Conservative Ben Stein on Tax Rates

[Thorgrim]

NOT long ago, I had the pleasure of a lengthy meeting with one of the smartest men on the planet, Warren E. Buffett, the chief executive of Berkshire Hathaway, in his unpretentious offices in Omaha. We talked of many things that, I hope, will inspire me for years to come. But one of the main subjects was taxes. Mr. Buffett, who probably does not feel sick when he sees his MasterCard bill in his mailbox the way I do, is at least as exercised about the tax system as I am.

Put simply, the rich pay a lot of taxes as a total percentage of taxes collected, but they don’t pay a lot of taxes as a percentage of what they can afford to pay, or as a percentage of what the government needs to close the deficit gap.

Mr. Buffett compiled a data sheet of the men and women who work in his office. He had each of them make a fraction; the numerator was how much they paid in federal income tax and in payroll taxes for Social Security and Medicare, and the denominator was their taxable income. The people in his office were mostly secretaries and clerks, though not all.

It turned out that Mr. Buffett, with immense income from dividends and capital gains, paid far, far less as a fraction of his income than the secretaries or the clerks or anyone else in his office. Further, in conversation it came up that Mr. Buffett doesn’t use any tax planning at all. He just pays as the Internal Revenue Code requires. “How can this be fair?” he asked of how little he pays relative to his employees. “How can this be right?”

Even though I agreed with him, I warned that whenever someone tried to raise the issue, he or she was accused of fomenting class warfare.

“There’s class warfare, all right,” Mr. Buffett said, “but it’s my class, the rich class, that’s making war, and we’re winning.”

This conversation keeps coming back to mind because, in the last couple of weeks, I have been on one television panel after another, talking about how questionable it is that the country is enjoying what economists call full employment while we are still running a federal budget deficit of roughly $434 billion for fiscal 2006 (not counting off-budget items like Social Security) and economists forecast that it will grow to $567 billion in fiscal 2010.

When I mentioned on these panels that we should consider all options for closing this gap — including raising taxes, particularly for the wealthiest people — I was met with several arguments by people who call themselves conservatives and free marketers.

One argument was that the mere suggestion constituted class warfare. I think Mr. Buffett answered that one.

Another argument was that raising taxes actually lowers total revenue, and that only cutting taxes stimulates federal revenue. This is supposedly proved by the history of tax receipts since my friend George W. Bush became president.

In fact, the federal government collected roughly $1.004 trillion in income taxes from individuals in fiscal 2000, the last full year of President Bill Clinton’s merry rule. It fell to a low of $794 billion in 2003 after Mr. Bush’s tax cuts (but not, you understand, because of them, his supporters like to say). Only by the end of fiscal 2006 did income tax revenue surpass the $1 trillion level again.

By this time, we Republicans had added a mere $2.7 trillion to the national debt. So much for tax cuts adding to revenue. To be fair, corporate profits taxes have increased greatly, as corporate profits have increased stupendously. This may be because of the cut in corporate tax rates. Anything is possible.

The third argument that kind, well-meaning people made in response to the idea of rolling back the tax cuts was this: “Don’t raise taxes. Cut spending.”

The sad fact is that spending rises every year, no matter what people want or say they want. Every president and every member of Congress promises to cut “needless” spending. But spending has risen every year since 1940 except for a few years after World War II and a brief period after the Korean War.

The imperatives for spending are built into the system, and now, with entitlements expanding rapidly, increased spending is locked in. Medicare, Social Security, interest on the debt — all are growing like mad, and how they will ever be stopped or slowed is beyond imagining. Gross interest on Treasury debt is approaching $350 billion a year. And none of this counts major deferred maintenance for the military.

The fourth argument in response to my suggestion was that “deficits don’t matter.”

There is something to this. One would think that big deficits would be highly inflationary, according to Keynesian economics. But we have modest inflation (except in New York City, where a martini at a good bar is now $22). On the other hand, we have all that interest to pay, soon roughly $7 billion a week, a lot of it to overseas owners of our debt. This, to me, seems to matter.

Besides, if it doesn’t matter, why bother to even discuss balancing the budget? Why have taxes at all? Why not just print money the way Weimar Germany did? Why not abolish taxes and add trillions to the deficit each year? Why don’t we all just drop acid, turn on, tune in and drop out of responsibility in the fiscal area? If deficits don’t matter, why not spend as much as we want, on anything we want?

