Who is going to give up profit?

Who is going to give up profit? (Full Version)

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tazzygirl -> Who is going to give up profit? (11/27/2012 7:34:07 AM)
Warren Buffett has a very valid point. For years we have heard that if taxes were raised on the rich, they would simply stop investing. That never made sense to me. Why give up profits? Are they really going to give up 70% profit because they cant make 85%? SUPPOSE that an investor you admire and trust comes to you with an investment idea. “This is a good one,” he says enthusiastically. “I’m in it, and I think you should be, too.” Would your reply possibly be this? “Well, it all depends on what my tax rate will be on the gain you’re saying we’re going to make. If the taxes are too high, I would rather leave the money in my savings account, earning a quarter of 1 percent.” Only in Grover Norquist’s imagination does such a response exist. ........... A huge tail wind from tax cuts has pushed us along. In 1992, the tax paid by the 400 highest incomes in the United States (a different universe from the Forbes list) averaged 26.4 percent of adjusted gross income. In 2009, the most recent year reported, the rate was 19.9 percent. It’s nice to have friends in high places. The group’s average income in 2009 was $202 million — which works out to a “wage” of $97,000 per hour, based on a 40-hour workweek. (I’m assuming they’re paid during lunch hours.) Yet more than a quarter of these ultrawealthy paid less than 15 percent of their take in combined federal income and payroll taxes. Half of this crew paid less than 20 percent. And — brace yourself — a few actually paid nothing. This outrage points to the necessity for more than a simple revision in upper-end tax rates, though that’s the place to start. I support President Obama’s proposal to eliminate the Bush tax cuts for high-income taxpayers. However, I prefer a cutoff point somewhat above $250,000 — maybe $500,000 or so. Additionally, we need Congress, right now, to enact a minimum tax on high incomes. I would suggest 30 percent of taxable income between $1 million and $10 million, and 35 percent on amounts above that. A plain and simple rule like that will block the efforts of lobbyists, lawyers and contribution-hungry legislators to keep the ultrarich paying rates well below those incurred by people with income just a tiny fraction of ours. Only a minimum tax on very high incomes will prevent the stated tax rate from being eviscerated by these warriors for the wealthy. ........ In the last fiscal year, we were far away from this fiscal balance — bringing in 15.5 percent of G.D.P. in revenue and spending 22.4 percent. Correcting our course will require major concessions by both Republicans and Democrats. All of America is waiting for Congress to offer a realistic and concrete plan for getting back to this fiscally sound path. Nothing less is acceptable. In the meantime, maybe you’ll run into someone with a terrific investment idea, who won’t go forward with it because of the tax he would owe when it succeeds. Send him my way. Let me unburden him. http://www.nytimes.com/2012/11/26/opinion/buffett-a-minimum-tax-for-the-wealthy.html?_r=0 Thoughts?

JeffBC -> RE: Who is going to give up profit? (11/27/2012 10:54:55 AM)
quote: ORIGINAL: tazzygirl Thoughts? My thought is that this is self-evidently true and is just one of the many lies the rich tell us. The other side of the coin is that if we give them more money they will NOT invest... EVER... until that "good business idea" is present. And those opportunities are going to become fewer and fewer as people become poorer and poorer. An economy takes money in motion not money at rest. All of this would be self-evident to anyone who gave it a moment's thought. Surely anyone who had even a bachelor's in economics. Kind of makes you ponder on folks like Greenspan and his ilk.

muhly22222 -> RE: Who is going to give up profit? (11/27/2012 10:59:04 AM)
I've been saying for several years (not too many...I'm only 24) that tax cuts would never solve any problems. Then again, just spending money wouldn't work either. The goal of cutting taxes is, putatively, to put money in people's pockets. Here's a question that may seem completely idiotic at first: How can the government take in more money (which it has to do) while allowing people to keep more of their money (the goal of tax cuts)? The answer: simplifying the tax code. The less money people have to pay accountants and lawyers to do their taxes, the more money they will have for themselves; the government can take in some of that surplus, and people will still have more money than they had before. I can't believe I'm saying that, as a lawyer (nobody tell, I don't want my bar card taken away...I just got it), but it could work. Full disclosure: this isn't wholly my idea, some of it came from Mark Cuban.

