Tuesday, August 16, 2011

The Real Reason You Won't See A Real Increase In Taxes on the SuperRich

On Monay, mega investor, the Oracle of Omaha, Warren Buffet authored an op-ed in the New York Times calling on Congress to increase taxes on the super rich.  The nugget take away came in this paragraph: 
But for those making more than $1 million — there were 236,883 such households in 2009 — I would raise rates immediately on taxable income in excess of $1 million, including, of course, dividends and capital gains. And for those who make $10 million or more — there were 8,274 in 2009 — I would suggest an additional increase in rate.
 So, increase the taxes on those making more than $1 million.  This statement, if made by President Obama, would be called classic class warfare, but because the statements come from Buffett, they are somehow more palatable.

So Buffett is making a call for a change in taxes for those making more than $1 million and I can predict how that is going to go over with Congress--like a lead balloon.  The reason why is simple--it is not in the individual self-interest of Members of Congress.

According to the Center for Responsive Politics, twenty five members of Congress had incomes in 2009 over $280,000 in income other than their Congressional salaries, which are substantial as well.  In 2011, a rank and file member of congress makes $174,000 per year.  So for those 25 Members of Congress listed by the CRP, their combined total income is more than $450,000 per year.

To increase the taxes on millionaires jeopardizes Congress's own tax bill.  Remember, the income discussed by the CRP is outside income.  While it might make good policy, an assertion I am not ready to admit, the fact is that if you were a member of Congress would you willinging punish yourself and your family by voluntarily increasing your tax burden? 

Increasing taxes on yourself requires an understanding of "shared sacrifice" that I really don't see a lot of in our current leaders in Washington.  It requires a courage that is lacking, so as appealing as Buffett's call may be, I simply don't see it happening.

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