We all know the economy is jacked. One look at most folks’ bank statements, 401k accounts, and credit card bills and we know we’re living in lean times.
While the poor and middle class continue to get poorer, however, the rich are prospering being beyond measure. Some chalk this up to Darwin-esque survival tactics, while others feel as though the game of life is rigged.
Over the weekend, Warren Buffett, one of the wealthiest men in the world, challenged Washington to stop giving handouts to the super-rich. In his New York Times op-ed piece, Buffett pointed out the disparities in the tax rate for the super rich versus the poor and middle class.
While the poor and middle class fight for us in Afghanistan, and while most Americans struggle to make ends meet, we mega-rich continue to get our extraordinary tax breaks. Some of us are investment managers who earn billions from our daily labors but are allowed to classify our income as “carried interest,” thereby getting a bargain 15 percent tax rate. Others own stock index futures for 10 minutes and have 60 percent of their gain taxed at 15 percent, as if they’d been long-term investors.
These and other blessings are showered upon us by legislators in Washington who feel compelled to protect us, much as if we were spotted owls or some other endangered species. It’s nice to have friends in high places.
Last year my federal tax bill — the income tax I paid, as well as payroll taxes paid by me and on my behalf — was $6,938,744. That sounds like a lot of money. But what I paid was only 17.4 percent of my taxable income — and that’s actually a lower percentage than was paid by any of the other 20 people in our office. Their tax burdens ranged from 33 percent to 41 percent and averaged 36 percent.
If you make money with money, as some of my super-rich friends do, your percentage may be a bit lower than mine. But if you earn money from a job, your percentage will surely exceed mine — most likely by a lot.
Throughout our current economic crisis, Buffett has continually advised Congress to raise takes on the super-rich, but so far they have yet to take his advice. Congress’ recent debt ceiling deal has opened up a new opportunity to finally correct loopholes in the tax code, but I doubt politicians–who are usually more concerned with poll numbers than their actual constituents—will finally get it right.