House of Eratosthenes

We start at the beginning. In August of last year, billionaire Warren Buffett penned an op-ed in the New York Times complaining that his taxes weren’t high enough.

OUR leaders have asked for “shared sacrifice.” But when they did the asking, they spared me. I checked with my mega-rich friends to learn what pain they were expecting. They, too, were left untouched.
:
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.

President Obama, looking for some justification for a second term, appeared alongside his wealthy friend and pressed the attack against this threat to the American dream, which is…uh…the American dream?

“Warren Buffett’s secretary shouldn’t pay a higher tax rate than Warren Buffett. There’s no justification for it,” President Obama insisted while pitching his $4 trillion deficit reduction plan in the Rose Garden on Monday.

And a star was born, albeit, apparently, a reluctant one.

For nearly two decades, Debbie Bosanek has fielded press calls, investor queries, and sundry other requests for her boss, billionaire investor Warren Buffett. Now, she herself is in the middle of a very bright spotlight.

On Monday the White House revealed its debt-reduction package. The most controversial, headline-grabbing portion of the $4.4 trillion plan is what Obama calls the “Buffett rule,” which would ensure that people making more than $1 million a year pay higher rates than middle-income taxpayers. It is named for an often-repeated aphorism of Buffett’s, calling for higher levies on the rich: Buffett says he pays a lower overall tax rate than his hardworking secretary does, and that is wrong.
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“People making more than $1 million a year should not pay a smaller share of their income in taxes than middle-class families pay,” Obama said in announcing his plan. “Warren Buffett’s secretary shouldn’t pay a higher tax rate than Warren Buffett. … It is wrong that in the United States of America, a teacher or a nurse or a construction worker who earns $50,000 should pay higher tax rates than somebody pulling in $50 million.”

Whether Bosanek really does pay a higher tax rate than Buffett, or whether the working class pays a higher tax rate than the gilded super-rich, is hard to say. Bosanek certainly isn’t chiming in.

Reached via telephone at Berkshire Hathaway’s Omaha offices on Tuesday morning, she sighed and politely responded: “I’m sorry, I’m not doing any interviews on that.”

“I understand you must be getting deluged.”

“I’ve got to let you go. Bye-bye.” With that, she hung up.

Her boss says she, or someone in the office, is paying 36 to 41 percent. Taking those words at face-value, I’d say the rest of us are owed at least the minimum information: How are these people getting their taxes done? I have to pay taxes too, and I need to know who & what to avoid.

But Buffett’s tale of tax misery for the lesser mortals, didn’t ring true.

The Buffett secretary comparison has become the go-to talking point for everyone supporting the proposed tax increases. But is it correct?

In order to properly investigate the claim, we contacted accounting professionals in different parts of the country and asked them to “run the numbers” on a secretary making $60,000 a year and a really rich guy.

That analysis becomes quite involved and is not the point of this morning’s coffee-o’clock scribblings. Go RTWT when & if you have the time, it’s quite eye-opening. No, I don’t think Warren Buffett would want you to, but do it anyway.

The long and weird backstory brings us to the events unfolding in the here-and-now:

Warren Buffett is ready to call Republicans’ tax bluff. Last fall, Senator Mitch McConnell said that if Buffett were feeling “guilty” about paying too little in taxes, he should “send in a check.” The jab was in response to Buffett’s August 2011 New York Times op-ed, which made hay of the fact that our tax system is so unbalanced, Buffett (worth about $45 billion) pays a lower tax rate than his secretary. Senator John Thune promptly introduced the “Buffett Rule Act,” an option on tax forms that would allow the rich to donate more in taxes to help pay down the national debt. It was, as Buffett told me for this week’s TIME cover story, “a tax policy only a Republican could come up with.”

Still, he’s willing to take them up on it. “It restores my faith in human nature to think that there are people who have been around Washington all this time and are not yet so cynical as to think that [the deficit] can’t be solved by voluntary contributions,” he says with a chuckle. So Buffett has pledged to match 1 for 1 all such voluntary contributions made by Republican members of Congress. “And I’ll even go 3 for 1 for McConnell,” he says. That could be quite a bill if McConnell takes the challenge; after all, the Senator is worth at least $10 million. As Buffett put it to me, “I’m not worried.”

Get it? Warren Buffett wants to make an issue out of Republican hypocrisy.

See the subtle shift taking place: Warren Buffett is taking advantage of a very seldom-discussed privilege available only to a few among us, those who have managed to remain solvent. It may be more precise to define their numbers as: Those who feel comfortable with gambling. He gets to make a grandiose public statement about an example of hypocrisy that has not yet been demonstrated. Obviously he believes in it, and because he has some money to back up what he believes, it could be credibly surmised that his beliefs trump everybody else’s.

