth district.
Every day of my working life, I have to face the possibility of losing clients and income if I screw up. I guess I deserve a special tax rate.
And so on, and so on…
Easy to see why you don’t like teachers, clearly they failed you.
@anjin-san: Shut up, you lying sack. Or, to use some cannon metaphors, you shot your wad and it was a dud, so shove it up your touchhole.
(Yes, all three phrases are metaphors based on cannons. Look it up.)
@Brummagem Joe: And what happens to the income of a hedge fund manager fired for incompetence?
Maybe they can get a job as a public school teacher. No accountability, great job security…
The basic idea — which I agree with — is that income generated from activity that, generally, is both risky and stimulates the economy should be taxed less, to encourage such things because it’s generally good for the nation.
The basic principle is that “you get more of what you subsidize, and less of what you tax.” This has been proven over and over and over again. Why do so many people have to re-learn this so many times?
@Jenos Idanian:
The activities of hedge fund managers do very little to stimulate the economy. They are essentially speculators! And even if you take the more respectable PE business in which Romney operated it’s highly questionable whether this produces a net gain in economic activity (and I used to work for a PE firm). Not that this is particularly germane to the issue of whether those employed in the financial industry (who are being amply rewarded with multi million dollar incomes for any risks they may take) should be taxed on it at the same rate as members of the middle class. Income disparity is already immense, the point is that these folks are not paying a tax bill commensurate with the amount of national income they are corralling. Simple really despite your tergiversations to avoid addressing this basic fact.
@Jenos Idanian: “Because tax cuts — i.e., “we’re going to let you keep more of your own money” — are a lot less likely to screw over people. ”
Except, of course, for people whose kids are in public schools. Who drive on public streets. Who depend on public streetlights. Who live on Social Security or depend on Medicare. Who work for the government. Who need protection from fire or crime. Who can’t afford to have their food and drugs tested by a lab. Who want to go to a national park.
Oh, wait, you mean tax cuts are a lot less likely to screw over RICH people. Which, to a right winger, is the only kind of person who matters.
@Brummagem Joe: They are essentially speculators!
Fascinating. Thanks for the education. Now, if you wouldn’t mind, explain what a “speculator” is.
I’ll be really appreciative if you can do so without using synonyms for “risk.” Because as far as I knew, “speculators” essentially wager on events before they happen. They predict future developments, making money when they are right — and losing money when they are wrong. Sounds pretty risky to me.
But I’m a financial naif. I’m sure I have it wrong.
@Jenos Idanian:
Amazing. You started out pretty well with:
“The federal government currently borrows 40 cents of every dollar it spends”
But then somehow you think this means the government should raise less money?
I guess you think “math” is “insane.”
@john personna:
Steve Rattner isn’t an economist. He’s a journalist and Democratic Party rainmaker.
Ah well, this is pretty boring. “Jenos” is the lonely defender at OTB that the Buffet Rule, nay any revenue increase is bad, because we spend too much.
Never mind, as I say, that the math doesn’t quite work. Unless that is, “deficits don’t matter.”
@ Jenos Idanian
Do you always get hysterical when you can’t refute an argument? That could be inconvenient, as it clearly happens to you often.
Stick to spell checking junior…
@Jenos Idanian:
I can understand you want to change the subject but the issue is tax fairness. If you corral $5 million of income (ie. 77 times 65k) you’ve already been rewarded disproportionately for any risk you may have taken so why shouldn’t you pay the same amount of tax on it as the teacher/engineer? Compris? Or is this beyond your reasoning powers which you’re usually boasting about?
@john personna: But then somehow you think this means the government should raise less money?
And Michael Moore’s health issues can be addressed by making sure he continues to get plenty to eat.
@Jenos Idanian: “Fascinating. Thanks for the education. Now, if you wouldn’t mind, explain what a “speculator” is.”
Actually it’s quite easy to find a definition for speculator. In the meantime I’m waiting for you to tell me what economic activity hedge fund managers create.
@Jenos Idanian:
Golden Parachute.
