daydreaming w/ Bob Arnold
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.
from The New York Times 14 August 2011
Warren E. Buffett is the chairman and chief executive of Berkshire Hathaway.
Watch the full episode. See more Tavis Smiley.
WASHINGTON — The Department of the Interior on Thursday granted Royal Dutch Shell conditional approval of its plan to begin drilling exploratory wells in the Arctic Ocean next summer, a strong sign that the Obama administration is easing a regulatory clampdown on offshore oil drilling that it imposed after last year’s deadly accident in the Gulf of Mexico.
The move confirms a willingness by President Obama to approve expanded domestic oil and gas exploration in response to high gasoline prices and continuing high levels of unemployment. It comes as the issuing of drilling permits in the gulf is quickening, including the granting on Thursday of a permit for a Shell floating drill rig for a 4,000-foot-deep well. That means that that all five of its rigs there will be back to work after a long drilling halt.
The decision to tentatively approve Shell’s plan to drill four exploratory wells in the Beaufort Sea off the North Slope of Alaska represents a major step in the company’s efforts to exploit the vast oil and gas resources under the Arctic Ocean, although some hurdles remain.
The company has spent nearly $4 billion and more than five years trying to win the right to drill in the frigid waters, against the opposition of many environmental advocates and of Alaska natives who depend on the sea for their livelihoods.
Opponents say the harsh conditions there heighten the dangers of drilling and make cleaning up any potential spill vastly more complicated than in the comparatively benign waters of the gulf.
Administration officials cautioned that the company must win a number of secondary permits before it can begin punching holes in the seabed. The plan approved Thursday, considered the overarching one, contains detailed information on how the company would respond to any blowout and spill.
“We base our decisions regarding energy exploration and development in the Arctic on the best scientific information available,” said Michael R. Bromwich, director of the Bureau of Ocean Energy Management, Regulation and Enforcement, which oversees offshore drilling. “We will closely review and monitor Shell’s proposed activities to ensure that any activities that take place under this plan will be conducted in a safe and environmentally responsible manner.”
Shell enthusiastically welcomed the decision. “We feel very good about it,” said Pete Slaiby, Shell’s vice president in Alaska. “It’s one of the road marks we wanted to see. It makes us very happy.”
But the announcement only partly smooths the rocky relations between the administration and the oil industry, with the president remaining committed to repealing $4 billion in annual oil company tax breaks. The administration has also been wary of encouraging the industry’s aggressive plans to drill in shale oil and gas fields across the country because of concerns about potential drinking water contamination.
“This strikes me as a shift back to the track that the administration was on prior to last year’s oil spill,” said Michael A. Levi, an energy and environment fellow at the Council on Foreign Relations. “It seems the lesson that the administration took is that offshore drilling needs to be regulated better and done better, not that it shouldn’t be done at all.”
The plan is almost certain to face legal challenges.
“No drill bits are going to hit the Arctic seafloor until at least one and probably several courts have reviewed this plan,” said Brendan Cummings, senior counsel at the Center for Biological Diversity, which is already suing to stop drilling in the Chukchi Sea west of Alaska. “From the perspective of ocean drilling and climate, it’s hard to see a difference between this administration and the last one.”
Shell still needs to win approval of its drilling plan for the Chukchi Sea, which is west of the Beaufort Sea and more remote.
The company has proposed drilling four wells at a depth of approximately 160 feet of water about 20 miles from shore in the Beaufort Sea. The BP well that exploded in the gulf in April 2010 was at a depth of more than 5,000 feet and 40 miles from the Louisiana coast. The accident killed 11 workers and spilled nearly five million barrels of oil into the gulf.
Energy experts and industry executives said the move on Thursday reflected a partial warming of relations between the oil industry and Obama administration since the BP disaster.
“I don’t know if I would call them friends yet, but I look at this as a step in the right direction,” said Craig T. Castille, operations manager for deepwater projects at Stone Energy, who added that the permit process in the Gulf of Mexico remained slower than the industry would like.
Shell has spent years trying to convince federal regulators and several courts that it can drill safely in the Arctic, and every year one hurdle or another has stood in its way.
Shell has already invested nearly $4 billion on its 10-year offshore leases and preparations for exploration in the forbidding Chukchi and Beaufort Seas. Its current plan is to drill up to 10 exploratory wells in the two seas, potentially leading to production by the end of the decade.
Shell has been obliged over the years to tighten its spill response plan, especially since the BP accident at the Macondo well in the gulf. It is proposing to use two drill ships in the Arctic, each capable of drilling a relief well for the other; to put an extra set of shears on its blowout preventers; and to keep emergency capping systems near drill sites to capture any leaks.
The Alaskan Arctic may hold 27 billion barrels of oil, enough to fuel 25 million cars for 35 years. But environmentalists warn that a spill in the Arctic would be more catastrophic than the Gulf of Mexico accident was because the Alaskan waters are dark and inaccessible, and because they are vital breeding grounds for many aquatic species that are endangered or at risk.
Marilyn Heiman, director of the Pew Environment Group’s Arctic program, said that the region was the harshest area in the world in which to drill for oil, as well as a delicate habitat for a variety of sea mammals. The proposed well sites are subject to fierce winds and high seas in the fall and lie hundreds of miles from the nearest Coast Guard stations.
“Hard questions need to be asked about any oil company’s ability to mount a response to a major oil spill in hurricane-force winds, high seas, broken and shifting sea ice, subzero temperatures, and months of fog and darkness,” Ms. Heiman said in an e-mail from Alaska.
John M. Broder reported from Washington, and Clifford Krauss from Houston.
UPDATE:
http://www.nytimes.com/2011/08/18/opinion/dont-allow-oil-drilling-off-alaskas-coast.html?hp
photo : moratoriumnow
n.y. times