Yachtie -> RE: Who is going to give up profit? (11/27/2012 11:06:14 AM)
quote: ORIGINAL: tazzygirl All of America is waiting for Congress to offer a realistic and concrete plan for getting back to this fiscally sound path. Nothing less is acceptable. I know, I know. He's a kook.[8\|] But Ron Paul has said what it will take and that is not politically acceptable. Buffet's nothing less is acceptable is just that, not acceptable. It's unfortunate Congress has not the power to say the sun don't shine and gravity be not gravity when it would be politically expedient to say so. Edit- So, people want to fix the problems? Really? Check the charts, one of them courtesy of Gary Alexander, Secretary of Public Welfare, Commonwealth of Pennsylvania.

tazzygirl -> RE: Who is going to give up profit? (11/27/2012 11:55:53 AM)
Ron Paul is not politically acceptable. No one can take the man seriously.

fucktoyprincess -> RE: Who is going to give up profit? (11/27/2012 12:56:22 PM)
This is a classic example of how the "haves" frame the nature of the debate and the "have-nots" accept the framework given to them by the "haves". Since time immemorial, people at the top of the pyramid have always claimed that increased tax rates for the wealthy act as a disincentive to work/invest. This is ONLY true if the marginal rate of tax on an additional dollar earned is 100%. Anything less than 100%, means the worker/investor is, in absolute terms, better off than he was before. Another thing that people conveniently like to overlook is that typically wages and prices take into account the existing tax and profit structure of any business. The typical low tax argument goes like this: lower taxes means that the $$ that were spent on taxes can now be invested or used to buy goods and services, thus stimulating the economy. What is interesting about this statement is that it assumes that the $$ will stay the same in a low tax environment. In other words it assumes wages and prices will stay constant even after low taxes are implemented. But this is not necessarily the case. There is no guarantee that wages and prices would stay the same and that people's take home pay, or people's investment income would actually increase. The entire myth of supply side economics has been proven not to work. We tried it already. It doesn't work. Enough. I'm so tired of an American public that is still held hostage to these ideas. Here is the reality. The bottom 20% of any society (define this however one wants) is always going to need some assistance; the top 20% of any society will never want to pay their fair share; it is up to the 60% in the middle to see that things are handled in a fair and just way. Anyone who thinks that a fair society is one that ignores the needs of the bottom 20% while catering only to the needs of the top 20% is creating a society that will collapse. Unsustainable. The top 20% have to accept the fact that they are part of a larger society, without whom, most investment ideas would not generate much profit at all. Try being WalMart if there are no consumers. And if we continue to ignore the bottom 20%, eventually that will create other costs to our society (crime, revolution, etc.) that are destabilizing for everyone. We are all in the boat together. All of us in the middle have to figure out how to keep the bottom and the top from sinking the ship. Conservatives think helping the bottom is what will sink the ship. I actually feel that leaving the top unfettered while also ignoring the bottom is what will ensure our doom. And history is much more supportive of the latter interpretation. A top unfettered that ignores the needs of the bottom has typically led to crime, unrest, and sometimes even extreme and violent revolution. I don't honestly understand why the top seems to think that is preferred to increased taxes? Not to mention, even leaving the economics aside for the moment, that this issue raises other important questions. Just where is it written, exactly, that the top are morally entitled to unfettered gathering of wealth? (Someone please show me where.) And yet, we can point to numerous documents of almost any religion (that most people on the planet claim to follow) that posit that the bottom are morally entitled to be taken care of. So then, someone please explain to me why economically, morally or otherwise, we should care about the rich to any greater extent than anyone else? Warren Buffett is correct. Taxes on the rich need to be raised.

