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The Buffet … Rule?

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The Buffet Rule is sitting before congress. The Buffet Rule says that if you make over $1 million dollars a year you should pay no less than 30% of your hard earned money to the state. The “rule” is named after billionaire investment guru, Warren Buffet, “The Oracle of Omaha,” as he is often referred to.

Buffet complained to the president that he felt it was unfair that he was taxed at a lower rate than his secretary. I should note that his secretary makes a six-figure income, as you might suspect, being the secretary of a billionaire. So she’s not just some nobody selected at random from the secretarial pool. And, never mind that she is taxed on her salary, while Buffet is taxed on dividends earned from investments that are taxed at a much lower rate. Why are they taxed at a much lower rate? To encourage people like Buffet, and you and I, to invest and save our money. In short, to build wealth for the future.

When exactly did the rich become the “bad guys?”

“Tax breaks for the rich.” Really? I believe a more accurate statement would be tax breaks for taxpayers. Currently, half the working people in the US don’t pay any taxes at all. The other half is stuck paying the full load for everyone. Where is the “so called” fairness in that?

My grandparents, and parents lived through the Great Depression of the 1920’s and 30’s. Growing up my parents always told me to save money. “You never know how bad things can get,” they would tell me. But after the Korean War our society went to work and had a pretty good run of prosperity. Yet, along the way, we created an entitlement society that felt if someone else had it better than you, that somehow just wasn’t fair. We created excuses for why you were not getting your “fair share” of the American dream. If you grew up poor, you were sentenced to be poor. If you grew up rich, you would most likely stay rich. We created every conceivable type of safety net in an effort to eliminate financial failure at all levels.

Noble but wrong

We are a very noble country. We are always the first to show up when any disaster occurs anywhere in the world. We give till it hurts in many cases. Our worldwide generosity is unmatched by any other people … ever. But, are safety nets fair to those they are supposed to help?

There’s an old saying, “What doesn’t kill you, makes you stronger.” I think it’s interesting that when unemployment insurance ran out at 26 weeks, the average time it took to find a job was 29 weeks. Now, unemployment is at an unprecedented 99 weeks. That is just 5 weeks short of two years. As I am writing this, 91.8 out of every 100 people have a job. If full unemployment is considered 4-5%, are you telling me that it takes 99 weeks for 3% of the unemployed to find a job? Looking in my morning paper tells there are plenty of people hiring.

The Buffet Rule is Not The Answer — it’s the problem.

The problem is math, not taxes or jobs. Government thinking is always stagnant. They exist in a bubble where things never change. Before Kennedy and Reagan came along to reduce taxes, US tax rates were 90% for the rich. During those days we built the entire US highway system. What most people don’t realize is that no rich person actually paid anywhere near 90% of their income in taxes. There was an endless list of deductions, not only for the rich, but also for the average American. We also built that highway system without all the regulations that government has heaped on us today.

The point is, even if the Buffet Rule passes, which is about as likely as me passing Danica Patrick — no one is ever going to pay that tax rate. That’s why God made CPA’s. So this “rule” is nothing more than a “feel good” panacea to buy votes from those that think the rich are getting breaks they don’t deserve.

There’s a better way

Instead of raising taxes, how about simply creating more taxpayers? Give businesses the opportunity to hire more people by re-evaluating the need for some of government’s restrictive regulations. I’m not talking about giving up safety or creating an unhealthy workplace. Let corporations bring money back to the US without penalty and put that money to work here. We now have the highest corporate tax rate in the world. Not every corporation pays the top rate but neither do their competitors in other countries. Stop taxing production and think more about taxing consumption.

Last but not least.

The rich have always had the freedom to pay more in taxes if they choose. My question would be, after seeing how the GSA and congress spends that money, how comfortable do you feel about sending extra dough to this group of irresponsible spendthrifts? We are borrowing over $4 billion dollars each day just to keep the doors open. Frankly I think I can do a better job of redistributing my wealth than Uncle Sam. Did I miss the part where the president kicked in a little extra to the Treasury on his return? What’s your opinion?

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