Stop Coddling the Super-Rich

This is an op-ed piece written by Warren E. Buffett for the New York Times. There is nothing left to say.

Published: August 14, 2011

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Omaha

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.

While the poor and middle class fight for us in Afghanistan, and while most Americans struggle to make ends meet, we mega-rich continue to get our extraordinary tax breaks. Some of us are investment managers who earn billions from our daily labors but are allowed to classify our income as “carried interest,” thereby getting a bargain 15 percent tax rate. Others own stock index futures for 10 minutes and have 60 percent of their gain taxed at 15 percent, as if they’d been long-term investors.

These and other blessings are showered upon us by legislators in Washington who feel compelled to protect us, much as if we were spotted owls or some other endangered species. It’s nice to have friends in high places.

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.

If you make money with money, as some of my super-rich friends do, your percentage may be a bit lower than mine. But if you earn money from a job, your percentage will surely exceed mine — most likely by a lot.

To understand why, you need to examine the sources of government revenue. Last year about 80 percent of these revenues came from personal income taxes and payroll taxes. The mega-rich pay income taxes at a rate of 15 percent on most of their earnings but pay practically nothing in payroll taxes. It’s a different story for the middle class: typically, they fall into the 15 percent and 25 percent income tax brackets, and then are hit with heavy payroll taxes to boot.

Back in the 1980s and 1990s, tax rates for the rich were far higher, and my percentage rate was in the middle of the pack. According to a theory I sometimes hear, I should have thrown a fit and refused to invest because of the elevated tax rates on capital gains and dividends.

I didn’t refuse, nor did others. I have worked with investors for 60 years and I have yet to see anyone — not even when capital gains rates were 39.9 percent in 1976-77 — shy away from a sensible investment because of the tax rate on the potential gain. People invest to make money, and potential taxes have never scared them off. And to those who argue that higher rates hurt job creation, I would note that a net of nearly 40 million jobs were added between 1980 and 2000. You know what’s happened since then: lower tax rates and far lower job creation.

Since 1992, the I.R.S. has compiled data from the returns of the 400 Americans reporting the largest income. In 1992, the top 400 had aggregate taxable income of $16.9 billion and paid federal taxes of 29.2 percent on that sum. In 2008, the aggregate income of the highest 400 had soared to $90.9 billion — a staggering $227.4 million on average — but the rate paid had fallen to 21.5 percent.

The taxes I refer to here include only federal income tax, but you can be sure that any payroll tax for the 400 was inconsequential compared to income. In fact, 88 of the 400 in 2008 reported no wages at all, though every one of them reported capital gains. Some of my brethren may shun work but they all like to invest. (I can relate to that.)

I know well many of the mega-rich and, by and large, they are very decent people. They love America and appreciate the opportunity this country has given them. Many have joined the Giving Pledge, promising to give most of their wealth to philanthropy. Most wouldn’t mind being told to pay more in taxes as well, particularly when so many of their fellow citizens are truly suffering.

Twelve members of Congress will soon take on the crucial job of rearranging our country’s finances. They’ve been instructed to devise a plan that reduces the 10-year deficit by at least $1.5 trillion. It’s vital, however, that they achieve far more than that. Americans are rapidly losing faith in the ability of Congress to deal with our country’s fiscal problems. Only action that is immediate, real and very substantial will prevent that doubt from morphing into hopelessness. That feeling can create its own reality.

Job one for the 12 is to pare down some future promises that even a rich America can’t fulfill. Big money must be saved here. The 12 should then turn to the issue of revenues. I would leave rates for 99.7 percent of taxpayers unchanged and continue the current 2-percentage-point reduction in the employee contribution to the payroll tax. This cut helps the poor and the middle class, who need every break they can get.

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.

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.

Move

As most of you already know, I did a lot of traveling in my twenties. One of the things that I did after about 7 months on the road was purchase an second-hand camcorder. My idea was simple--record as much "global" coverage as possible with the intention of editing it someday to some cool music for my children and/or grandkids to have.

Well, I haven't really got around to it yet. While I did employ my uncle to transfer all of the film to digital DVD so I could edit more easily on my Mac, the project still remains untouched.

