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Monday, August 22, 2011

My Response to Buffett And Obama: Spend More Wisely, Then Tax Me More

Wall Street Journal op-ed, My Response to Buffett And Obama, by Harvey Golub:

Over the years, I have paid a significant portion of my income to the various federal, state and local jurisdictions in which I have lived, and I deeply resent that President Obama has decided that I don't need all the money I've not paid in taxes over the years, or that I should leave less for my children and grandchildren and give more to him to spend as he thinks fit. I also resent that Warren Buffett and others who have created massive wealth for themselves think I'm "coddled" because they believe they should pay more in taxes. I certainly don't feel "coddled" because these various governments have not imposed a higher income tax. After all, I did earn it. ...

Others could pay higher taxes if they choose. They could voluntarily write a check or they could advocate that their gifts to foundations should be made with after-tax dollars and not be deductible. They could also pay higher taxes if they were not allowed to set up foundations to avoid capital gains and estate taxes.

What gets me most upset is two other things about this argument: the unfair way taxes are collected, and the violation of the implicit social contract between me and my government that my taxes will be spent—effectively and efficiently—on purposes that support the general needs of the country. Before you call me greedy, make sure you operate fairly on both fronts.

Today, top earners—the 250,000 people who earn $1 million or more—pay 20% of all income taxes, and the 3% who earn more than $200,000 pay almost half. Almost half of all filers pay no income taxes at all. Clearly they earn less and should pay less. But they should pay something and have a stake in our government spending their money too.

In addition, the extraordinarily complex tax code is replete with favors to various interest groups and industries, favors granted by politicians seeking to retain power. ... Governments have an obligation to spend our tax money on programs that work. They fail at this fundamental task. ...

Here's my message: Before you "ask" for more tax money from me and others, raise the $2.2 trillion you already collect each year more fairly and spend it more wisely. Then you'll need less of my money.

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Comments

Disgusting. I'm going to cancel my American Express Card if this is what their ex-CEO thinks of people who aren't rich like him.

Posted by: reality bites | Aug 22, 2011 7:32:39 AM

And many of us who are in the middle class resent that our tax burden has increased when people like Mr Golub have been given a back door into the Treasury. Yes, spend more wisely. Especially when you spend money on giveaway to people who do not need the money. Is Mr Golub going to have to cash out his retirement plan to pay for medical bills? Are his kids going to have to rack up tens of thousands in student loans because the cannot afford tuition because of the fiscal problems of the states? He doesn't feel coddled? Millions have left jobs without the platinum parachute of Mr Golub. Earned it? I wonder if the shareholders would agree. It seemed like too many bankers and CEO who earn their money were quick to run to the Taxpayers yellng "save me" when their mismanagement sent their companies into bankruptcy and someone invented the idea of "too big to fail". Obviously not too big to whine.

Posted by: George W | Aug 22, 2011 10:12:30 AM

Harvey Golub is perpetuating the brainless notion that the payroll taxes wage-earners pay to fund the biggest (and most popular) government programs somehow doesn't count as "paying into the system."

That he doesn't acknowledge facts like this makes him look petty and self-interested, and a bit of a whiner to boot.

Having said that, the government really needs to explain its own usefulness, to better counter folks like Golub, who are merely repeating old talking-points. Here's a smart reply from Forbes: http://onforb.es/nuh83x

Posted by: Vertov | Aug 22, 2011 10:17:55 AM

Up to about a year ago, people who worked full time and still got food stamps or claimed the EITC were the 'working poor' We all felt sorry for them. Then the Republicans turned their fire-hose of a propaganda machine on them. Now they are completely villainized. Retired credit card company CEOs can write op-ed pieces about how these food-stamp deadbeats are scheming to cheat Mr. CEO's children out of their multi-million dollar inheritance and nobody laughs.

Reality seems to have noticed, but not too many other people.

Anyway, the Republicans are planning on reinstating the payroll tax on these guys. That'll teach 'em.

Posted by: Jim Harper | Aug 22, 2011 11:10:15 AM

Ah yes, envy, the solution to all problems.

Posted by: SDN | Aug 22, 2011 3:58:01 PM

Harvey Golub is perpetuating the brainless notion that the payroll taxes wage-earners pay to fund the biggest (and most popular) government programs somehow doesn't count as "paying into the system."

Those payroll taxes won't even cover the social security and medicare benefits those workers will receive when they retire. So no, those payroll taxes really shouldn't be counted (at least not as 'paying into the system' and contributing to the general welfare).

Posted by: Slocum | Aug 22, 2011 4:00:03 PM

Harvey Golub should pay more taxes because ---(insert ad hominem and counterfactual or illogical explanation here)---.

---because envy is cool and I want what he has---

Posted by: John Schappert | Aug 22, 2011 4:04:12 PM

And out come the defenders of insane deficit spending. Funny, they don't have any other explanation or argument other than "You can afford it." But then again, I guess theft is in the Left's blood...I wonder if they'd commend me if I mugged them and took their wallets in the name of "fairness."

