Warren Buffet talks dividend voodoo

[AChimp]

EDIT: I forgot to post the article link. :(
http://www.washingtonpost.com/wp-dyn/articles/A13113-2003May19.html?nav=hptoc_eo


Dividend Voodoo

By Warren Buffett
Tuesday, May 20, 2003; Page A19


The annual Forbes 400 lists prove that -- with occasional blips -- the rich do indeed get richer. Nonetheless, the Senate voted last week to supply major aid to the rich in their pursuit of even greater wealth.

The Senate decided that the dividends an individual receives should be 50 percent free of tax in 2003, 100 percent tax-free in 2004 through 2006 and then again fully taxable in 2007. The mental flexibility the Senate demonstrated in crafting these zigzags is breathtaking. What it has put in motion, though, is clear: If enacted, these changes would further tilt the tax scales toward the rich.

Let me, as a member of that non-endangered species, give you an example of how the scales are currently balanced. The taxes I pay to the federal government, including the payroll tax that is paid for me by my employer, Berkshire Hathaway, are roughly the same proportion of my income -- about 30 percent -- as that paid by the receptionist in our office. My case is not atypical -- my earnings, like those of many rich people, are a mix of capital gains and ordinary income -- nor is it affected by tax shelters (I've never used any). As it works out, I pay a somewhat higher rate for my combination of salary, investment and capital gain income than our receptionist does. But she pays a far higher portion of her income in payroll taxes than I do.

She's not complaining: Both of us know we were lucky to be born in America. But I was luckier in that I came wired at birth with a talent for capital allocation -- a valuable ability to have had in this country during the past half-century. Credit America for most of this value, not me. If the receptionist and I had both been born in, say, Bangladesh, the story would have been far different. There, the market value of our respective talents would not have varied greatly.

Now the Senate says that dividends should be tax-free to recipients. Suppose this measure goes through and the directors of Berkshire Hathaway (which does not now pay a dividend) therefore decide to pay $1 billion in dividends next year. Owning 31 percent of Berkshire, I would receive $310 million in additional income, owe not another dime in federal tax, and see my tax rate plunge to 3 percent.

And our receptionist? She'd still be paying about 30 percent, which means she would be contributing about 10 times the proportion of her income that I would to such government pursuits as fighting terrorism, waging wars and supporting the elderly. Let me repeat the point: Her overall federal tax rate would be 10 times what my rate would be.

When I was young, President Kennedy asked Americans to "pay any price, bear any burden" for our country. Against that challenge, the 3 percent overall federal tax rate I would pay -- if a Berkshire dividend were to be tax-free -- seems a bit light.

Administration officials say that the $310 million suddenly added to my wallet would stimulate the economy because I would invest it and thereby create jobs. But they conveniently forget that if Berkshire kept the money, it would invest that same amount, creating jobs as well.

The Senate's plan invites corporations -- indeed, virtually commands them -- to contort their behavior in a major way. Were the plan to be enacted, shareholders would logically respond by asking the corporations they own to pay no more dividends in 2003, when they would be partially taxed, but instead to pay the skipped amounts in 2004, when they'd be tax-free. Similarly, in 2006, the last year of the plan, companies should pay double their normal dividend and then avoid dividends altogether in 2007.

Overall, it's hard to conceive of anything sillier than the schedule the Senate has laid out. Indeed, the first President Bush had a name for such activities: "voodoo economics." The manipulation of enactment and sunset dates of tax changes is Enron-style accounting, and a Congress that has recently demanded honest corporate numbers should now look hard at its own practices.

Proponents of cutting tax rates on dividends argue that the move will stimulate the economy. A large amount of stimulus, of course, should already be on the way from the huge and growing deficit the government is now running. I have no strong views on whether more action on this front is warranted. But if it is, don't cut the taxes of people with huge portfolios of stocks held directly. (Small investors owning stock held through 401(k)s are already tax-favored.) Instead, give reductions to those who both need and will spend the money gained. Enact a Social Security tax "holiday" or give a flat-sum rebate to people with low incomes. Putting $1,000 in the pockets of 310,000 families with urgent needs is going to provide far more stimulus to the economy than putting the same $310 million in my pockets.