Last night, I was wandering around the computer machine and stumbled upon a series of shorts by Rick Mereki. I was blown away. Needless to say, my own personal project looked as if it will never match the creative brilliance of this young man.

Below is one of three videos he has posted on his Vimeo page. I leave the rest to you to explore, and all I can say is--kudos to you, Mr. Mereki. Genius.

Enjoy.

MOVE from Rick Mereki on Vimeo.

For the love of Gawd, Vancouver

No, this is not about the Stanley Cup embarrassment.

This week, a friend of mine forwarded me this Craigslist ad because, in her words, "Made me think of you...."

Allow me to sum it up for you: A Vancouver musician has his studio broken into and all of his equipment stolen. Now, it is bad enough that someone/some people would think of robbing musicians, when you read this guy's story, you really feel for him.

Musicians offer our world an escape from reality. And they do so for free. How anyone could look at themselves in the mirror after stealing from artists who offer happiness for free is beyond me. If you feel the need to sack a place, what's wrong with a bank or an insurance company?

Whoever is responsible for this theft, I hope you get caught. And I hope you pay a serious penalty for your crime. But more importantly, I hope Maurice and his son get their guitar back. People like you disgust me.

This is a plea readers, to pass this on to as many people as you can in the hopes that the guitar gets returned to its rightful owner. Please help Maurice and his son get their Les Paul back!

http://vancouver.en.craigslist.ca/rds/msg/2449158332.html

Wise idiot

Last week on my radio show I sat down with Jackass number one, Steve-O, to discuss his recent publication, Professional Idiot: A Memoir. Thinking a book from the most famous self-mutilating clown at the turn of the century would be written in crayon and loaded with spelling and grammar errors would have you mistaken. It's not what you expect. Steve-O takes a large step back and provides an amazing account of his life and how he came to be broke, abused, and in a Psych ward after attempting suicide. Now completely sober and vegan, the man (progressed from the boy) has a life's worth of lessons to shed. It's worth every moment.

"I had these mortality issues where I was conflicted and angry about the way that our main instinct as human beings is to survive--our survival instinct overrides everything. And yet we're plainly aware that we're not gonna survive. So, it occurred to me at a pretty young age that, 'Hold on a second--the one thing that we care the most about is "don't die" and yet we know we're gonna die.' How is our existence just not a cruel prank on us?"

Click HERE to listen to the interview.

Authentic Creativity vs. Karaoke Culture

In October 2009, Malcolm McLaren delivered a speech discussing the future of education, culture, and anglo-saxon identity in the 21st century. Much of the focus is on his own personal life and experiences with British education in the 1950s and '60s. The talk has been reviewed as "longwinded" and it is a fair accusation to be made. That being said, for anyone who can get over the inserted personal anecdotes (of which I found to be quite interesting actually), the message is a powerful one.

Without struggle, grandiose failure, and the audacity to fearlessly challenge today's culture of immediate fame and success, our world (the Western world, or more specifically, the colonial world) will continue on a self-destructive path where karaoke reigns over invention. What kind of cultural environmental damage are we doing by teaching the message that fame overnight, without years of hard-work, struggle, and failure, should be the aspiration of the young?

The age of the "televised talent-show" is, unfortunately, what propels so much of the world's youth today. It's result? A so-called artist who will tell you herself that she is "famous because of her academic approach to the study of fame itself," rather than her individual artistic talents or creativity. (Lady Gaga in an interview with 60 Minutes).

McLaren eventually brings his argument to the point that creativity is lost in: First - the education system; And now second - the media, including social media. What hope does a child have who is taught to lose all sense of imagination in replace of instant gratification? You better believe this is the message being taught to children by their own cultural ecosystem today.

McLaren is smart to anchor his thesis in Baudelaire, who once wrote, "Genius is no more than childhood recaptured at will, childhood equipped now with man's physical means to express itself, and with the analytical mind that enables it to bring order into the sum of experience, involuntarily amassed."

Let us yearn to recapture the value of that childhood genius, analyzed and expressed as adults, and embrace it. May it never be "cool" again, to be stupid, immediate, or an undeserved icon.

I hope you take the time to watch this.

