Eyes That See

“I Once Was Blind”

The Buffett Rule & Homeless Beggars

If you live in Houston, and if you leave your home much, you see homeless beggars.  At just about every stoplight at just about every highway intersection, you will see a man or woman with a sign.  Some are handicapped, all are dirty.

Some people give them money, some don’t.

Whether or not people give money in this situation is entirely up to them.  I have heard stories of people in such situations “living the good life.” Somebody told me that they saw one such man push his shopping cart around a corner and get in an SUV.  Somebody else told me that when he apologized to such a man for not having any money to give him, the man said not to worry and assured him it would be okay because he made about $40,000 a year begging.  I have also heard stories of them spending the money they’re given on drugs and alcohol.

Also, many beggars appear to be perfectly capable of working, although appearances can certainly be deceiving.  One time my dad, who has a small lawnmowing business, offered a group of three beggars money.  The condition was that they had to work for it, which they looked perfectly capable of doing.  They would mow and weed-eat for one of his customers.  The leader of the group refused, and said somebody else would come along who would just give them the money without making them work for it.

All of these are possible reasons not to give them money.  There are also plenty of reasons to give them money.  Many people are moved by compassion when they see people in such situations.  They won’t miss the handfull of change or couple of dollars, and even small amounts could buy the next meal for the beggar.

Whether you give them money or not is entirely up to you.  What cannot be said under any circumstance, however, is that they deserve your money.  If we follow the money, we see that your employer gave you/your parent(s)/your spouse the money in question as wages for work performed.  Somebody worked for that money, and that somebody was not the beggar.  You have every right to give the beggar your money if you so choose, but no one can say the beggar has a right to your money.

The so-called “Buffett Rule” championed by President Obama and named for Warren Buffett is absurd because it is like saying that everybody who works should pay their “fair share” to every beggar on the street corner.  Just as no one has a right to demand that you give your money to a beggar, no one has the right to demand that Warren Buffett or any other business owner or executive pay a higher per centage of taxes.  No notion of “fairness” can make sense of this.

Just like we followed the money from your/your parent(s)/your spouse(s) employer to you and found no way that any beggar deserves your money, following the money debunks any notion that wealthy individuals should pay more taxes than they already pay.  These are some of the problems I have with the “Buffett Rule” and its attempted justifications.

First of all, in following the money, we see that Buffett pays far more taxes than his secretary ever will.  His income is taxed.  Although much fuss has been made about the lower rate, his capital gains are still taxed.  He pays a payroll tax for employing his secretary and every other employee he has.  Like the rest of us, he pays taxes on everything he buys.  As we follow the money we must also ask where his secretary’s income- including the portion that pays her taxes- comes from.  From Mr. Buffett.  He pays her salary, and her salary pays her taxes.  So we could say that he both creates her job and pays her taxes.

Second, the only way to look at the tax rates of these two individuals and conclude that the secretary pays more is if we isolate the tax per centages and look at nothing else.  While the tax rate may be higher, Buffett very likely pays drastically more in taxes than his secretary earns in an entire year- not to mention a lot more than she pays in taxes.  The “Buffett Rule” proponents position their argument as if by paying a lower per centage of their income the wealthy pay less in taxes than middle class Americans.  This is not the case.  A small per centage of a lot of money can be more than a larger per centage of a little money.

Would you rather have 28% of $40,000 or 15% of $1 million dollars.  If we only look at per centages like Obama and company are doing, that 28% sure looks a lot better than the 15%.  But if we do the actual math, by choosing the lower per centage we end up with $150,000 versus the $11,200 we get from the higher per centage.  Likewise, just because higher income individuals pay a lower per centage tax rate does not mean that they pay a lesser amount of taxes.

Just like a beggar does not have any right to your money, the government does not have any right to a higher per centage of anybody’s income.  You are free to give your money to a beggar if you want to, and Warren Buffett and President Obama can each pay whatever “fair share” per centage they want to on top of the per centage they already pay.

Lastly and most importantly, the economic impacts of the “Buffett Rule” would be terrible.  Increasing tax rates on people with the money to create jobs and make sizable investments means they will have less money to do either.  Also, secretaries throughout this country may win a moral victory if Buffett’s secretary is the reason this tax law comes into play.  However, such a moral victory would likely cost them in the long run.  If the people who pay the salaries of those secretaries have to pay more of their income to the government in taxes, it is safe to assume that wages and raises will take a hit.

Congratulations, Mrs. Secretary, your boss now pays the same tax rate you do!  Sorry to hear that your salary was cut and you’ll never again get a raise, but hey at least you got that moral victory to hang your hat on.

The bottom line is this.  Do you think that business owners, job creators, and investors in this country should pay more money to a government that has no idea how to manage money?  Or do you think these people should be free to use that money to run their businesses, create jobs, and invest in rebuilding our nation’s economy?

Depending on your answer, more of us might have to find a street corner to beg on!


April 21, 2012 - Posted by | Uncategorized

1 Comment »

  1. I wish you had stated the ‘buffet rule’, not all your readers come from America. I got tired halfway.

    Comment by Googol | May 16, 2012 | Reply

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