Or perhaps something like this:
http://www.washingtonpost.com/blogs/plum-line/post/romney-worried-about-pink-slip-bain-gave-him-golden-parachute/2012/01/09/gIQAPD4ylP_blog.html
@Brummagem Joe: If you corral $5 million of income (ie. 77 times 65k) you’ve already been rewarded disproportionately for any risk you may have taken so why shouldn’t you pay the same amount of tax on it as the teacher/engineer?
“Disproportionately?” Isn’t that just another way of saying “unfairly?”
Why is it disproportionate? Who decides it?
You’re just finding new ways of saying “I don’t think it’s fair!”
And no, I don’t think I’ll let you switch the teacher to an engineer freely. I’m going to stick with the teacher, because it’s a far better contrast. You should trust your first instincts; they served you well here.
I have a good friend who’s a physical engineer. He has great responsibility and real accountability in his job. When engineers mess up, people often get killed. Google up the Kansas City Hyatt Regency walkway collapse in 1980 — my friend once gave me a lengthy lecture on that one.
I don’t blame you for wanting to redefine it, though. The “teacher vs. hedge fund manager” comparison was not going well for you.
Apropos of nothing else, that has got to be the nerdiest thing I’ve read today.
tergiversations
@Jenos Idanian: Why is it disproportionate? Who decides it?
I’m not redefining anything just trying to get you to answer a couple of simple questions. Some, probably most, would say disproportionately at 77 times but I’m quite prepared to accept the term fairly rewarded. So why exactly shouldn’t he pay the same rate of tax upon it as the teacher/engineer at 65K? And what economic activity do hedge fund managers create?
@Jenos Idanian:” And no, I don’t think I’ll let you switch the teacher to an engineer freely. I’m going to stick with the teacher, because it’s a far better contrast.”
Why. For the purposes of this comparison they are exactly they same. I could just as easily say a nurse or librarian. It’s not what they do that is important in this context but what they earn and how much tax they pay on that earnings.
@Brummagem Joe: During World War II, we killed a LOT more Japanese than they killed Americans. On Iwo Jima, we killed over 3 times as many Japanese as we lost.
Hillary Clinton turned $1,000 into $100,000 in cattle futures in the one time in her life she speculated in that market.
Nancy Pelosi made a huge profit off Visa’s IPO — several million dollars.
The difference between them and your example? For one, your guy most likely didn’t have access to inside information and favorable treatment. For another, they’re good Democrats, so they get a pass.
Well, so much for that blackquote. Rest in peace.
@Jenos Idanian:
They don’t call it incompetence; they call it being investigated by the federal government for fraud.
I kid, but considering the extensive performance reviews most hedge funds put their analysts through, you’d think our fired hedge fund manager would’ve seen the writing on the wall long before now. Hell, the hedge fund manager isn’t even, strictly speaking, the person making the investments or the speculations. He’s managing the financial analysts who make the speculations, kinda like an editor at a newspaper in a way. He determines maybe a mission statement, and from then on it’s all effing management. Really, the hedge fund manager is more analogous to a school principal than a school teacher.
Fun fact about that, did you know teachers have to regularly undergo performance review in the course of their jobs? Financial analysts don’t as long as their books appear successful, but see, there is no analogy to that sort of work in education. The very concept of education is nebulous enough that quantitative analyses of its “results” are riddled with assumptions so unscoped as to be maddening. We have an idea of what a good teacher is, and we have these state-arranged calculi to sort of gauge it.
The funniest part about this is that most people assumed financial analysis was sounder. It rested in mathematics and economics, and those two professions involve lots of big numbers! It’s only in the past, oh, five, six years that we’ve begun to re-evaluate just how spotty financial analysis of this kind can get. So it is an intellectual travesty to boil it down to “make money for the firm or get fired,” especially when the process of firing must be attended by so many performance reviews beforehand. It is an equal travesty to assert teachers have perfect job security because of unions, since their performance is rated not only within their profession but by the culture at large.
Look, all I know is that it’s highly unlikely hedge fund managers have to deal with the PTA. Their job immediately becomes easier because of this unlikelihood.
@Jenos Idanian: During World War II, we killed a LOT more Japanese than they killed Americans. On Iwo Jima, we killed over 3 times as many Japanese as we lost.