blacksword404 -> RE: Who is going to give up profit? (11/27/2012 1:30:06 PM)
quote: ORIGINAL: tazzygirl Warren Buffett has a very valid point. For years we have heard that if taxes were raised on the rich, they would simply stop investing. That never made sense to me. Why give up profits? Are they really going to give up 70% profit because they cant make 85%? SUPPOSE that an investor you admire and trust comes to you with an investment idea. “This is a good one,” he says enthusiastically. “I’m in it, and I think you should be, too.” Would your reply possibly be this? “Well, it all depends on what my tax rate will be on the gain you’re saying we’re going to make. If the taxes are too high, I would rather leave the money in my savings account, earning a quarter of 1 percent.” Only in Grover Norquist’s imagination does such a response exist. ........... Thoughts? (Early in his career, Buffett invested heavily—almost one third of his early fund's capital—in Sanborn Map, a company that mapped utility lines and such. But he soon grew frustrated with the company's leadership, which "operated more like a club than a business," and which refused to return greater dividends to investors. So Buffett amassed more and more stock, and with control of the company finally in hand he pressed the board of directors to split the company in two (one for the mapping business, and one to hold the company's other outsized investments). Finally, the board capitulated. But with victory finally at hand, Buffett nearly scuttled the deal because of ... taxes. As Schroeder recounts, quoting Buffett, one director proposed that the company just cleanly break the company, despite the tax consequences—"let's just swallow the tax," he suggested. To which Buffett replied (as he recounted to Schroeder): And I said, 'Wait a minute. Let's -- "Let's" is a contraction. It means "let us." But who is this us? If everyone around the table wants to do it per capita, that's fine, but if you want to do it in a ratio of shares owned, and you get ten shares' worth of tax and I get twenty-four thousand shares' worth, forget it.' Buffett was willing to walk away from a deal because the taxes would have taken too much of a bite out of it. Fortunately for him, the board gave in and allowed him to structure the deal that he liked, saving him from his own Norquistian response.) Apparently at one time buffet himself was willing to. http://www.weeklystandard.com/blogs/watch-what-warren-buffett-does-not-what-he-says_664022.html

tazzygirl -> RE: Who is going to give up profit? (11/27/2012 1:38:22 PM)
A neoconservative site that gives just enough information to make itself slightly plausible. The increase in net worth that is produced by this change is not yet reflected in our financial statements. Rather, under present GAAP rules (which may be changed), the benefit will flow into the earnings statement and, consequently, into net worth over the next few years by way of reduced tax charges. We expect the total benefit from the fresh-start adjustment to be in the $30 - $40 million range. It should be noted, however, that this is a one-time benefit, whereas the negative impact of the other insurance-related tax changes is not only ongoing but, in important respects, will become more severe as time passes. The General Utilities Doctrine was repealed by the new tax law. This means that in 1987 and thereafter there will be a double tax on corporate liquidations, one at the corporate level and another at the shareholder level. In the past, the tax at the corporate level could be avoided, If Berkshire, for example, were to be liquidated - which it most certainly won’t be - shareholders would, under the new law, receive far less from the sales of our properties than they would have if the properties had been sold in the past, assuming identical prices in each sale. Though this outcome is theoretical in our case, the change in the law will very materially affect many companies. Therefore, it also affects our evaluations of prospective investments. Take, for example, producing oil and gas businesses, selected media companies, real estate companies, etc. that might wish to sell out. The values that their shareholders can realize are likely to be significantly reduced simply because the General Utilities Doctrine has been repealed - though the companies’ operating economics will not have changed adversely at all. My impression is that this important change in the law has not yet been fully comprehended by either investors or managers. http://www.berkshirehathaway.com/letters/1986.html

blacksword404 -> RE: Who is going to give up profit? (11/27/2012 1:45:36 PM)
As far as you op goes it seemed you asked who would give up profits because of taxes. And it seems he himself would. Unless you're claiming that particular deal didn't happen.

tazzygirl -> RE: Who is going to give up profit? (11/27/2012 1:51:58 PM)
I am not claiming anything. Your piece misrepresented itself as him saying he wouldnt take a huge bite out of his own pocket when the truthw as no business owner would ever allow his entity to take a double taxation based upon new tax laws. My impression is that this important change in the law has not yet been fully comprehended by either investors or managers. He refused to bow down to the easier way out which would have cost them all more money. Thats a completely different animal than refusing to invest to begin with because someone will get only 70% as opposed to 85%.