When you listen to tax-cut rhetoric, remember that giving one class of taxpayer a "break" requires -- now or down the line -- that an equivalent burden be imposed on other parties. In other words, if I get a break, someone else pays. Government can't deliver a free lunch to the country as a whole. It can, however, determine who pays for lunch. And last week the Senate handed the bill to the wrong party.

Supporters of making dividends tax-free like to paint critics as promoters of class warfare. The fact is, however, that their proposal promotes class welfare. For my class.

The writer is chief executive officer of Berkshire Hathaway Inc., a diversified holding company, and a director of The Washington Post Co., which has an investment in Berkshire Hathaway.

[mburbank]

Gee, Chimp, none of that makes any sense to me at all. Do you suppose a smart person could craft me a metaphor about bunch of people going out to dinner and splitting up the tab?

[sspadowsky]

Wow. When a rich white guy says the tax cut most benefits the wealthy, that's really saying something.
________
ARIZONA MEDICAL MARIJUANA DISPENSARIES (http://arizona.dispensaries.org/)

[KevinTheOmnivore]

http://www.i-mockery.net/viewtopic.php?t=3513

>:

[VinceZeb]

Who pays the most when it comes to taxes? "Rich" people.
Who gets the most back when taxes are cut? "Rich" people.

You can't get much plainer than dat.

[KevinTheOmnivore]

That isn't the complete issue when it comes to dividends, Vince.

You should read the article I have linked above.

[Protoclown]

I LIKE MINE WITH LETTUCE AND TOMATO
HEINZ 57, FRENCH FRIED POTATO

CHEESEBURGER IN PARADISE
HEAVEN ON EARTH WITH AN ONION SLICE















i hate jimmy buffet :(

[mburbank]

I was once on a cable talk show with Jimmy Buffets Harmonica player. I can't recall his name, but he went by 'fingers'. Later we all went to Buffets club. Buffet himself did not show, but I got to see "The Black Elvis" for free, so it was okay.

That is not to be taken as an endorsement of Mr. Buffets music, or his carefree alchoholoic lifestyle.

[Zebra 3]

:) - For those that aren't familiar with the NYSE and NASDAQ, Warren Buffet is a well knowed, and respected financial guru.

:/ - Canadian and U.S. brokerage houses have been throwing around (bitching) the tax-free dividend scheme-scam for sometime, and especially after the NASDAQ's 1999 hightech bubble.

>: - One of the reason is for older stocks like GE or McOutHouse that have little to no growth left in them to compete for investment dollars against the hightech sweethearts like Microsoft, EMC, and Nortel.

[sspadowsky]

I work for a Buffett-owned company, that's why the article particularly interested me.

At any rate, it's refreshing to see a rich white guy essentially say, "You know, I really don't have to have more money than I already do."
________
Gay muscle (http://www.fucktube.com/categories/633/muscle/videos/1)

[mburbank]

Sure, but what does any of that mean in terms of a dinner tab?

[AChimp]

It means that the rich guy can now afford to buy the entire restaurant and eat for free.

I agree with you, sspad. When one of the richest people in America (I believe Buffet has $65B)--a self-made billionaire, I might add--says that the new tax cut is shite, I think he knows what he's talking about.

Of course, the government is stupid and probably won't listen. Voters will just hear the words "tax cut" and dollar signs will pop up in their eyes like in the cartoons.

Trickle-down economics are bullshit; they were attempted in the '80s and they failed then. They will fail again.

In other news, in the past 12 months, the Canadian dollar has gone up from $0.62 to just peeking over $0.74 today because of lack-lustre performance in the U.S. I think that's proof enough that Bushonomics don't work. :lol

[mburbank]

I think identifying with the Rich is a very American trait. We think the Rich should 'get their money back' because we imagine we will be rich soon enough. We will win the lottery or our genious will be recognized, etc. etc. We think of ourselves as the proto-rich.

It's also very hard for most folks to concieve of being in favor of a policy that is not financially beneficial for them, as if wealth was a moral be all end all.

[VinceZeb]

Max, I know it is hard for you to see past your own nose, but realize that making a few pay for the many is wrong. No matter how you slice it, you are a socialist who wants to punish the rich. You, therefore, are an idiot who would be laughed out of the room if you socialized with anyone of your own age about these various subjects, unless the group of people your own age were left-wing professors or street performers.