Hillary Clinton turned $1,000 into $100,000 in cattle futures in the one time in her life she speculated in that market.
Nancy Pelosi made a huge profit off Visa’s IPO — several million dollars.
The difference between them and your example? For one, your guy most likely didn’t have access to inside information and favorable treatment. For another, they’re good Democrats, so they get a pass.
Back in non sequitur ranting territory again I see. Not my thing I’m afraid.
@Jenos Idanian: Actually, private equity managers usually DO have something equivalent to a salary and have little of their own money at risk in the fund. Private equity managers are part of the General Partner, which usually puts 1%-2% in to the fund by comparison to the passive investors (Limited Partners), who put in the rest. The fund managers get to charge a 2% charge no matter what and then get another 20% of the “return” of the fund. Which they can define however they like. So they’re putting in 1%-2% of the capital and hiking off 20% of the rewards, using other peoples’ money. WHAT risk?!
The system is set up so that it’s heads I win, tails you lose. And no matter what they get, it’s taxed at 15% because of this “. Nice gig if you can get it.
@grumpy realist: Nice gig if you can get it.
Old story from the 1800’s. A train was crossing the Old West broke down. Luckily, on board was one of the lead designers from the locomotive manufacturer. He came forward, looked over the engine, took out a hammer, and struck three sharp blows. The engine resumed working.
The designer submitted a bill for $500.00 to the railroad for “services rendered.” The railroad wrote back for a detailed breakdown. The bill:
“Striking engine with hammer: $1.00.
Knowing where to strike: $499.00”
Envy is such an ugly thing…
@grumpy realist: Now can you explain how they have the job security and no metrics to measure their performance like the aforementioned public school teacher has? That would be really, really impressive.
Indeed…like the envy displayed by some against teachers and other public sector employees…
@Jenos Idanian: I wonder how many teachers sent Jenos to the principal’s office to make him so bitter.
@WR: I grew up in a small town; my teachers were, by and large, great. It’s the ones I’ve encountered since then that have convinced me that it’s really the unions’ faults. They make protect the bad teachers at the expense of the good ones.
My ex-sister-in-law was a teacher who wasn’t a morning person. She loved to sleep in and phone in sick. It took three years for her to lose her job.
And feel free to look up New York City’s “Rubber Rooms.”
@Jenos Idanian:
So is toadying.
I’ve always been fascinated by the instinctive servility of some people. You aren’t going to be paying this proposed tax. You’re the secretary in this scenario. Now, oddly enough, the people who actually have to pay the tax have shown in polls and often in public statements — Bill Gates quite recently — that they don’t have a problem with it.
But the bootlick force is strong with some. Even when the czar isn’t asking for them to do so they’ll tug the forelock and run around compulsively swearing allegiance and look for enemies to slay on the czar’s behalf. It’s a big part of the GOP skill set of course, getting people to vote against their own economic interests in the service of some superior class with whom they hope to curry favor. Related to the religious impulse, I suspect. A need to bend a knee and then race off to slay heretics.
Weird.
Guess your English teacher was one of the bad ones…
@michael reynolds: I don’t think I’ve ever read a more compelling argument for the “screw those who aren’t like me” position than yours, Mr. Reynolds. Such a passionate advocacy for the “if you ain’t like me, up yours” philosophy. I have to respect your vigorous selfishness and egocentrism and hateful narcissism.
I’m gonna hoist a beer in your honor, Mr. Reynolds. Hope you don’t mind that it’s Natural Ice…
@anjin-san: Spelling/grammar flames are the last refuge of the incompetent…
@ WR
My theory about Jenos is that all the girls that would not talk to him are the root of the bitterness. Whatever the source, the unresolved issues rear their ugly heads in pretty much every post he makes…
@michael reynolds: Oh, and your total refutation of any principle beyond pure self-interest? Positively breathtaking. I might have to upgrade that beer. Maybe a Sam Adams…
@Jenos Idanian:
You’re absolutely right: I’ve never been a good sycophant.
Kind of do, actually. So many better beers out there.
Really? Let’s visit the way-back machine – not so long ago in a thread not so far away this is what you had to say:
Dude, tell us its an act – tell us you are not as stupid as your posts lead us to believe.