The final argument is the one I really love. People ask how I can be a conservative and still want higher taxes. It makes my head spin, and I guess it shows how old I am. But I thought that conservatives were supposed to like balanced budgets. I thought it was the conservative position to not leave heavy indebtedness to our grandchildren. I thought it was the conservative view that there should be some balance between income and outflow. When did this change?

Oh, now, now, now I recall. It changed when we figured that we could cut taxes and generate so much revenue that we would balance the budget. But isn’t that what doctors call magical thinking? Haven’t the facts proved that this theory, though charming and beguiling, was wrong?

THIS brings me back to Mr. Buffett. If, in fact, it’s all just a giveaway to the rich masquerading as a new way of stimulating the economy and balancing the budget, please, Mr. Bush, let’s rethink it. I don’t like paying $7 billion a week in interest on the debt. I don’t like the idea that Mr. Buffett pays a lot less in tax as a percentage of his income than my housekeeper does or than I do.

Can we really say that we’re showing fiscal prudence? Are we doing our best? If not, why not? I don’t want class warfare from any direction, through the tax system or any other way.

Ben Stein is a lawyer, writer, actor and economist.

In Class Warfare, Guess Which Class Is Winning - New York Times

It really struck me how much I forgot that there is a CONSERVATIVE argument for raising taxes, one which many blue dog democrats agree with...

I don't think top republican economists really believed a tax hike on the millionares is going to destroy the economy, I think they believe if tax hikes become acceptable, the GOP will collapse as a national party

I'm not a big fan of Ben Stein obviously, he's a conservative and he has the old school GOP attack that the impeachment of Nixon was stupid and is directly responsible for the troubles of Cambodia

However, like Chuck Hagel, I can respect those across the aisle if they show a willingness to consider or stand up for bipartisan

If Hagel and Stein were the Republicans in charge, taxes would go up and we'd be out of Iraq, the GOP would crumble for decades, but hey its country before political power

The Democrats fell on their own sword in the 1960s over civil rights, they gave up the south to the GOP and they knew it (LBJ noted it as he signed the civil rights act in 1964...12 years before Carter swept the south...and 30 years before the GOP captured it)

Principle and country over power, will the GOP follow in those steps?

[lew]

Rich don't pay taxes. They never do. If you raise taxes on the wealthy, since they own the corporations, they'll pass the taxes onto us. Our taxes go up. I don't get why people don't understand this.

[6SpeedTA95]

Wow what a flawed piece of work

Because the debt has gone up tax cuts haven't added to the revenue? Way to cite figures, whoever wrote that article should be shot

I do however, agree that tax reform is desperately needed including closing off the loopholes.

Conservatives want a balanced budget but not through increased taxes, I want it through decreased spending

[Phantom]

Ben stein is writing for idiots now?

It should be no surprise that the richest guy with so much income from capital gains is going to pay a lower percentage of total income to taxes than the rest of us paying all the taxes that come with ordinary income.

[DosEquis]

The tax cuts did create more debt because there was no cut in spending what so ever, and no it did not immediately add to revenue. It took until 2006 before the tax revenue caught back up with the old levels. Our grandkids pretty much financed those tax cuts. Its disgusts me every time i think about it.

[JaJae]

Originally Posted by DosEquis

The tax cuts did create more debt because there was no cut in spending what so ever, and no it did not immediately add to revenue. It took until 2006 before the tax revenue caught back up with the old levels. Our grandkids pretty much financed those tax cuts. Its disgusts me every time i think about it.

The debt didn't go up because of tax cuts. It went up because of spending. The tax cuts did increase federal tax revenues. We just kept spending more than we were bringing in..

[hsmith]

so some guy with $40,000,000,000 thinks he should pay more in taxes

well fuck, nothing is stopping him. cut a check to the tresury.

but no, lets force at gunpoint everyone to pay more in taxes because someone with an ungodly amount of money thinks we should!