Happy Birthday Les Paul!

I won't do Google any justice. Get there. Today. NOW!

And let your Wang Dang Doodle shine!

Ahead of its time

Many of you are aware that this past May I completed a master's thesis in the study of music and American urban culture. For those of you who don't know, the paper--The Subway Sessions--was a sociological study on how the iPod is changing the way people use music as a response to their urban environment.

The idea came to me last summer, while doing an extended piece for BreakThru Radio that looked at the Music Under New York (aka 'MUNY') program. As my team's investigation into street musicians deepened, I began to pay attention to the habits of people on the subway who were engaged with personal listening devices more than I did the musicians struggling to make a buck. "I wonder what they are listening to?" was the first thought, immediately followed by "And how is that changing their perception of the environment?"

As summer turned into fall, I thought more and more about this oxymoronic 'public-private' soundtrack that lives in and under our streets. I eventually became so fascinated by the topic that I decided to pursue it as my major piece of graduate work.

When my research began last fall, there was little to nothing to be found that had been written on the topic. In the early 80s, just after Sony introduced the Walkman, a small onslaught of academic articles and studies (mostly from Japan for obvious reasons) appeared in musicological journals; but that was it. More recently, some bloggers of little academic or professional credential had postulated on what the effects of the iPod were in our society and to musicians, but it was difficult to find qualified research into this urban phenomenon.

It seems to me that ever since I finished my studies, there has been a deluge of work on this very topic. Some of it has been academic, like the article "Wall of Sound" that first appeared as an excerpt on Slate and was later published in full print in New York's n+1 magazine. This particular publication stung a bit. I had interviewed one of the editors at n+1 back in November, and we had discussed my thesis in detail. I was hoping to get it published in his magazine and he seemed to warm to the idea, which is why I was shocked to discover that n+1 had published a paper on this exact topic only two weeks before my thesis was turned in. The article's author, Nikil Saval, is a Ph.D. candidate at Stanford and assistant editor of n+1. I couldn't help but wonder, "Just how many subways are there in Stanford, California?"

Alas, not all of this, "What's on your iPod?" is academic. And thank God for that, for if it was it could get quite boring quickly. Take this Tumblr Web site for example, "What's On NYC?" that asks random New Yorkers with headphones on what songs they are listening to, and then maps and tags them on Google maps. This is exactly what I sought to track.

Smartphone apps are being developed by the day as well, or so it seems. We are seeing more and more technology that looks for ways to have fun and take advantage of individual urban soundtracks. Perhaps most famously, and successful, is Grammy's developed "Music Mapper" app, an application that lets you drop songs, write stories, and share your own "audiobiography" as you wander through life. Or, if you are more into seeing others lives than you are about sharing your own, you can pick up songs left by others and read what they have left for you within a specific radii of your location. Similarly, there is Schematic Labs developed "Soundtracking" app. It's kind of like Twitter, but with music. You can share what you are listening to on your iPhone with those who are in range of you and also have the same app. Similar, but more like Pandora radio, is Soundtracker, except it lets you see what your friends are listening to at any given moment as well as sharing your own music and using the application like a radio station.

There were times during my research when I was kicking myself for going the unconventional route on my graduate work. When I tried to explain to contemporaries what I was doing, including some professors, I often received sideways glances as if to say, "Where is the academia in that?" Now, I am almost moved to shock to see just how trendy my topic was.

The words 'academic' and 'trend' don't seem to fit together all that well. All of this recent pop culture Youtube and Smartphone Application design surrounding the "What are you listening to?" inquiry risks making my thesis be received as cheap in many pretentious academic circles. Yet there is a whole other side to this argument--my graduate work was slightly ahead of its time. Too often the formal academy waits too long to begin to dissect major shifts in culture. There are some sound arguments as to why this is, staying power and effect being the most popular, but at the pace of information-exchange in which we now live, it may be that this patience bow to reality.

I don't know if my graduate work was "ahead of its time" or "cheapened academia". You can be the judge of that. What is for certain, is the amount of attention this curiosity is getting all over the world. It seems I am not the only one who started asking "What are you listening to?" and then set out to share these soundtracks with the rest of the world.