Posted by: seguin | Aug 22, 2011 4:23:45 PM

"Retired credit card company CEOs can write op-ed pieces about how these food-stamp deadbeats are scheming to cheat Mr. CEO's children out of their multi-million dollar inheritance and nobody laughs. "

Is there any evidence that this is not true?

According to his article, he pays 80-90% of his income in various taxes. Is that figure incorrect? If not, do you really think it's fair to take more? Why not pick him up by his heels, shake and see what falls out?

No wonder the USA is in decline if the comments here are representative of the kind of critical thinking its citizens are capable of.

If you punitively tax the rich, the economy will suffer even more, hurting poor people the most. But I suppose that's OK as long as it's "fair".

Posted by: Nicholas | Aug 22, 2011 4:34:46 PM

I think he's right. Everybody should pay into the system in some form or another. I'm disturbed that so many benefit from this country while paying no Federal Income Taxes.

And, payroll taxes are for a specific purpose. Income taxes are for the general fund.

Here's an idea: If you don't pay cash into the general fund, you should be required to contribute time or talent to the country. And if taxes go up - so does your 'time requirement'.

Posted by: Lily | Aug 22, 2011 4:40:46 PM

I don't suppose those complaining Mr. Golub's article would consider a tax scheme that confiscates all income over the median as fair, would they? I mean, we could continue to have differential compensation[that would somehow show how useful you are to society, I suppose], but no one should have more than the median income [for their sized household] to spend.

That would be fair, wouldn't it? I hope all those above would endorse this and disclose how much of their income they'd have to give up.

Posted by: jorgxmckie | Aug 22, 2011 4:47:31 PM

"And many of us who are in the middle class resent that our tax burden has increased...."

It has? I'm in the middle class. Mine hasn't. It's gone down, mostly thanks to the lowering of the lower tax brackets and the increase in the child tax credits. In fact, my federal taxes were lowered more via the 2001-2003 tax cuts than Mr. Golub's were. (My California state taxes are a whole 'nother story -- but they haven't increased because California undertaxes the wealthy.)

As for the payroll tax -- no, that doesn't count. The payroll tax doesn't go to fund general public services. It funds your own retirement -- and for most people, it doesn't even cover full freight for that. You depend on me, and others paying the maximum payroll tax for Social Security, to subsidize you.

Everybody should have to pay at least something towards the cost of the general public good. Half the people don't. That's a problem.

Posted by: Thomas | Aug 22, 2011 5:36:25 PM

"Having said that, the government really needs to explain its own usefulness, to better counter folks like Golub, who are merely repeating old talking-points. Here's a smart reply from Forbes: http://onforb.es/nuh83x"

Well, George, if you think Professor Burman counters Golub in the piece you link, you might want to read it again.

The real joke, of course, is that you and Burman believe the government can justify the extent of its spending.

Posted by: hombre | Aug 22, 2011 5:44:15 PM

I think the time has come to invert the old watchwords of the American Revolution "No Taxation without Representation." Today, you should not get representation unless you are subject to taxation.

NO REPRESENTATION WITHOUT TAXATION!

Posted by: Doug Jones | Aug 22, 2011 6:03:07 PM

Don't forget...when Bush cut taxes he cut them on everyone. That seems fair. Cut...cut all. Raise...raise all.

Posted by: Teh Dave | Aug 22, 2011 6:08:43 PM

So far, the criticism of Mr. Golub's observations seems to be based on little more than emotional spin coupled with ad hominem attacks. In other words, standard operating procedure for the tax-and-spend Left.

Posted by: Jeff | Aug 22, 2011 6:17:04 PM

I too pay a buttload in taxes. And I too resent evidently healthy young men whipping out their ACCESS cards (PA welfare) to buy all sorts of goodies all while yapping on their high-end cell phones, sporting tattoo's that most assuredly were not free. Or showing up in my ER DEMANDING some drugs ("It's their right, dammit!"). Or a host of other instances in this society where the lazy and addicted demand more and more. I fail to see what is so "unfair" about everybody paying 10% of the gross, no deductions, send it in. No tax lawyers (From a UC alum, sorry Dr. Caron!) and minimal IRS interfernce in our lives. If it's good enough for God, it's good enough for the US Government.

Posted by: DocinPA | Aug 22, 2011 6:36:43 PM

It frustrates me how some people who are willing to do so little for themselves, expect me to do so much for them.

Posted by: Jane | Aug 22, 2011 7:36:24 PM

"Retired credit card company CEOs can write op-ed pieces about how these food-stamp deadbeats are scheming to cheat Mr. CEO's children out of their multi-million dollar inheritance and nobody laughs."


Envy is the most pathetic form of human greed.

Especially in a wealthy Nation where the 'welfare deadbeats' are using their foodstamp cards to gamble in Las Vegas, tan on the beaches of Hawaii, dine on filet migon and lobster then hang out at the newest Bruce Springsteen concert.

Mr. Envyman even after you were given $ 4 Trillion in tax-dollars from your Government Man you still complain it isn't enough.

