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December 20, 2014

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Letter to the Editor:

Taxing the rich is counterproductive

Warren Buffett says he pays a lower tax rate than his secretary, and that “coddled” rich people should pay more in taxes. His politics are showing (Buffett is a Democrat). In actuality, he pays a much higher tax rate than his secretary.

Dividends and capital gains are taxed twice: 35 percent when a corporation earns the money and 15 percent when it’s paid out to shareholders. As the owners of the corporation, shareholders pay both taxes for a combined rate of 45 percent. If you think shareholders and corporations are different entities, imagine how shareholder returns would be affected if corporations paid no income taxes.

Democrats say they want to stimulate the economy, create jobs and reduce the outsourcing of jobs overseas. Eliminating the corporate income tax would do all three. The increase in economic growth and American jobs would generate tax revenues that would offset the elimination of the corporate income tax. The tax rates on dividends and capital gains could be raised, so that shareholders bear their share of the offsetting tax revenues. A flatter, broader tax would be best.

Democrats’ animosity toward rich people is counterproductive to their stated goals. Class warfare against the people who invest in businesses and create jobs is not the way to grow an economy and lower unemployment. Allowing them to earn a better return is.

If Warren Buffett thinks rich people should pay more, he should leave his fortune to the government instead of the Bill and Melinda Gates Foundation. Or write a check.

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  1. Mr. McCord,

    Your statement "Democrats' animosity toward rich people is counterproductive to their stated goals" is all that the rest of us need to understand. Until that statement is no longer true, nothing much else matters, economically or politically.

    Regards,
    Purgatory

  2. Warren Buffet has the option to spend his money as he sees fit, even placing it into a charitable trust. As far as we know he has not evoked the ever popular generation skipping "death tax" escape option in order to allow his heirs to forego paying any federal estate taxes. Taxing the "rich" is all relative. Where the rich create jobs, if any, and how much to tax is the real issue. Right now the country needs both new revenues and a revamped allocation of resources. One without the other probably won't work. Today, those out of work or taking pay cuts aren't good candidates for tax increases. Since about 75% of all individual wealth in America is held by the upper 5% of the population then why not tax them at the levels imposed by the Clinton administration? Twenty-three million new jobs created during that eight year time period eight couldn't be all wrong. The writer seems to be confused about the difference between a tax rate and taxes paid. Not many American corporations pay anything close to 35% taxes on income. These corporations pay nothing here in taxes when they create a job in a foreign country and the profits remain there. A favorite canard of the "don't tax me crowd" is always the double taxation on dividends bad math issue, the fictitious 35% corporate tax plus 15% dividend taxation. One reason many companies pay dividends is that they cannot find a better use for their money, no R.O.I. so they allow for double taxation to occur. Nobody ever seems to complain about having to pay the same double taxation on their money market or CD bank accounts where their return on savings can be taxed at a higher rate than 15%. Those savers are much less likely to be rich than the 15% dividend crowd. To paraphrase what Buffet said recently about taxing the rich," In my entire career I never call someone with an investment opportunity and then had them say, sorry the taxes are too high I can't consider it." Warren Buffet is old enough to remember the bad old days when the federal income tax rate on the "rich" was 90%. Gee, I wonder how they became rich?

  3. Richard....the problem is that very few companies pay at the 35% rate and individuals offset dividend and interest income with deductions.
    The majority of businesses and half the individuals pay NOTHING.
    Buffet was a Republican for most of his life

  4. Yet another letter that paints the situation in a way that the rich are being made scapegoats.

    The truth cannot be clouded.

    The rich DO NOT pay their fair share.

    They have shoved off the sacrifice on everyone else. And they end up reaping not some of the benefits, but ALL of them.

    Yet another letter painting it that it's the middle class declaring "class warfare."

    The reality of the matter is that this "class warfare" has been declared against the middle class already by the rich for years and years.

    Anyways, if that's what you want, YOU GOT IT. The gloves are off now. Let's call a spade a spade. It's out in the open and it's clobbering time!

    Filthy rich? We're coming after you. Those tax cuts for the rich are going to end. If you feel we are picking on you, then so be it. If you feel these are tax increases, then I guess it is. Fair share, baby. Call it what you want. But you are going to pay.

    This crap about tax cuts for the rich must continue in order to create jobs has been proven to be nothing but malarky.

