Warren Buffett on the tax cut

The Washington Post this morning features an oped by Warren Buffett, playing out in simple terms why the Bush tax cut helps the rich by shifting the burden to you and me:

The taxes I pay to the federal government, including the payroll tax that is paid for me by my employer, Berkshire Hathaway, are roughly the same proportion of my income — about 30 percent — as that paid by the receptionist in our office. My case is not atypical — my earnings, like those of many rich people, are a mix of capital gains and ordinary income — nor is it affected by tax shelters (I’ve never used any). As it works out, I pay a somewhat higher rate for my combination of salary, investment and capital gain income than our receptionist does. But she pays a far higher portion of her income in payroll taxes than I do.

… Now the Senate says that dividends should be tax-free to recipients. Suppose this measure goes through and the directors of Berkshire Hathaway (which does not now pay a dividend) therefore decide to pay $1 billion in dividends next year. Owning 31 percent of Berkshire, I would receive $310 million in additional income, owe not another dime in federal tax, and see my tax rate plunge to 3 percent.

And our receptionist? She’d still be paying about 30 percent, which means she would be contributing about 10 times the proportion of her income that I would to such government pursuits as fighting terrorism, waging wars and supporting the elderly. Let me repeat the point: Her overall federal tax rate would be 10 times what my rate would be.
Like Bill Gates, Sr. before him, it’s refreshing to hear such plain math from a very rich man — one who would be reaping the benefits of such an unwise and unnecessary tax cut.

It also occurs to some Democrats now that there is another motive behind this ill-conceived boondoggle: political retribution. If, in fact, the Republicans are booted out of office, they will have left behind the largest budget deficit in the history of this nation and that will leave the Democrats with no choice but to raise taxes to fix the mess that was left in their laps. The Clinton White House left as it’s legacy to Bush the largest budget surplus in history. Bush has squandered it along with the goodwill of the planet, and will leave such an incredible tangle for the next administration… who will then look like the bad guy.