Posted by: syn | Aug 22, 2011 8:57:06 PM

Harvey Golub and all of his fellow travelers in stratospheric corporate compensation are collectively nothing but straw men. Reasonable people can differ as to whether they should have the right to leave untold millions to their progeny rather than using the money for civic purposes such as funding presidential bus tours through Iowa and the like. In any case, the executive class will keep working, confiscatory taxation notwithstanding because they are, after all, employees and they still have to produce. Most of them have no more of an option than a commuter trying to avoid a bridge toll.

The poster boy for the absolute economic ignorance of class warfare tax policy should be small business.

We'll paint in broad strokes here just to make a point.

Generally speaking, before an owner of a small business can take $250,000, $500,000, $1,000,000 or more out of it for himself he has to generate sufficient revenue to cover this and all his other costs. To earn his money, be it in the form of salary or profit distribution, most small business people have to hire employees, rent space of some kind, maybe buy goods for fabrication or resale, or office supplies, office equipment etc.

If I own a paper goods business with fifteen employees, a warehouse with offices, and three trucks, from which I take out $250,000-$500,000, what are the odds that I will risk the capital and energy necessary to open a second facility fifty miles down the road if the government will take most of my expected profit away in taxes?

I wouldn't do it, no one reading this blog would do it, and neither would any rational small business person do something so incredibly stupid. The result of this manifestation of rational behavior when multiplied by the millions of small business people in this country is millions of uncreated jobs, millions of vehicles neither purchased nor leased, millions of computers and pieces of office equipment not purchased, billions of dollars in office and general supplies not purchased, hundreds of millions of square feet of commercial space neither purchased nor built, billions of dollars not spent on advertising and tens of billions not spent on goods. And this is only a partial list.

Show the American People this picture, and they'll understand who gets screwed at the end of the day when the Tax Man cometh with scythe in hand for the jugular of those who create employment opportunities for others.

This is what it's all about, not about the rich getting richer.

It's about allowing those who know how to produce wealth to create conditions that will allow millions of others to live, very many of them to prosper, and quite a few to transition from the presently unemployed to the Hated Rich.

If in order to make this happen, Harvey Golub's grandchildren will wind up with a few million that would have otherwise wound up in some Afgan official's Swiss bank account, we'll learn to live with it.

Posted by: meir zev mark | Aug 22, 2011 9:45:56 PM

Mr. Golub's point about the growing percentage of citizens who pay little or no income tax should be of greater concern to all. It is a bit ironic that Warren Buffet is credited with coining the term "skin in the game" about the benefit of high ranking company insiders using their own money to buy stock in the company. Having a vested interest is good for both private companies and our government.

I also join "jorgxmckie" to question the earlier comment, "many of us who are in the middle class resent that our tax burden has increased..." I'm in the middle class and live in California. While I have paid more in sales, property, and state taxes since the year 2000, my federal tax burden has fallen over the same period. I keep seeing claims about the supposed transfer of the federal tax burden from the wealthy to the middle class, but all the facts and figures I have seen show the reverse to be true.

Posted by: Dash Senile | Aug 22, 2011 10:49:46 PM

"Retired credit card company CEOs can write op-ed pieces about how these food-stamp deadbeats are scheming to cheat Mr. CEO's children out of their multi-million dollar inheritance and nobody laughs."

Apparently Vertov did not read the article.

Posted by: Dave Munnell | Aug 23, 2011 6:01:13 AM

Hahaha. Some of these parody posts are great!

Those damn kids and their tattoos and visits to the ER! Curse them!!

Posted by: Marketplace | Aug 23, 2011 6:02:29 AM

In regards to Burman's article at Forbes, I think his proposal falls far short of what's necessary to restore people's faith in government (particularly at the federal level). It isn't enough for EPA to tout its accomplishments from generations ago -- the funding level EPA requires to prevent another river from catching afire is a tiny fraction of its current funding.

Further, I don't know what somebody at Energy or Education could possibly share to justify their existence. Energy security is the worst it's been since Carter. Education outcomes have been flat forever; all those Pell grants have gone straight into the pockets of middle-management bureaucrats at the universities. There aren't enough 140-character talking points on Earth to make the case for some of these departments and programs.

Were Burman a more adventurous sort, he'd propose something more drastic, and more effective: scale the federal government back to the scope and power it had a hundred years ago, and see for ourselves just how necessary all the bloat really is. Ignore the wailing and gnashing of teeth, and just see whether we're capable of taking care of ourselves, our families, and our neighbors without some pencil-pusher in northern Virginia telling us how we're required to live.

I'll bet you a dollar that we can do it way better, more effectively and at much lower cost, than even the best program to come out of Washington. Now THAT would be reform.

Posted by: Squid | Aug 23, 2011 6:54:26 AM

I agree the government should spend more wisely. I disagree with the winner take all policies where 20% of the U.S. population owns 85% of the financial assets and 60% of the population has .005%. This third world country we live in call USA needs to be rebalanced and the 85% need to step to the plate and pay their debt.

Posted by: Nick | Aug 23, 2011 9:31:36 AM