You and your ilk will constantly whine about the rich. You will never try to improve your situation. You will bitch and complain until it is time to shine the shoes of people like myself. I'm sorry weality is twough. Quit your whining and deal with it. But unfortuantly you do not possess even that capability. You would have been a good fit in the heyday of the Communist control of Russia.

But you are probably right. I know all those people that come over to America just strive to be a constant bitch-machine about those who made something of themselves. They don't come to be successful or anything. The problem is you have had it too good in this country to appreciate it. If you were a woman in a physical way (your views already make you one mentally), you could be considere the quintessential "Jewish princess"; a girl that was always told she was intelligent and perfect but cannot stand when someone puts up their big paw and says "No."

Face the facts, Max. You are the leader of the Special Ed Class, the #1 student of Summer school; you are the first monkey that learned how to throw a shit ball. Your constant whining will lead you down a road to bitterness and hatred for all you don't have, and mine will lead me down a path of perhaps not certain success, but self satisfaction that I did what was right for myself and also for the betterment of those that come beyond me. It is not a Messiah complex that I have, it is common sense and upholding of the core American values which drives me. You and others like you will be nothing more than footstools for those like me; your only escape being when we decide to give you a break so you can go to the smoke lounge to talk about how smart you are with the other lackeys.

I suggest you stock up on knee and elbow pads.

[AChimp]

So, uhh... what about Warren Buffet's comments, then?

[mburbank]

He doesn't understand them. If we mixed up the verb tenses, removed some neccesary words and mentioned tne length of Buffet's penis, maybe it would be Vince friendly, but maybe not even then. I'm home now and can't be bothered, but tomorrow I'll harvest that rather lengthy post for gems of cretinism.

[kellychaos]

No offense to anyone here but logic tells me that, in all likelihood, we don't have too many multi-millionaire's posting on the Mockery boards. This leads me to my next question. Is vince a lobbyist for a multimillionaire because he sure seems to be investing a lot of his argument into protecting a wage bracket of which he'll never be a part ... not to mention the fact that many those in that earnings bracket don't particularly think that the tax cut is such a swoopty deal. Although I have a basic grasp of economics and a meager stock portfolio, I'll never claim to totally understand the "ins and outs" of economics, particularly macro-economics. I'm just curious about Vince's motivation. I do find it admirable, however, that Vince comes to the aid of the rich who are so desperate for his counsel and support. What's in it for you, Vince? Is it just your mission to just be contrary and obtuse .... an internet troll, so to speak?

[mburbank]

He believes in the Capitalist Opium of the Masses, that he will one day be rich.

He also resents the concept of taxation period, in that he thinks his money should only go to things he agrees with. He espouses a universal sales tax on non essentials, but I imagine if that magically came to pass, he would still vigourously object to that money being spent on things he did not agree with. He is lately swing a Jefferson quote as if it were a roadkill cat, to the effect that a government large enough to do everything is large enough to take everything away. He ignores the fact that our government has been 'large enough to take it away' using it's military since probably the 1940's and as he embraces the Bush doctrine of global military supperiority, it will always be 'large enough to take it away'. Far from being a true Liberatarian, Vince wants a government that does only what he wants with it's cictizens money, and in fact finds it hard to concieve of anyone who osn't 'scum' or 'a liberal college professor' wanting anything besides what he wants. I believe this inability to respect the opinions of others coupled with his rage at any compelled expenditure outside his worldview, make him a Totalitarian.

[VinceZeb]

Max,

First off, I never said I was a full libertarian. Second off, you are the last person to say what a libertarian believes/does not believe. I know one thing I am not, which is a socialist fool such as you.

You know what is considered rich in this freaking country? About 70,000 dollars. That is what our country considers to be "rich". Do you think that is rich, people? Probably not. I don't fight just for multimillionaires. I fight for everyone who is overburden with the task of taking care of people that refuse to do anything for themselves. They didn't ask to take care of them, why should they?

There is a BIG difference between the mentally and physically handicapped that CANNOT do one single thing that is productive and people who can that flat-out refuse to. The govt is an inefficient machine. The govt should not bend to only my whim, but the govt should not screw over the people who make the country go. That is WRONG. It is IMMORAL.