    To label the filthy rich as "job creators" (taking a page from the Republican Party playbook) is idiotic. To say they are both the same is the same as saying that zebras and horses have no differentiation.

    Hold onto your purses and wallets, filthy rich. Hold on tight. We're coming after you. You can't win. Since you feel like we're taking it from you in some sort of highway robbery, then that's okay, we'll play it your way.

    One thing that's not understood by the filthy rich is that no amount of money paid to campaign coffers will buy my vote.

    We number just about 98 percent of the people.

    We outnumber you.

    You can't win. Because we can't be bought. Nor can we be snowed into your stupid way of thinking that gets us to vote against our best interests with candidates you hide behind.

    We're onto you. Bet on that.

  5. 1. There is a difference -- often a big difference -- between nominal tax rates and effective tax rates.

    2. 35% is the top marginal tax rate imposed upon taxable income. In well run corporations, the real effective tax rate is minimal.

    3. Income earned by U.S. corporations in foreign operations is not taxable until it is brought back into the U.S. A significant part of U.S. corporate profits are earned in foreign operations and not repatriated.

    Result: it is currently perfectly legal to have an accounting profit without having any U.S. taxable income. GE is the poster child for this.

  6. Colin,

    You just described mob rule. You, and the many like you, frighten me. Please chose a different enemy than the successful amongst us. Many are doctors, engineers, entrepreneurs, and producers of goods and services that lead to wealth. They are not the enemy of you.

    Moreover Colin, you are not in your condition BECAUSE they are in theirs. You are where you are in life due to your efforts, as they are where they are due to their efforts.

    Purgatory

  7. Rychtarik:

    Your post reminds me of Ronald Reagan's statement: "It's not that liberals are ignorant; it's that they know so much that isn't true."

    To wit:

    "he has not evoked the ever popular generation skipping "death tax" escape option in order to allow his heirs to forego paying any federal estate taxes"

    The GST imposes an estate tax on transfers to grandchildren just so they do NOT escape taxation.

    "Not many American corporations pay anything close to 35% taxes on income."

    Simply incorrect, especially for corporations large enough to pay dividends.

    "Nobody ever seems to complain about having to pay the same double taxation on their money market or CD bank accounts..."

    Money market and CD accounts pay interest, not dividends, which is tax-deductible to the bank paying it, and, therefore, taxed only once.

    I vigorously defend Buffett's right to do as he chooses with his private property. He is hypocritical, though, in telling others to hand over more to the government.

  8. I wish the Republicans/Tea Partiers would put down Atlas Shrugged and read a real book about economics.

  9. Purgatory - your statement:

    Moreover Colin, you are not in your condition BECAUSE they are in theirs. You are where you are in life due to your efforts, as they are where they are due to their efforts.

    totally contradicts the Tea Party GOP standard line that we (middle class) are where we are because the rich were kind enough to give us jobs inreturn for not taxing them fairly.

    What gives?

  10. When one compares the economic vigor of the America which had a top marginal tax rate of 91% with the current economic troubles of an America suffering under a top marginal tax rate of 35%, one might conclude from the data that it was counterproductive to reduce taxes on the rich so much.

  11. I laugh at the comments that just try to poo poo me away.

    I don't envy the rich at all. For some reason, their only argument is that the middle class envies the rich. No. I don't. I can definitively say that we are more worried about surviving.

    I could care less what the filthy rich say or do. Only thing I care about is that they pay the same taxes, according to the wages earned, the VERY same per capita that I do. Right now, they don't. Not even close.

    Also, from the comments I see, they are very, very quick to come after me. Why? Because they know I am right. And scared to let loose of anything.

    MY class of people, the ones that are thought to envy the rich, does in fact outnumber the filthy rich.

    Ninety-eight percent to two percent.

    Call me crazy all you want, but I still persist in my belief that no amount of money will buy votes and make the middle class vote for something that will lead us down a path that sinks down in misery, and causes the filthy rich to get even filthier and nastier rich. While making the middle class sacrifice even more. How much more do you want? Do you want all of it? You want people living in the streets, scraping for food?

    MY class will win.

    Wait til the 2012 elections. The rich and the corporations can't hide behind the Republican Party forever. MY class will prevail. There will be justice. Because right now, we're not seeing it.

    Talk about wave elections? In 2012, it will be a tsunami.

    No more of this crap about privileged few and unwashed masses.

    Time to get this country back on track and run like it's supposed to be run. Because the train track we're on right now is seriously getting nobody nowhere.

