Warren Buffett, the second richest man in the world, has been an outspoken critic of the Bush tax cuts since back in 2001 or 2002. He is one of the few billionaires who are honest enough to admit that they aren’t paying as much in taxes (proportionately) as you or I. This is the problem in America. We have been sold a bill of goods and the goods are terrible.
Let’s start with the Death Tax. This is dumbest argument but the Republicans sold it to the American people. The story goes like this – So poor family farmer would lose his farm if we continued the Estate Tax. The second part of the argument was that folks that make a lot of money should be able to keep their money. If we tax it again, it will be double taxed and that’s not fair. (I’m getting nauseated while I type this. I think that I’ll need some Pepto Bismol.) We get “double taxed” all of the time. When we buy gas with our money that has been taxed, we pay gasoline tax. When we pay sales tax on a shirt, it is double taxed. The purpose of the estate tax was to prevent the formation of entitlement or royal class. The thought was that everyone should have to work for a living. The Republicans turned that idea on it ear and they pushed to repeal the Death Tax. Let’s go back to that poor family farmer. No one has been able to show one incident where a family farmer has lost his farm secondary to the Estate Tax. All of the Republicans arguments were bogus.
Tax cuts have never worked to boost an economy. They have worked to pad the pockets of rich Americans but they have never put money in the pockets of the average Joe and Joan. Here’s what Lee Price from the Economic Policy Institute has said about the tax cuts back in 2005.
Since 2001 President Bush and congressional leaders have promised that enacting each of a series of tax cuts would strengthen the economy by bringing faster growth, more jobs, and greater investment. With Congress again debating whether to extend past tax cuts and enact new ones, it’s time to review how much the last four years of tax cuts have affected the U.S. economy and budget outlook. Unfortunately for most Americans, the tax cuts since 2001 have not made today’s economy stronger. Over the last five fiscal years, the tax cuts have had a direct cost of $860 billion and (with interest costs) a total effect on the deficit of $929 billion. By creating excessive permanent deficits, they have lowered our future standard of living.
So, that brings us back to Warren Buffett. Maybe he understands that the average Joe or Joan needs a break. They are the ones that need tax relief. How about a tax cut for the everyone who makes between $30,000 – $100,000? How about that? And then to offset this we need to increase taxes on the top 1% of households. This isn’t class warfare as some Republicans have stated. Instead, it is equality.
Update: A.L. has written about a Wall Street Journal op-ed which sang the praises of Bush’s tax cut. A.L. took a different route but came to the same conclusion as I did above, tax cuts do not pay for themselves. They never have and never will.
Buffett interview (video) with Tom Brokaw where he clearly states that he doesn’t pay enough in taxes.