BTW, you are doing a disservice to Salvor Hardin mangling one of his sayings in a failed attempt to be clever…
@anjin-san: You got hung up on my grammar over how I described the area around the Mediterranean, then brought up cannons. And when you did, you absolutely consistently misspelled the term.
I have a tit-for-tat philosophy on spelling/grammar issues. You made such a point out of my talking about the Med and then referring to “Northern Arfica and the Middle East” that it was just impossible to not point it out. And the fact that you didn’t just do it once, but repeatedly and consistently showed that it wasn’t a typo, you really were intent on proving how stupid you were.
And what you call “mangle,” I call “adapting.” Considering that Asimov’s magnum opus was, itself, inspired by Gibbon’s seminal work, I don’t think the Good Doctor would object too strenuously.
On the other hand, The Grand Master held such matters as so critical, I could be mistaken.
With that, I think I’ll call it a night. There’s a particular adult establishment, with many delightful adult libations and delightfully distaff distractions that commands my attention.
Well that’s not what happened, but stick with it if it make you feel better.
You can’t even spin consistent BS across a single thread. The Dolt Olympics just announced they have a place for you on the podium.
It should be easy. Just cut the Corporate Tax and increase capital gains. Easy, easy. No need of Buffett or whatever rule.
I think he can do math, Doug. It’s obviously a political benefit to him. However, it’s also necessary as policy.
Cutting the benefits to the working poor, which will be necessary, without also cutting the tax breaks for the wealthy would be very dumb politics, which is also dumb policy.
Commenter banned for repeated violation of site policies.
@ Jenos Idanian
You sound crabby this morning – did you get thrown out of the bar faster than usual last night?
Oh, an I admit that talking politics does not always bring out the best in me. But you are hardly in a position to point fingers about being petty and personal, are you? You seem to do it constantly, after all. Glass houses and all that…
Commenter banned for repeated violation of site policies.
I suspect that Jenos is destroying the OTB brand.
@JP
Yea, a “don’t feed the troll” policy might not be a bad idea. The problem I have is that I keep waiting for the clever, witty, and erudite conservatives to show up so we can have some decent arguments. When you do that, you end up feeling like Diogenes waiting for an honest man, arguing with people who would not rate the time of day in the real world.
@anjin-san:” that I keep waiting for the clever, witty, and erudite conservatives to show up so we can have some decent arguments.”
I just don’t think they exist. The usual suspects here (even those with big opinions of themselves) all follow the same pattern…absurd mistatements which are summarily demolished at which point they respond with casuistry, non sequiturs, outright lies, personal abuse and disappearance. It’s as predictable as the seasons.
My apologies to the hosts. I thought I had taken Mr. Mataconis’ warning to heart, but apparently not enough. This will be my only attempt to circumvent the banning.
Why raise the taxes on the rich?
First of all, what problem would solve?
I’ve said this before; let’s take a top 5% of earners in the country, and take all of their income. The fact of the matter is it won’t keep this current level of spending up, for a month. And keep in mind we can only do such a thing, once. Secondly, if Warren Buffett is so blinking interested in having his taxes raised, why is he spending millions in legal fees to keep from paying them? You see that’s the dirty little secret here. If he really wanted to pay more in taxes, under the guise of “fairness” he could do so without force of government… and he wouldn’t even have to do it voluntarily. He could simply pay the Billion in taxes he already owes.
By the way, read Scott Johnson’s post on the matter.
And in saying this, with it’s not very subtle dog whistle about wealth confiscation, you have made it clear that you are simply spewing right wing talking points and have nothing to add to the discussion.
Taxes are at historic lows. The deficit is at historic highs. Revenue and spending both have to be addressed to solve the problem.
@Eric Florack:
See what I mean. The reductio ad absurdum followed by the completely unsubstantiated claim that Buffett personally owes a billion dollars in back taxes.
@BJ
I think a billion is conservative. A gagillion is probably more like it. Soros is running the coverup drawing heavily from the Alinsky playbook…
@anjin-san:
Followed by the disappearance. As I said these folks are as predictable as the seasons.