Media should learn from Warren Buffet
It is clear why Jon Stewart was voted the most trusted man in America. The Daily Show is at its best honing in on its favorite target — the 24-hour cable news establishment. Stewart exposes their collective hypocrisy and extinguishes their vitriol with humor.
There was naturally no shortage of vitriol in response to Warren Buffett’s op-ed piece, “Stop Coddling the Super-Rich,” in the New York Times earlier this month.
Despite Buffett’s wealth and status as a prominent, much-admired investor, The Daily Show team had no difficulty in finding Fox News correspondents who had characterized Buffett a socialist and a class warrior.
What Buffett suggested is far from radical. He simply recommended taxing the top 0.3 percent of earners in the same manner as the upper middle class. He did not, as Fox News suggests, encourage the proletariat to take up torches.
Buffett would have tax levels returned to the ‘90s boom level. These levels clearly did no harm to investment or the economy, and the subsequent tax breaks have certainly not been proven to help. In fact, continuing the Bush tax cuts will add $700 billion to the deficit over the next decade — that same deficit that the GOP claims must be eliminated.
There is little doubt that the tax system should be simplified. Corporate tax loopholes allow corporations to pay an effective tax rate that is roughly half their expected tax debt and to hire teams of tax attorneys to find more loopholes. Studies have shown that trickle-down economics do not work. Reducing taxes does not substantially create jobs; so why should we be giving the top 0.3 percent of earners such a significantly lower marginal tax rate that fails to benefit the economy as a whole, when we are so concerned about our rising deficit?
Furthermore, how do Fox pundits think we should raise revenue? It has become a popular talking point that 51 percent of American households pay no income tax. This is true, but it is not the entire story. First of all, the lowest 50 percent of earners in our nation control only 2.5 percent of the nation’s wealth. The pundits would begrudge many American’s basic comforts like refrigerators and microwaves, though many rent apartments rather than own homes, and likely did not purchase the appliances. “Broadening the tax base” is trying to squeeze blood from a stone.
A married couple making less than $17,000 per year is currently taxed 10 percent. If they start making up to $69,000 a year, they would be taxed 15 percent. Doing the math, it isn’t hard to see that income tax deductions and credits, such as a mortgage or dependent children can bring the household’s tax debt close to zero. Some households are eligible for the Earned Income Tax Credit, which provides an incentive for workers to work more hours. Lower income Americans will also have a higher effective payroll tax. Workers pay 6.2 percent of their income up to $106,800 in social security. For a worker making less than the $106,800 cap, this is a larger effective expense than the maximum $6,621.60 social security tax paid annually by those at, or in excess of the cap. Many of the top 0.3 percent of earners do not receive a wage, but instead make a majority of their income from investments, thus paying no payroll tax at all.
The content of Buffett’s op-ed was soundly capitalist, moderate and reasonable. Why the response? For 24-hour cable news, rage equals ratings. The subject is irrelevant. Calling a self-made billionaire like Warren Buffett a socialist is obviously ridiculous, but it leads eyes to the screen.
Emily Brooks is a senior economics major and may be reached at [email protected]