[6SpeedTA95]

Originally Posted by hsmith

so some guy with $40,000,000,000 thinks he should pay more in taxes

well fuck, nothing is stopping him. cut a check to the tresury.

but no, lets force at gunpoint everyone to pay more in taxes because someone with an ungodly amount of money thinks we should!

he's totally free to overpay his taxes, the IRS will accept the money, furthermore if he really believes in payin gmore taxes why is he taking advantage of all the loopholes in the system? If he's paying less than his secretary he's obviously not paying the 35% on his income.

[DosEquis]

Originally Posted by JaJae

The debt didn't go up because of tax cuts. It went up because of spending. The tax cuts did increase federal tax revenues. We just kept spending more than we were bringing in..

UH, they are both responsible. If you cut revenue without cutting spending there is going to be a deficit. That is why these tax cuts were "irresponsible".

When you do have the tax cuts there is a temporary cut in revenue. The tax cuts are only partially repsonsible for the revenue growth, and btw by "revenue growth" it means back to where it was in the year 2000. So there was no real revenue growth yet.

[DosEquis]

Originally Posted by 6SpeedTA95

he's totally free to overpay his taxes, the IRS will accept the money, furthermore if he really believes in payin gmore taxes why is he taking advantage of all the loopholes in the system? If he's paying less than his secretary he's obviously not paying the 35% on his income.

Nope, he has tried that already. A few years ago and they just cut him a refund check back and wouldn't accept it. It was all over our local news. His house is about 10 minutes from my work

[JaJae]

Originally Posted by DosEquis

Nope, he has tried that already. A few years ago and they just cut him a refund check back and wouldn't accept it. It was all over our local news. His house is about 10 minutes from my work

You have to let them know you're doing it...

[hsmith]

Originally Posted by DosEquis

Nope, he has tried that already. A few years ago and they just cut him a refund check back and wouldn't accept it. It was all over our local news. His house is about 10 minutes from my work

You can't over pay in taxes, they will give you a refund.

You CAN write a check directly to the tresury though. They will take that.

[Phantom]

He's already agreed to donate some obscene amount of money to charity, so you have to at least give him credit for not being the typical "raise taxes on the rich" type of guy.

[DosEquis]

Originally Posted by Phantom

He's already agreed to donate some obscene amount of money to charity, so you have to at least give him credit for not being the typical "raise taxes on the rich" type of guy.

He really just has to much money. IMO after a certain point you have a moral (not legislated, relax) obligation to donate that money to something. Give a bunch to your friends who will take care of it, give it to charities, buy a football stadium for the city you live in, etc.

Personally if i won some sort of lottery or became wealthy through some other method, i would probably only keep a couple million so i could retire comfortably and the rest of it would be spread out accordingly.

[Thorgrim]

If I won the lottery i'd spend it all to run as a "moderate reform-anti-immigration" candidate to make sure Hillary won

I'd be the Ross Perot of 2008

Ok I'm not old enough so I'd have to hire/adopt someone

[6SpeedTA95]

Originally Posted by hsmith

You can't over pay in taxes, they will give you a refund.

You CAN write a check directly to the tresury though. They will take that.

That is correct, if he were all about paying taxes he could cut the treasury a check.

[Thorgrim]

I don't see why people are against paying their taxes that funds the war on terror

And no, you can't pick and choose, because i use the subway so much I'd stop paying for roads

But no, we have people trying to give as little to this country as possible, and thus we have to fight 'wars on the cheap' that create more terrorists and endanger america

You could say those who want lower taxes aren't patriotic, nothing would make Osama Bin Laden happier than having US taxes abolished

So, are you on OBL's side or America's side?

[hsmith]

Originally Posted by Thorgrim

I don't see why people are against paying their taxes that funds the war on terror

And no, you can't pick and choose, because i use the subway so much I'd stop paying for roads

But no, we have people trying to give as little to this country as possible, and thus we have to fight 'wars on the cheap' that create more terrorists and endanger america

You could say those who want lower taxes aren't patriotic, nothing would make Osama Bin Laden happier than having US taxes abolished

So, are you on OBL's side or America's side?

no

[nbiggershaft]

Originally Posted by JaJae

The debt didn't go up because of tax cuts. It went up because of spending. The tax cuts did increase federal tax revenues. We just kept spending more than we were bringing in..

Tax cuts always increase tax revenue in the long run. Theoretically we should keep cutting taxes and we could remove the national debt. As the tax percentages go to zero our revenues should approach infinity.