Recently, the Obama administration tried to pass the Buffett Rule. Of course, it failed as everyone predicted. It has been said that the Buffett Rule was just a political stunt to help Obama gain support in the middle class with the elections coming up later this year. I agree with the premise that we should all pay our fair share, but I don’t agree with how the Buffett Rule has been promoted. This opinion is coming from a person who has to look up to see the “middle class.” Because of the Social Security restrictions I basically live at the poverty level. See my Social Security paper for details.
The Buffett Rule was started because Warren Buffett (one of my personal heroes) was upset that he paid a lower income tax rate than his secretary. Yes, everyone should pay their fair share, but I’m sure Mr. Buffett has a wonderful CPA who helps lower his rate through different write-offs.
We are also forgetting that capital gains taxes are different from income taxes. I will show you next week when I talk about the Occupy movement how most of the “top one-percent” pay at least 30% in taxes, which is about average. Jim Cramer at CNBC is a millionaire and he said that he paid 48% in taxes. My point is the wealthy pay just like we do. People just try to use it as a way to divide us and get votes.
Furthermore, most wealthy people make huge contributions to charities each year. Personally, I would rather they give millions to a non-profit that is trying to cure cancer instead of giving that money to the politicians for them NOT to make a decision. The rivalry between the Democrats and Republicans is to a point now that someone could have the best idea in the world, but it won’t pass because the one party doesn’t like the other. Right now I think the nonprofit contribution is a much better investment for the wealthy.
If you really want to help the “lower-middle class,” then make the wealthy pay more Social Security taxes, not income taxes. Social Security was designed as a promise to US Citizens that if they worked hard and contributed to the economy, the Social Security Fund would help them in the future. It is a major part of retirement plans for people with lower levels of disposable income. Politicians always say they have our interests in mind, but they always poach the Social Security Fund.
I heard an interview on CNBC (I watch it a lot) where a CPA said that the government spends $1.40 for every dollar it makes. I’m not sure if it’s true, but think about that. It doesn’t take a financial genius to realize you can’t get out of a hole if you keep digging! So why pay higher taxes and give more money for the politicians to mismanage it?
I believe if the wealthy pay more Social Security taxes, they will help the middle class preserve their future. We always hear the Social Security Fund is going bankrupt, well here’s the solution. For 2011, the limit to which FICA is collected is $106,800. This means if you make $1 million a year, $893,200.00 goes untaxed as far as FICA (Social Security). At 6.2%, that would mean an extra $55,378.40 could go into Social Security. It doesn’t sound like much in the grand scheme, but that adds up. That one extra contribution could help close to 7 additional people in my situation. One person helping 7 people sounds good to me!
As always, these are just my thoughts.