Of course I am minimising my tax. And if anybody in this country doesn't minimise their tax, they want their heads read, because as a government, I can tell you you're not spending it that well that we should be donating extra. – The late Kerry Packer a real businessman.
Warren Buffet has copped a bit of flack over an Op-ed in the NYT on Monday in which he complained about tax breaks for the rich:
Some of us are investment managers who earn billions from our daily labors but are allowed to classify our income as “carried interest,” thereby getting a bargain 15 percent tax rate. Others own stock index futures for 10 minutes and have 60 percent of their gain taxed at 15 percent, as if they’d been long-term investors.This is a reasonable point in that there is very little point in having a higher marginal tax rate for those over a certain income, only to give breaks to those who can afford to play the system. This creates an inherent unfairness in that with the Administration pushing ‘millionaire rates’ for those who earn over $250,000 per year, the lower end of that bracket are going to be slugged much more than the Buffets.
These and other blessings are showered upon us by legislators in Washington who feel compelled to protect us, much as if we were spotted owls or some other endangered species. It’s nice to have friends in high places.
It would be more sensible to have a lower overall rate with no breaks at all. The mega rich lobbying for them as special cases causes these breaks. Generally they are designed to guarantee politically desirable results by manipulating the system, and as such are a form of social engineering.
He then goes on to contradict his claimed good intentions:
Last year my federal tax bill — the income tax I paid, as well as payroll taxes paid by me and on my behalf — was $6,938,744. That sounds like a lot of money. But what I paid was only 17.4 percent of my taxable income — and that’s actually a lower percentage than was paid by any of the other 20 people in our office. Their tax burdens ranged from 33 percent to 41 percent and averaged 36 percent.Why, Hell Warren, the fact that the breaks exist does not mean you have to apply them if you disagree with them. You can always decline to do so and pay the full amount if that turns you on. Apart from that, there is always the possibility of sending another $7 mil off to the IRS as a donation; with an explanation that you feel you should pay more. This will put you in a 35% bracket, and might get you a thank you letter. You will of course probably get audited very thoroughly by them to find out, “just what this bastard is covering up.”
What Warren seems to miss is that if he gave the IRS his entire personal fortune, estimated to be around $50 billion, with government expenditure for this year at $3.8Trillion, it would only take them 4.8 days to chew through the lot. Better to hang onto it Warren.