I want my country to be safe. Iraq has been a threat and would continue to be. Any other country that is a threat gets the same shit done to them. I'm sorry that I'm not a big liberal idiot like you Max that thinks we can all hold hands and sing songs to solve our problem. People like me will go out and do the violence to protect the elitist assholes like yourself.

Can't you just face the fact that the only reason you have a shred of credibility in our entire argument is because you are on this fucking message board? Any other place that is straight down the line I would make you my punching bag. You are a fucking tool, Max. I could debate you ANYWHERE that is impartial to either side and make you look like a pompous ass, which in all honesty wouldn't take much effort. That is why you don't like me. I interfere with this big comfort zone you have here. Here, you are vast and wise and oh so intelligent. Everywhere else you are an old fart who thinks like a 20 year old girl who read Zinn and thinks she is the most politically advanced mind in the world.

You can give me hell here but you can't prove me wrong. And you hate that. Here I am the minority that can hold his own. Everywhere else max... well.....


[center:42a76f8614]You. Are. My. Bitch.[/center:42a76f8614]

[Bennett]

new creases in the Vincevolution...

[mburbank]

I don't hate you at all, Vinth. Quite the contrary.

"People like me will go out and do the violence to"

People LIKE you, but not you, right? People like you in every way excpet for a 'condition of hives'. Simple as that. Are you talking about your top secret, ultra private weapons incident again? Where you defended your family with a weapon, family being defined by you as 'anybody'?

Are you challenging me, Vinth? Where did you have in mind? In what Arena are you offering to 'make me your bitch'? Might it be one where the regulars can think of debate without immediately employing sexual dominance as a metaphor? Or is that what you meant by 'straight' down the line? Pick place, Nancy, and I'll think about it. Unless that's as scary as being asked to post your submarine letter after you offered to do it. Simple as that.

[VinceZeb]

Bennett, are you going to give anything intelligent to the conversation or just say something idiotic?

*geek laugh* BWAHAHAHAH BWAHAHAHAH BWAHAHHAHA!!!! I'm so funny! Vincevolution! Man I'm so clever! I hope the people on the anime boards will think this is funny! BWAAAHAHAHAHAHA!


I must remind you of the people that beat you up at school, Bennett. Except I am more intelligent than you as well as physically stronger.

[VinceZeb]

I'll allow you to pick it. Anyplace I would pick you would label as biased. So you pick it and the rules as well. I am that confident that your ideas are that idiotic.

[mburbank]

Alright, Vinth. I'm not the message board net geek you are, so it's not something I know all that much about. But I'll look into it.

I could suggest Brawlhall. They hate me there. It might give you a leg up.

[VinceZeb]

I don't want a place where they hate you. I want a place where it is neutral.

[mburbank]

Well, as usual, you're making me do your leg work for you, but I'll see what I can do.

[Bennett]

Bennett, are you going to give anything intelligent to the conversation or just say something idiotic?

I must remind you of the people that beat you up at school, Bennett. Except I am more intelligent than you as well as physically stronger.

number 3.

number 5.

how intelligent are you that if I were to spend any amount of time on it, I could map out a complete and total guide that would effectively predict any of your future posts on this message board?

own that.

[mburbank]

OMG, someone needs to write an Eliza style computer program that simulates Vinth!

[VinceZeb]

If you sit around and predict what I say, then you are more pathetic than I could ever even try to be.

[mburbank]

Alll that means is you're llazy and can't try very hard and we already knew that.

It wasn't exactly a major effort on his part, you are exceedingly predictable.

[VinceZeb]

Max, you are just as predictable as me.

You are going to say Vinth as some funny geek in-joke.

You are going to make some baseless assumption and avoid the question.

You will insult me against attacking my points 5 to 1.

[mburbank]

Am I predictable?

"You are going to say Vinth as some funny geek in-joke."

Wrong. It's not an 'in-joke' by any strecth of the imagination. I made it up to annoy you, which it does, and becuase you put me in mind of Daffy Duck. Since I've haven't shared tht with anyone until now, it wasn't an in-joke before, and since I've now publicly stated my reason and inlcuded you, it can't be an in-joke anymore. Unless you had some personal deffinition of 'in-joke', or simply meant something else by saying it.

"You are going to make some baseless assumption and avoid the question."


The assumption I just made about you using the wrong words is hardly baseless, in that you do it quite frequently. Unless you had some private deffinition of 'baseless' or simply meant something else by saying it.

