Buffet: There's Class war, and Rich Are Winning
October 7, 2010 A University of Chicago law professor created a firestorm of controversy last month when he blogged that he and his wife are barely making ends meet with their $250,000-plus combined salaries.
[The 80-year old billionaire said: Theres class warfare, but its my class, the rich class, thats making war, and were winning.]The 80-year old billionaire said: Theres class warfare, but its my class, the rich class, thats making war, and were winning.
Professor Todd Henderson was protesting President Obamas plan to let the George W. Bush tax cuts on income above $250,000 per couple expire at the end of the year while extending the cuts for everyone below that threshold.
Needless to say, the good professor didnt get much sympathy. As well he shouldnt.
The couple live in a nice house, send their kids to private schools, employ a nanny and a lawn caretaker plus have compiled a sizable retirement account. Lots of folks -- 97 percent of American taxpayers, in fact -- would love to be in that position and most probably wouldnt mind paying the tax rate they were paying back in 2000 before the Supreme Court made George W. Bush the president.
Yet, thanks mainly to a united Republican minority in the U.S. Senate and a handful of nervous Democrats, Congress cannot bring itself to vote on Obamas plan that would lock in the tax cuts for a huge percentage of the people and begin tackling the budget deficit by raising taxes on the rich. Republicans claim it is important to reduce the deficit yet hypocritically oppose the Democrats effort to do so by letting the Bush tax cuts expire for individual incomes above $200,000 a year and couples earnings over $250,000.
Everyone should get their tax cuts extended, insist Republicans like Senate Minority Leader Mitch McConnell, yet they offer no plan for how they would make up the $700 billion the treasury would lose over the next 10 years if the cuts for the upper echelon are allowed to continue.
Some insist that increasing taxes on the wealthy would hurt job creation in this economy, but that ignores the simple reality that the Bush cuts didnt do a thing to help the economy the past several years. George Bush left office in 2009 with the number of working Americans essentially the same as it was when he took over in 2001 -- roughly 137 million -- and the economy in a shambles. During Bill Clintons eight years the tax rate on the top income bracket was increased, but millions more people went to work. By the end of his second term, the budget deficit had been essentially eliminated.
Perhaps its all coincidental, as many Republicans argue, but there is not any more proof that the GOPs formula of lower taxes on the wealthy creates more jobs and spurs the economy than there is for the Democratic formula seeking to have the wealthy pay progressively more.
Besides, the rich should pay more because they get more from the government. All those Wall Street and S&L bailouts, the funding of regulatory agencies, and the public school training of workers arent services used by the middle and lower classes. There are some studies that have estimated that the tax breaks and services that benefit the wealthy add up to $400 billion a year, compared to the $116 billion spent on programs for the poor.
Class warfare?
One of the richest Americans, Warren Buffett, replies to that notion:
Theres class warfare, but its my class, the rich class, thats making war, and were winning.
As Richard Thaler, a professor of economics at the University of Chicago, wrote in a recent New York Times op-ed: The question comes down to whether we want a society in which the rich take an ever-increasing share of the pie, or prefer to return to conditions that allow all classes to anticipate an increasing standard of living.
Demanding that the rich get a tax cut as a condition for tax relief to others is simply elitist.
But, hey, as his colleague professor Henderson pointed out, its tough getting by on $250,000 a year.
