'Billionaires on notice,' ABC anchor Diane Sawyer teased Monday's World News in trumpeting, as did CBS and NBC, a New York Times [1] op-ed [1] by liberal billionaire Warren Buffett. Sawyer heralded Buffett's quest: 'Is it time for the mega-rich to pay at least the same tax rate as their secretaries? And if they did pay their fair share, would it fix America's schools or roads?'
Sawyer soon ludicrously asserted 'working men and women,' meaning the non-wealthy, 'pay the most taxes.' In fact, as detailed by the Tax Foundation, 'America's wealthiest taxpayers are paying a disproportionate share of the income tax burden' while half of all households pay no income taxes.
And forget applying additional revenue to the deficit. ABC reporter Bianna Golodryga, aka Mrs. Peter Orszag, the wife of Obama's former OMB Director, salivated over how the forecast $100 billion over ten years of increased tax revenue would be 'enough to build almost 7,000 new elementary schools or more than 2,000 new high schools.'
NBC Nightly News anchor Brian Williams touted the op-ed which pleased President Obama, whom Buffett endorsed in 2008, and NBC conveniently linked to it on their Web site:
One other note from today, President Obama today made mention of an op-ed article getting a lot of attention. The billionaire Warren Buffett made the case in today's New York Times, the same case he's made to us here in the past, saying, in effect, that he's not being asked to pay enough in taxes. Buffet wrote in part: 'My friends and I have been coddled long enough by a billionaire-friendly Congress. It's time for our government to get serious about shared sacrifice.' We've linked, by the way, the entire article on our Web site tonight.
In 'Warren Buffett's Call for Higher Taxes on the Rich Doesn't Fit the Facts [2],' the Tax Foundation's David S. Logan corrected the fallacies presumed by Buffett and the news media:
The United States currently boasts the most progressive income tax in the industrialized world. Meaning, our wealthy pay a greater share of the tax burden than do the wealthy in any other capitalist nation....
Mr. Buffett chose to leave most of his fortune to the Bill & Melinda Gates Foundation and, thus, avoided an estate tax that could potentially give 55 percent of his wealth to Uncle Sam....
In his op-ed, Mr. Buffett suggests that increasing taxes on the rich ensures that they pay their fair share. Perhaps, but while the top 1 percent of taxpayers earn 20 percent of the nation's income, they currently pay nearly 40 percent of the income taxes. That's a greater share of the burden than the bottom 90 percent combined (that's everyone earning under $100,000 by the way).
Let's not forget that when the top marginal income tax rate was 70 percent in 1980, the rich paid 20 percent of all income taxes. Yet now, when the top marginal rate is 35 percent they pay twice that.
Finally, while the tax burden on the rich has been growing, the burden on low and middle-income Americans has been shrinking. By most accounts, roughly 50 percent of American households pay no income tax at all. Indeed, the IRS will give out roughly $110 billion in "refundable" tax credits this year to households that pay no income taxes.
Contrary to Mr. Buffett's and President Obama's perceptions, America's wealthiest taxpayers are paying a disproportionate share of the income tax burden. Before we ask the rich to pay more, perhaps we should ask those who are paying nothing to contribute at least something to the basic cost of government.
Over on the CBS Evening News, anchor Scott Pelley combined Buffett with a gimmick by another big Democratic donor:
Two of America's top corporate executives today demanded that Washington put the economy back on track. In an opinion piece in the New York Times, billionaire investor Warren Buffett told Congress it must increase taxes on people earning more than a million dollars. 'My friends and I have been coddled long enough by a billionaire-friendly Congress. It's time for our government to get serious about shared sacrifice.'
The chairman of Starbucks took his concerns a step further. He called for a boycott on campaign donations to incumbents in Washington until the President and the Congress find agreement on the deficit. In an e-mail to CEOs, Howard Schultz wrote: 'The government needs discipline; the people need jobs and leaders need to lead. Our country is better than this.' Schultz grew Starbuck into the world's largest coffee house with 11,000 stores and 135,000 employees in America alone. I asked him today how he came up with the idea of boycotting campaign contributions...
From the Monday, August 15 ABC World News:
DIANE SAWYER: Today, there was a call to action from billionaire investor Warren Buffett, who says it's time to ask some tough questions of all the money managers making fortunes in America while working men and women pay the most taxes. Buffett asked, should he pay a smaller percentage of tax than his own secretary? ABC's Bianna Golodryga breaks down his argument.
GOLODRYGA: Warren Buffett took aim at the nation's tax system, saying his $45 billion fortune had bought him access to an elite club that doesn't pay its fair share. In today's op-ed, the billionaire says, 'while most Americans struggle to make ends meet, we mega-rich continue to get our extraordinary tax breaks. My friends and I have been coddled long enough.' It's an argument he's long been passionate about.
WARREN BUFFETT, JANUARY 10, 2010: I don't think our tax program is very equitable, and I think it drifted dramatically in the last ten years toward favoring rich guys like me. So I play a lower tax rate on much of my income than my cleaning lady does. And I think that's crazy.
GOLODRYGA: Just how crazy? Well, last year Buffett paid $7 million in taxes. That sounds like a lot of money, but it works out to a tax rate of just 17 percent. Buffett points out that on average his employees pay about double that rate. He says his secretaries and receptionists pay a 33 percent rate. So why is his rate so low? Much of Buffett's income comes from capital gains, profits resulting from investments, and they're taxed at only 15 percent. Buffett's solution: Rates should be raised for the 300,000 Americans who make more than a million a year, left alone for everyone else. An additional one percent tax on the richest Americans is estimated to raise $100 billion in extra revenue during the next decade. But tax experts say it's not enough for just the super-rich to pay more.
MAYA MacGUINEAS, COMMITTEE FOR A RESPONSIBLE FEDERAL BUDGET: The bottom line is that the fiscal hole that we face is so large that everybody is going to have to be prepared to pay more in revenues in the end.
GOLODRYGA: And while experts agree that $100 billion over the next decade wouldn't t enough to even make a dent in the deficit, it would go far in other ways. For example, it's enough to build almost 7,000 new elementary schools or more than 2,000 new high schools, Diane.
SAWYER: In the name of those mega-rich people.
GOLODRYGA: Less than one half of one percent.