    The filthy rich have to be slapped into getting out of that "us and them" mentality and back into thinking one country, indivisible, with justice for all.

    I am happy with my lot in life. I stack up my 98 percent against your 2 percent.

    It's time to fix things.

    And if people think I'm a lone voice out here, you are seriously misinformed.

    One person.

    One vote.

    People are doing research right now, as of this very minute, and finding out one right after the other that this crap we're going through as a nation is just that...crap. The Republican Party trying to change the message to only serve their party, trying to get into power, and serving their corporate and rich masters even more is slowly being revealed.

    Wait til 2012. Call it flash mob. Call it mob rule. Call it whatever you want. I call it justice.

  12. Emthree, right on! Knowledge is power and little knowledge is dangerous. A dynasty trust (a type of GST)is a technique designed to allow its creator to pass wealth from generation to generation without the burden of transfer taxes, including estate and gift tax and the generation skipping transfer tax (GSTT). The technique passes wealth to successive generations of descendants with distributions and operation of the trust being controlled by the terms initially established by the grantor of the trust. The trust is irrevocable and, once funded, the grantor no longer has control of the assets and will not be able to reach the assets or amend the trust terms.

  13. It comes back to the argument, if low taxes on the wealthy create jobs, where are the jobs? Low taxes for the wealthiest only creates greater profit.

  14. rychtarik:

    Knowledge is indeed power. However, plagiarism is a form of theft. From the following website, I paste below:

    (http://www.financeware.com/ruminations/w...)

    "What Is a Dynasty Trust?

    Briefly, a dynasty trust is a technique designed to allow its creator to pass wealth from generation to generation without the burden of transfer taxes, including estate and gift tax and the generation skipping transfer tax (GSTT). The technique passes wealth to successive generations of descendants with distributions and operation of the trust being controlled by the terms initially established by the grantor of the trust. The trust is irrevocable and, once funded, the grantor no longer has control of the assets and will not be able to reach the assets or amend the trust terms."

    Notice that the quote above lacks your parenthetical phrase "(a type of GST)", which you inserted to try to prove that you were not incorrect. You are a fraud.

  15. ColinFromLV:

    Regarding the rich, you ask, "How much more do you want? Do you want all of it? You want people living in the streets, scraping for food?"

    The answer is no. The rich want you to be their customer. Steve Jobs, Bill Gates, Warren Buffett, Steven Spielberg, et al, need you to buy their products. The rich people you describe live in places like Syria and Venezuela, where they don't need customers, because they steal their wealth.

    You may enjoy your fantasy of slapping the filthy rich, but why not pursue the American dream? That's all that most of the rich in America did. There are no limits on what you can achieve, other than the ones you place on yourself.

    Be advised, though, that the obstacles you run into will mostly be placed there by government. You may find yourself thinking differently then.

  16. Amazing how much time we waste worrying about our societies elites. They are laughing all the way to the bank!

  17. McCord,...turn off Fox,...they're turning you into a cluck. Republicon talking points are quite stale. If perhaps you think your letter will help you join "Club Con" home of the wealthy you'll soon find your NOT wealthy enough to be a Republicon. They will use your mind, take your money and your vote,...but in the end they have nothing for you.

    Tax the wealthy! Their free ride needs to come to an end and yesterday isn't soon enough.

  18. The writer is on point--correct!!!

  19. Ignorance...
    Fed to Fox Followers like baby pablum,
    yum yum yum!!!
    Isn't that GOOD???
    There, there...
    have a widdle bit more...
    C'mon, now, you can do it!
    IN she goes... YAY!

    Repeat after US!
    "The RICH should PAY. NO. TAXES."
    It's "COUNTERPRODUCTIVE"... Okay?

  20. Richard most these people can not handle the math. If someone makes more then them they should pay all of it in taxes. The bigger fact is to get dividends you must buy stock, taking risk. The government does not give you a tax credit if the company slashes the dividend. The capital loss is limited to 3000 per year but if you have a 10,000 capital gain you have to pay the tax that year. People that do buy stock, and anyone can have this "tax break", provide capital for companies to use for expansion and growth which in turn means more jobs. This is a much more efficient way to job growth then paying a higher tax and letting the government spend it on stimulus for job growth. Lastly it is to bad so many people seem to not be able to view GE financial statements. You can find it on their web site, and more info about what really happened.
    http://www.gereports.com/setting-the-rec...