But he’s doing this to take a little bit of limelight away from another example of hypocrisy, this one much more credible since it arrives from the past rather than the future: Namely, his own hypocrisy. He’s already been caught red-handed, running to Washington to talk to his buddy Barack Obama, to get the taxes raised on his “mega-rich friends” and himself.

Gee, that Warren Buffett must be a wonderful personal pal. With friends like that…

But you know what? You don’t even need to wait for the Thune Act if you don’t think your taxes are high enough. As Mitch McConnell and others pointed out, you can send it in yourself. We are not to presume Buffett’s too dense & thick to figure this out for himself, are we? He must have recognized the option was available from the very beginning. Which, in my view, makes his whole cause here a little disingenuous to say the least.

But we don’t need to conclude this is incompetence talking, or even necessarily hypocrisy or deceit. I think it is an example of obfuscation…and Buffett, backed into a corner, if you were paying attention you’ll notice he finally dropped the act. To repeat:

“…as to think that [the deficit] can’t be solved by voluntary contributions,” he says with a chuckle.

That is what this is all about. It doesn’t have anything to do with paying down the public debt or making the government more flush…not for just this year or the year coming-up, anyway. It isn’t about fairness to Buffett’s secretary or calculating a “fair share” for her tax bracket, or his, or any other.

It is about choice. The effort currently underway is to abrogate it. Obama, Buffett, et al, want to get rid of it. They want force. That is central to what this is all about. Everything else under discussion is simply derivative of that.

Senate Minority Leader McConnell, to his credit, made an issue out of that in his office’s response to Buffett’s challenge:

Sen. McConnell says that Washington should be smaller, rather than taxes getting bigger. And since some, like President Obama and Mr. Buffett, want to pay higher taxes, Congress made it possible for them to call their own bluff and send in a check. So I look forward to Mr. Buffett matching a healthy batch of checks from those who actually want to pay higher taxes, including Congressional Democrats, the President and the DNC.

Warren Buffett, teaching us all that rich doesn’t always equal smart.

The more I hear from Buffett the less I respect the guy. Remember him pre-Obama, dude was a brilliant businessman, now when I see his face on TV I can’t change the channel fast enough to escape his verbal diarrhea.

Please Mr. Buffett, just STFU and go away already, your act has gotten old real quick. But do let us all know when you send in that check.
- tim | 01/12/2012 @ 10:10
“People making more than $1 million a year should not pay a smaller share of their income in taxes than middle-class families pay,” Obama said in announcing his plan.

No, Mr President, they shouldn’t.

They should be paying exactly the same share of their income, regardless of where that income is. God took 10% of everyone’s income during the Old Testament times; are our leaders of the belief that they are wiser than God? (Don’t answer that…)

Steve Forbes proposed this while running for president back in 1996. It was a good idea then; it’s a good idea now. The only drawback is that it would put a lot of accountants out of business.
- cylarz | 01/16/2012 @ 00:24
So Buffett has pledged to match 1 for 1 all such voluntary contributions made by Republican members of Congress. “And I’ll even go 3 for 1 for McConnell,” he says. That could be quite a bill if McConnell takes the challenge; after all, the Senator is worth at least $10 million. As Buffett put it to me, “I’m not worried.”

Excuse me, Mr Buffett, but I am not seeing the ‘hypocrisy.’ Senator McConnell is not the one who stood before the American people (via an op-ed in the NYT) and told them that he thinks he doesn’t pay enough taxes. You did, sir.

McConnell doesn’t want pay more in taxes than he currently does. He wants to spend his money on the goods and services and investments of his choosing, rather than having the government pick and choose for him. The same could be said of you; instead of simply eating some crow and admitting the exact same is true of you, you upped the ante by offering to go “3 for 1.”

You’re an idiot, Mr Buffett…and more to the point, I do not appreciate you encouraging the president and members of Congress to raise taxes on the rest of us who aren’t millionaires and billionaires…which was sort of the point all along, wasn’t it? You may have money to throw around; the rest of us out here in middle America are having a hard enough time feeding our families, putting gas in our cars, keeping roofs over our heads, and running our businesses…without you and a bunch of other idle rich going around trying to get the government to take away even more of what was ours.

Just shut the hell up, will you?
- cylarz | 01/16/2012 @ 00:38
Yeah, cylarz, I just sort of lifted that last comment of yours and threw it up over at my place as a post of its own. 🙂
- philmon | 01/27/2012 @ 09:13

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Buffett Misses the Point — On PurposeThursday, January 12th, 2012

Buffett Misses the Point — On Purpose
Thursday, January 12th, 2012