thompsonx -> RE: Who is going to give up profit? (11/27/2012 2:37:38 PM)
quote: ORIGINAL: JeffBC quote: ORIGINAL: tazzygirl Thoughts? My thought is that this is self-evidently true and is just one of the many lies the rich tell us. The other side of the coin is that if we give them more money they will NOT invest... EVER... until that "good business idea" is present. And those opportunities are going to become fewer and fewer as people become poorer and poorer. An economy takes money in motion not money at rest. All of this would be self-evident to anyone who gave it a moment's thought. Surely anyone who had even a bachelor's in economics. Kind of makes you ponder on folks like Greenspan and his ilk. It would seem self evident to a six year old running a lemon aid stand that anything more than a fraction of one percent on their investment is a money maker.

blacksword404 -> RE: Who is going to give up profit? (11/27/2012 2:53:43 PM)
quote: ORIGINAL: tazzygirl I am not claiming anything. Your piece misrepresented itself as him saying he wouldnt take a huge bite out of his own pocket when the truthw as no business owner would ever allow his entity to take a double taxation based upon new tax laws. My impression is that this important change in the law has not yet been fully comprehended by either investors or managers. He refused to bow down to the easier way out which would have cost them all more money. Thats a completely different animal than refusing to invest to begin with because someone will get only 70% as opposed to 85%. Double, triple taxed. What difference would it make. He still would have made a huge profit.

tazzygirl -> RE: Who is going to give up profit? (11/27/2012 2:55:15 PM)
The profit margin changed after the investment.... he is speaking of those who claim they wont invest anymore.

blacksword404 -> RE: Who is going to give up profit? (11/27/2012 3:13:49 PM)
I think some would choose not to invest. How big that group would be is debatable. Most would simply park the money until they found something more profitable.

tazzygirl -> RE: Who is going to give up profit? (11/27/2012 3:18:58 PM)
Park it for "a quarter of 1 percent"? lol

blacksword404 -> RE: Who is going to give up profit? (11/27/2012 3:22:12 PM)
Let the tax rates go back to the Clinton era and we'll get an answer.

tazzygirl -> RE: Who is going to give up profit? (11/27/2012 3:28:18 PM)
Clinton’s signature accomplishment was the 1993 budget act, which raised the top marginal tax rate from 31 to 39.6 percent, raised the corporate tax rate from 34 percent to 35 percent, increased the fuel tax, and raised taxes on Social Security for wealthy beneficiaries, among other changes. To this?

blacksword404 -> RE: Who is going to give up profit? (11/27/2012 3:39:23 PM)
quote: ORIGINAL: tazzygirl Clinton’s signature accomplishment was the 1993 budget act, which raised the top marginal tax rate from 31 to 39.6 percent, raised the corporate tax rate from 34 percent to 35 percent, increased the fuel tax, and raised taxes on Social Security for wealthy beneficiaries, among other changes. To this? And the higher dividend tax that went along with it.

thompsonx -> RE: Who is going to give up profit? (11/27/2012 3:40:01 PM)
quote: ORIGINAL: blacksword404 I think some would choose not to invest. How big that group would be is debatable. Most would simply park the money until they found something more profitable. I would like to know what sort of fuckwit would rather make a fraction of 1% on their money rather than make 2% since the tax rate is the same for both investments?

tazzygirl -> RE: Who is going to give up profit? (11/27/2012 3:41:22 PM)
quote: ORIGINAL: blacksword404 quote: ORIGINAL: tazzygirl Clinton’s signature accomplishment was the 1993 budget act, which raised the top marginal tax rate from 31 to 39.6 percent, raised the corporate tax rate from 34 percent to 35 percent, increased the fuel tax, and raised taxes on Social Security for wealthy beneficiaries, among other changes. To this? And the higher dividend tax that went along with it. LOL.. you wont find me arguing that. However, I do believe Clinton's tax era would cause more screaming than Buffett's.

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