Warren Buffett Quotes
I have never been able to understand why the tax comes as such a body blow to many people since the rate on long-term capital gain is lower than on most likes of endeavor (tax policy indicated digging ditches is regarded as socially less desirable than shuffling stock certificates).
The George W. Bush administration when they had a Republican-controlled Congress, had amended the tax laws to treat the earnings of the hedge fund managers differently from people who manage other enterprises in the nation. They gave a group of very wealthy managers whose earnings were already amongst the highest of any managers in the country a huge tax break, while little public attention was paid to the subtlety of complex tax laws. Daschle and others began to draw public attention to the inequity.
This became known as the Buffet Principle—that the very rich should not pay a lower tax rate than the workers who make far less money than they do. President Barack Obama used this principle by name in calling for the 2011 Jobs Act which would eliminate some of the loopholes and exemptions by which the rich could avoid some or much or their tax obligation.
There are two reasons that government cannot depend on the rich for tax yield. First, there are very few rich compared to middle class workers. Although the rich person may pay more on the average in taxes, than others, there are not enough to cover all the expenses of a modern government. Second, because the rich make larger policitcal contributions and have lobbyists, they get legislation that exempts them from many taxes or provides loopholes. So even though the wealthy are theoretically supposed to pay a higher rate of taxes, as a practical matter, most wealthy people pay a lower tax rate than their secretaries or the waiter who will serve them lunch—the Buffet Principle.
Leonhardt was pointing to the thousands of logical inconsistencies in the tax code while urging reform. However, the answer to his question has nothing to do with logic. Soda manufacturers are larger and wealthier than the retailers, have more lobbyists, and donate more money to Congressional and Presidential campaigns.
Warren Edward Buffett is an American investor, business tycoon, philanthropist, and the chairman and CEO of Berkshire Hathaway. He is considered one of the most successful investors in the world and has a net worth of over US$100.6 billion as of April 2021, making him the world's seventh-wealthiest person.