"You will insult me against attacking my points 5 to 1."

While I admit I am also insulting you, I adressed both of your first two points and by doing so adress your third. It's called multi-tasking. As to the ratio you propose, I haven't really counted, but I'd say the insult/attacking of points split is closer to fifty-fifty.

In this last post for instance, while doing none of the things you predicted, I 'attacked' all three of you points.

Unless you had some private deffinition of 'predictable' or simply meant something else by saying it.

[kellychaos]

I don't fight just for multimillionaires. I fight for everyone who is overburden with the task of taking care of people that refuse to do anything for themselves. They didn't ask to take care of them, why should they?


The claim of "trickle down" economics is that the rich, when given a tax break, will reinvest/reinvigorate the economy to provide for the unemployed and/or disenfranchised. By that logic, wouldn't the money be going, indirectly, to those same people, Vinth?


There is a BIG difference between the mentally and physically handicapped that CANNOT do one single thing that is productive and people who can that flat-out refuse to. The govt is an inefficient machine. The govt should not bend to only my whim, but the govt should not screw over the people who make the country go. That is WRONG. It is IMMORAL.


So all this money saved in the tax cut is going to go to those people who ARE willing to put in their 40+ hours in the form of profit sharing checks and NOT to the leaders of corporate America. Yeah ... lots of luck there! :rolleyes


People like me will go out and do the violence to protect the elitist assholes like yourself.


So your found your submariner letter, Vinth?! :)


Here I am the minority that can hold his own.


Did I miss a key day on the board? When did THAT start happening?

[VinceZeb]

Kelly, moron, learn what the govt considers rich! 70,000 a year to the govt is considered rich. Do you believe that is a "rich" person? It is obvious you are not known for your intelligence.

Blow your class warfare crap out of your ass, Kelly. Your just another ignorant liberal tool, no matter how much you want to deny it.

[mburbank]

Vinth, $70,000 is more than my family's income, and unlike you, I think of myself as middle class. I do this by looking at people who actually live in poverty and seeing how much easier my life is than theirs. Far from being bitter about those better off than I as you constantly insist, I'm very grateful to be as well off as I am. My children aren't hungry, my family has health benefits through my job. We own our own home and a car. We've worked very hard to achieve these things. I don't know why people who are poor fill you with rage, even junkies, drunkards, those with lots of children and illegal imigrants. The money they get from my paycheck is a small thing I think of as part of being an American Citizen. Sure, beyond my vote I have no choice if I intend to obey the law, but money to social security, welfare, WIC, etc. just doesn't upset me the way it does you, because even if it's abused (you know, the way the Pentagon abuses it's budget sometimes) some of that money goes to feed hungry kids, and I think that's okay. It doesn't fill me with loathing and rage. I don't know why it does that to you. I would suggest somke form of political advocacy. Or donate money to Politicians who share your views, or time.

I'm not sure what your major is, but you may be very surpirsed when you get out of... wherever it is you go... just how hard it is to reach even that $70,000.00 mark. You may even find it hard to get a job. Who knows, the day may come when $70,000.00 seems like a hell of a lot of money to you. I know you like to be cocky, but don't be sure it won't happen. Pride goeth before the fall.

[kilmie polanski]

just how hard it is to reach even that $70,000.00 mark. You may even find it hard to get a job. Who knows, the day may come when $70,000.00 seems like a hell of a lot of money to you. I know you like to be cocky, but don't be sure it won't happen. Pride goeth before the fall.

Exactly...hey vincey, if one earns less than $70, 000, he/she doesn't automatically fall into that category of "slackers, and whores, and bums *oh my*"; a person can be competent enough, like max, to support any financial burden that comes his/her way. I know where you're comin from vince,as my whole family is composed of right wing hawks; you're voicing the opinion of your grand old party. good boy. And i'm not saying i disagree with you wholly, but you're not being very realistic.

Mostly, i just see you as a pompous hot tempered asshole, worthy of your Stan avatar. i just want to nail you in a coffin. :troutslap

[Zhukov]

Glad I read this thread. I don't want to slot into any niche here, but...

"You would have been a good fit in the heyday of the Communist control of Russia."


Nice job of sliping this one in.
I am guessing you are refering to Stalinist Russia. If you are, what does your sentence mean?


