Nevertheless, the move to cut taxes on dividends protects the pocket linings of corporate executives and billionaire bigwigs galore while adding about $124-$660 billion to that old budget deficit.
Sure, the Senate’s tax cut package, passed a week ago, contains some happy news for we the people. A $1,000 tax credit per kid sounds like a healthy move given the cost of a free public education these days. We at the RN&R don’t mind fewer dollars being taken out of our biweekly checks for federal income tax. The less we contribute to the current administration’s recent murderous acts in downtrodden Middle Eastern countries, the better. (Note: Twice as many Iraqi civilians—the most conservative estimate is 1,700—died as a result of U.S. military bombings than have died so far of SARS as of the most recent worldwide total—662 on Tuesday.
Among the critics of the Senate tax bill is gajillionaire Warren Buffet, who owns about a third of the stock in Berkshire Hathaway, a corporation with dozens of diverse holdings including Dairy Queen, Helzberg Diamonds and several furniture chains. In a recent Washington Post column (washingtonpost.com), Buffet blasts the Senate bill as “Enron-style accounting” and “class welfare … for my class.”
In the column, Buffet gives an example of how the dividend cut would work. If Berkshire decided to distribute $1 billion in dividends to shareholders next year, then Buffet, who owns 31 percent of the shares, would nab a cool $310 million in additional income while “[owing] not another dime in federal tax.”
His overall tax rate would be about 3 percent. At the same time, Buffet’s receptionist would be paying about 30 percent on her salary—"about 10 times the proportion of her income that I [pay for] such government pursuits as fighting terrorism, waging wars and supporting the elderly.”
If the government is dead set on giving money away, Buffet has some suggestions. “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.”
We hear ya, Warren.