It seems that the Wizard of Omaha has seen so many Jon Stewart and Colbert Nation episodes that some of their talents has rubbed on him. From his op-ed in New York Times:
And, wow, do we have plenty to invest. The Forbes 400, the wealthiest individuals in America, hit a new group record for wealth this year: $1.7 trillion. That’s more than five times the $300 billion total in 1992. In recent years, my gang has been leaving the middle class in the dust.
A huge tail wind from tax cuts has pushed us along. In 1992, the tax paid by the 400 highest incomes in the United States (a different universe from the Forbes list) averaged 26.4 percent of adjusted gross income. In 2009, the most recent year reported, the rate was 19.9 percent. It’s nice to have friends in high places.
The group’s average income in 2009 was $202 million — which works out to a “wage” of $97,000 per hour, based on a 40-hour workweek. (I’m assuming they’re paid during lunch hours.) Yet more than a quarter of these ultrawealthy paid less than 15 percent of their take in combined federal income and payroll taxes. Half of this crew paid less than 20 percent. And — brace yourself — a few actually paid nothing.
In case anybody is wondering, Warren, – can I call you Warren, since it seems that I know you so well, never mind that you don’t even know that I exist – has some sturdy experience to draw ideas for his op-ed:
Between 1951 and 1954, when the capital gains rate was 25 percent and marginal rates on dividends reached 91 percent in extreme cases, I sold securities and did pretty well. In the years from 1956 to 1969, the top marginal rate fell modestly, but was still a lofty 70 percent — and the tax rate on capital gains inched up to 27.5 percent. I was managing funds for investors then. Never did anyone mention taxes as a reason to forgo an investment opportunity that I offered.
My favorite part of the piece is:
Our government’s goal should be to bring in revenues of 18.5 percent of G.D.P. and spend about 21 percent of G.D.P. — levels that have been attained over extended periods in the past and can clearly be reached again. As the math makes clear, this won’t stem our budget deficits; in fact, it will continue them. But assuming even conservative projections about inflation and economic growth, this ratio of revenue to spending will keep America’s debt stable in relation to the country’s economic output.
After all issue is never the level of debt but the ability to pay the debt and if the GDP is growing at a faster rate then the national debt, then the level of debt will not be an issue for bond holders. Ever wonder why some people can get mortgages of more that $1 million dollar whereas some can’t get more than $200K? Hint: people who get higher mortgage have a higher income to expanses ratio – same as higher GDP to debt ratio for countries. And, the ability to pay notion for countries come from their ability to raise taxes – something that USA has been continuously ruling out, which is like telling the market that we are against generating more revenue.