"you are a socialist.... You, therefore, are an idiot..."

"I know one thing I am not, which is a socialist fool such as you."

".....elitist assholes like yourself."

"I'm sorry that I'm not a big liberal idiot like you"

Can you be a Socialist Liberal? Can you be an Elite Socialist Liberal? I know you can't be an Elitist Socialist. I am Socialist, what is Liberal? What makes me an idiot for being Socialist? DO you know what Socialism is yet?


"Idiot"
"Fool"
"Asshole"
"Idiot"


"That is why he has to insult and degrade me. It's the standard liberal tactic."


"Blow your class warfare crap out of your ass, Kelly. Your just another ignorant liberal tool, no matter how much you want to deny it."

Why don't you blow your "Libertarian" crap out of your arse?

I am not a smart person, and I don't really know what 'Liberal' is but I will make a guess and state that they probably don't support the armed revolution over Capitalism. If they do, however, support the Class War, hooray for the Liberals.

I'm sure you would 'love' to respond to my questions, but you are probably too tired. However if you want to " do the violence ", then step outside - I hear you punch like a girl.


Fuck you, cocksmoker. >:

[AChimp]

$70,000 per year already puts you close to the upper middle-class, in which case you are extremely well off. So says Corporate America and their army of marketers.

[VinceZeb]

You all beneath me when it comes to this argument. If you don't make 70,000 a year, it doesnt mean you are dirty or stupid. How much money you make has nothing to do with this. If you are someone who works hard and is self-reliant and makes 23,000 a year, well good for you.

I do not like people who mooch off the government, which in turn means they are mooching off my hard work. If you are not struck with tragedy, physical or mental disabilities, have no desire to make a ton of money, or are a child/teenager and you STILL have yet to get on your own and do for yourself, you are lazy and a parasite.

[Sethomas]

Ah, so now there are stipulations and exceptions.

Dipshit.

[AChimp]

or are a child/teenager and you STILL have yet to get on your own and do for yourself, you are lazy and a parasite.

Children and teenagers are parasites for living with their parents? :confused

I'd say that all children and teenagers are better off living at home. Of all the people here, I thought that Vinth would be the one to stand up for family values. :tear

[Miss Modular]

AChimp made me :lol

[Zhukov]

I do not like people who mooch off the government, which in turn means they are mooching off my hard work.


The biggest "moochers" off of your hard work are not those on welfare:

http://www.newyouth.com/archives/workingconditions/quick_reminder.asp

Samuel Lynbrook

August 15, 2001

Recently, I recieved a raise in pay, a grand fifty cents which brought my hourly wage up from $6.00 to $6.25. Working in a photo lab in a Florida Eckerds, (a drug store chain owned by JC Pennies) what do you expect? Of course, this is where being a Marxist always gets you in trouble. I expect the capitalist class which leeches off of humanity to be overthrown.

I have always been aware that I was and still am being grossly exploited by the capitalists, but never before had I done the math! (Of course the following numbers are approximations in many cases, such as hourly wages of co-workers and so on.) Opening a binder in the back of the photo lab labled "finance" I found many statistics dealing with the profit and expenses of the lab. Namely the Gross profit.

Gross profit for April: $16,200.00, and a few lines down the word "usage" with $4500.00 written to the left of it. I am assuming that is the cost for that month to keep the lab running; (the cost of chemicals for the machines, paper for printing photos, etc.). At that time I made $6.00 an hour, and worked 20 hours a week, as did two other employees. The manager of the lab makes $17.50 and works 50 hours a week.

If you do the math Eckerds pays out $5,000 a month in wages to the photo workers; $500 for myself and two other employees and $3,500 to the manager, leaving them with a nice profit of $6700 a month, which is just one lab of well over one thousdand locations.

Now, if you were to add up the total hours worked by all employees (including the manager) and divide the Gross profit, minus the cost of running the lab, you will find the amount of wealth produced by a worker in an hour. In this case the formula looks like this: $16,200.00 - $4500.00 = 11,700.00/440 = $26.60. The wealth we create every hour is worth $26.00, yet I was being paid $6.00. Every hour I was being robbed of $20.60. Just a friendly reminder of why those capitalists have such nice fancy cars and houses.

Samuel Lynbrook,
August 2001