The IRS will gladly accept a billion dollars
I have seen quite a few Facebook postings relating to the Reuters article about Warren Buffett. He came out and said that billionaires are over-coddled, and that congress should start taxing the crap out of them. I have a little problem with this, and with all of my arguments, I’m going to use pesky facts and hard statistics to validate my point. Here are a few to start:
1) I question Buffett’s math. He noted that his tax bill was $6,938,744, and that this is based on an effective tax rate of 17.4%. This means he made a shade under $40M last year. Now this isn’t bad, but one of the richest guys in the world only made that much? I personally know people who made more than that. At that rate, to achieve a net worth of around $50 billion would take about 1,250 years. So I’m hoping this was just an off year for him.
2) Number of billionaires in this country: approximately 412 (according to Forbes). This is about 8 per state, or 0.0001% of the population.
3) Number of households with a Net Annual Income greater than $250k: 2.25M (per the U.S. Census). This is about 45,000 households per state, or 0.75% of the population. If you think this qualifies you as rich, you are delusional.
4) Number of households with a Net Worth greater than $20M: 77,000 (per the U.S. Census). This is about 1,540 per state, or 0.03% of the population.
Now that we have those statistics out of the way, does anyone out there still feel that taxing these people exorbitantly is going to help our fiscal debt situation? Even if we assume all billionaires made as much as Mr. Buffett, and we taxed them 100% of their income, it would only cover $2.8 billion of the deficit. The Federal Government spends about $10 billion a day. So this would cover up until about the point our congressmen wake up in the morning on January 1st.
How about we take those people with a net worth of $20M and seize all of their assets! Besides the fact that they’re going to be mostly illiquid, and the true value of them will only be determined upon sale (which we’ll ignore for the time being), this would free up $1.54 trillion. Now we’re getting somewhere. That will cover almost one year of deficits at the current rate, bringing us almost to a balanced budget. And now that all of the wealthy people in this country have been eliminated, we’ll just figure out how to pay the bills for the next hundred years without them. It’s also worthy to note that many of these individuals are small and medium-sized business owners who create thousands of jobs, keep small towns sustainable, and promote economic growth. But these are nuances that we should probably ignore.
I used to have great respect for Mr. Buffett until recently. On August 6th he mentioned that the U.S. should have a “quadruple A rating”. Why is this? Because Berkshire was also downgraded recently, and has a lot of International and insurance exposure. He’s looking out for his own interests, and was trying to reduce the damage caused by lower credit ratings.
Clearly Mr. Buffett is a great investor, but must have skipped some of his basic math classes. Either that, or he has something else up his sleeve. I’m guessing the latter. After all, no one is stopping him from writing a billion dollar check to the IRS. Perhaps Mr. Gates and the Walton family would also like to write 10-figure checks to the IRS to help out this great nation. I’m even happy to look up the address for them.
As for fixing the debt problem, I propose we start looking somewhere that can actually make a difference:
Just a thought.