Warren Buffett - "stop coddling the super-rich"

[Lurker765]

Contributions to a Roth IRA are NOT tax-deductible. You do pay taxes on them up front. Withdrawals can be taken out tax-free if the standard rules are met. This is different from a 401(k), where contributions are not-taxed, but all of the withdrawals are taxed.

That is the point. If you take your already taxed money and put it into a ROTH IRA then it will never be taxed again and everything it earns is tax free as well (once you hit retirement age).

If you take that same money (say $5000) and put it in the stock market until retirement age and it ballooned you then pay capital gains on the profit.

The ROTH IRA seems to have been part of the idea that once money is taxed once by the government it shouldn't be taxed again IMHO. I thought that was part of the arguments when it was first proposed.

[Lurker765]

I guess this is just an integral part of my world. In gaming (the Casino) I see people take their earned income (already taxed) and if the win (over $600) they are taxed on that money won. To continue--should they take THAT money and say, enter a poker tourney and win, they'll be taxed on it again.

I'd say that's pretty similar to the capital gains tax--If you make money, you pay the toll.

Just think of the abuse that would occur should they NOT tax these kinds of monies.

Thanks for the clarification.

That is almost what is happening. With a capital gains rate of 0% you don't get taxed. With enough deductions you can get down to that level as an upper middle class person.

With the super-rich, getting a 15% tax rate is also pretty sweet even if they cannot somehow hit the 0% spot. There are many, many people paying a higher rate than this.

[OaklandA's]

That is the point. If you take your already taxed money and put it into a ROTH IRA then it will never be taxed again and everything it earns is tax free as well (once you hit retirement age).

If you take that same money (say $5000) and put it in the stock market until retirement age and it ballooned you then pay capital gains on the profit.

Yes, that is true, since the Roth IRA is a retirement account. The logic is to encourage long-term investments for your retirement. So if you wait until age 60, then the money can be withdrawn tax-free. If you take it out earlier, you would have to pay the usual capital gains taxes.

[Lurker765]

Yes, that is true, since the Roth IRA is a retirement account. The logic is to encourage long-term investments for your retirement. So if you wait until age 60, then the money can be withdrawn tax-free. If you take it out earlier, you would have to pay the usual capital gains taxes.

That is mostly true, but there is an exception as well. With the ROTH IRA you can remove your contributions at any time and not be taxed on them. So if you toss your $5000 in there, wait five years and have it double due to shrewd investments you can then remove $5000 and not be taxed on it and have another $5000 in your ROTH that is now tax free.

Anyway, I edited the post you responded to since I forgot my main point on the ROTH IRA. I thought it was proposed under the principle that money once taxed should be tax free and this is one way that this idea has made it into the tax code.

I think the true issue is why is the long term tax rate for capital gains at 15%? The super-rich are not toiling for a salary for the majority of their money. The vast source of their money is investments and this is the primary method that people like Warren Buffet have a lower tax rate than his secretary.

[Hammer]

Havent read all the way through so I apologize if this has already been answered but why doesn't Buffett just write the govt a check?

[B-Fly]

Havent read all the way through so I apologize if this has already been answered but why doesn't Buffett just write the govt a check?

Because he's analyzing a macro-economic problem. One billionaire voluntarily giving more money to the federal government doesn't address the problem about which he's opining. Buffett is saying that problem can and should be addressed by raising the tax rate on all those in a bracket making $1 million-$10 million per year and raising it even higher on all those making $10 million a year or more. That's not net worth, that's annual gross income. Those are people who, as Buffett notes, aren't all that likely to change their behavior if the tax rate on their investment gains and other earnings rises from 15%-18% to 40%, nor are they likely to feel any impact on their standard of living.

[Hammer]

Because he's analyzing a macro-economic problem. One billionaire voluntarily giving more money to the federal government doesn't address the problem about which he's opining. Buffett is saying that problem can and should be addressed by raising the tax rate on all those in a bracket making $1 million-$10 million per year and raising it even higher on all those making $10 million a year or more. That's not net worth, that's annual gross income. Those are people who, as Buffett notes, aren't all that likely to change their behavior if the tax rate on their investment gains and other earnings rises from 15%-18% to 40%, nor are they likely to feel any impact on their standard of living.

Him writing a check would go a long way in showing sincerity

[Kevin Seitzer]

Him writing a check would go a long way in showing sincerity

If you think school teachers should be paid more (for example), are you insincere unless you write a check to your kid's teacher?

[Wonderboy]

If you think school teachers should be paid more (for example), are you insincere unless you write a check to your kid's teacher?

Seriously, you are my favorite poster here. I used to be B-Fly's bitch but I think you've stolen my heart.

[senorsheep]

Seriously, you are my favorite poster here.

Have you read his views on violence against snakes?

[Hammer]

If you think school teachers should be paid more (for example), are you insincere unless you write a check to your kid's teacher?

Thats not the same thing. Buffet said "I should be paying more taxes." In your example, I am saying teachers should be paid more but I didnt say I should be the one paying them.

[DMT]

Thats not the same thing. Buffet said "I should be paying more taxes." In your example, I am saying teachers should be paid more but I didnt say I should be the one paying them.

No, he said 'we should be paying more taxes' and he has no power to coerce all of other super-rich in to paying more.

[Hammer]

No, he said 'we should be paying more taxes' and he has no power to coerce all of other super-rich in to paying more.

isnt he part of 'we'?

[Igor]

As in 'we' pay teachers?

[Lurker765]

Thats not the same thing. Buffet said "I should be paying more taxes." In your example, I am saying teachers should be paid more but I didnt say I should be the one paying them.

If teachers are paid from collected taxes then you are the one paying them. Who are you saying should be paying them?