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My Plan For Buffett’s Money (And Those That Want To Pay More Taxes)

September 28, 2011 · 20 comments

in Personal Finance

There has been a lot of press recently about how Warren Buffett and others all think the rich should be jumping up and down at the opportunity to pay the government more money to help ease the country’s debt crisis.

I am not rich and the ‘Buffett Rule’ would not affect me, but even if it did, I would not be embracing the opportunity to send more money to Washington.

Why you might ask?  Is it because I am greedy and I want to hoard all my money?  Is it because I am an uncaring  and only care about myself?  Of course not.

The reason is, I don’t trust the government to spend my (or anyone else’s) money wisely.  I am obviously not the only person that is concerned with how the government allocates our tax dollars.  According to a Gallup poll from September 19th, 2011, Americans feel that the government wastes about 51 cents out of every dollar it spends.  This brings me back to my point about ‘willingly’ handing more money to the government to help the economy.  I don’t donate to any cause where the vast majority does NOT go to the cause itself.  Now, I don’t know what percent of money is actually wasted by the government each year, but if the perception is 51 percent- who wants to donate to that?

My Solution For Decreasing U.S. Debt

What I would like to see Warren Buffett, Ron Howard, Jane Lynch and all the others that want people to give more money to the government do with their money instead is this:

  1. Create a non-profit Accounting organization that would be funded by the generous donations of Buffett et al.  (This organization would also be accepted and embraced by the government.  I recognize the General Accountability Office (GAO) already exists for this purpose, but they obviously are not getting the job done. )
  2. Assign this organization with the task of finding wasted money within the government.  I am not talking about sending in the accountants to shut down useless departments.  I am talking about having these accountants audit the goverenment to find where money is being set out the door necessarily.  For example, it is estimated that the government spends between $100 and $150 million dollars each year on payments to dead people.  Apparently stimulus money is also being distributed to dead people and those in jail.  In this day and age with all the technology we have, how does so much money get wasted this year on payments to people that should not be receiving any money?  These accountants would go in like bulldogs hunting for wrongly spent money.

Think about how great this program could be.  It would cost taxpayers nothing because it would be funded by all the people in the country that really want people to pay more in taxes like Warren Buffett.   This program would also create jobs as many auditors and other support functions would have to be hired to find where the government is ‘accidentally’ spending money.  No party could oppose such a plan because the task force would only be going after money that the government should not have spent in the first place.  Once the obvious leaks were stopped, the auditors could dig a little deeper and investigate fraud too.

What’s not to love about my program?  Instead of the government just counting on increasing taxes to create more revenue, they could now look at the other side of the coin and cut spending in a way that can’t upset anyone.  (Ok, so maybe the inmates and the people cashing checks on behalf of dead people might be a bit mad.)

What do you think?  I am sure there are many ways that government spends money inefficiently besides just handing out cash to the dead.  Maybe a non-profit, non-government group could help find a lot of hidden money and stop the government bleeding of unnecessary spending that is happening today?

 

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{ 17 comments… read them below or add one }

Moneycone September 28, 2011 at 7:05 am

Running on donations is against capitalism. As you mention, we already have GAO which is supposed to oversee government expenditure. Maybe strengthen that first.

I like Buffett’s rule because it is about paying your fair share and not just taxing the rich. Heck, I would be ok if everyone paid a flat 20% tax, rich or poor.

If Buffett pays less than his secretary, there is something seriously wrong with the way the system is setup.

If you really want a serious dent in cutting expenditure, I would start with defense. Our defense budget is more than the defense budets of all the countries put together. Forget politics, but think, do we really need such a huge allocation? I’d start there.

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Kris September 28, 2011 at 8:11 am

But isn’t overtaxing a certain segment a form of forced donation in a sense?

There are definitely some good things within the plan Obama discussed, including flattening the tax system and others. I love the thought of flat tax, although I would not tax those at poverty level.

The whole Buffett/Secretary thing is such a remote situation that I get scared when we want to pass legislation based on such an obscure event. Buffett does draw a very small salary and most of his gains are investment driven. By the way, it isn’t that he is paying less, it is that he pays a lower percent.

I think many departments need to cut their expenditures, and i really don’t think our GAO is doing nearly as good a job as they could. Maybe they are understaffed, I don’t know, but if people think that over 50 percent of every tax dollar is wasted, then the perception is definitely that the government is not doing a good job allocating their funds.

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MoneyCone September 28, 2011 at 9:49 am

“But isn’t overtaxing a certain segment a form of forced donation in a sense?” That is exactly Buffett’s point! The net percentage tax he pays is less than what his secretary pays and that is unfair.

“The whole Buffett/Secretary thing is such a remote situation”
I wish it were! And that’s the problem. Do you know what was the federal tax Exxon paid in 2010? 17.2% (http://www.washingtonpost.com/business/economy/how-much-do-oil-companies-really-pay-in-taxes/2011/05/11/AF7UNutG_story.html – not from talking points of political parties or questionable front groups, but from Exxon itself) which is less than what I pay.

Buffett’s rule is not about taxing the rich more, it is about fairness. That’s how I see it once I take away party blinkers.

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Kris September 28, 2011 at 12:58 pm

MC, Buffett makes what, 100k/year salary and the rest of his income is from investments? In terms of people (and not businesses) that fall into Buffett’s Rule, it is somewhere around 60k people, which is a small segment of the population. I would much rather if money and time were put into focusing on real tax reform instead of these outlier situations. Regarding Exxon, add Google and probably a whole host of other companies that are getting avoiding taxes. The system allows it to happen, and it is the entire system that needs reform.

My whole point is, our nation is not handling its money well, and Buffett is not just talking about Buffett’s Rule, but about how all wealthy americans should stand up and be willing to donate money to the government. Why would anyone want to donate to someone that so mishandles our money? (Whether it is donate or through taxation, it doesn’t matter. The end result is more of the public’s money going to an organization that cannot handle money properly.)

I would love fair taxes, which is why I love the flat tax idea. To me, nothing is more fair than that, and I do like the part in the Buffett Rule that would flatten tax laws somewhat. My point is though, these ultra rich people stand up and say the rich should want to give more to America. Well, if the rich spent their money like the government did/does, then they wouldn’t have gotten rich in the first place.

I don’t have party blinkers. I just am sick of the example this country is setting in terms of spending and fiscal matters.

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The Biz of Life September 28, 2011 at 1:22 pm

Based on 2009 IRS data, Buffet’s secretary would have to earn between 200K – 500K to pay federal taxes at a higher rate than he does. I doubt he pays his secretary that much since he only pays himself 100K.

Someone should call his bluff and make him prove his statements. If he wants to give the government more of his money, no one is stopping him from doing it. The IRS tax rates are the minimum a person has to pay, not the maximum. The fairness argument is a bunch of hooey. The US has one of the most progressive tax systems in the world already. The real problem with the US tax system is that the bottom 50% of earners pay very little in taxes. If the government were to confiscate the entire wealth of all billionaires in the country it would still fall well short of closing this year’s budget deficit.

Shared sacrifice should first start with the government making some significant cuts to its own budget like businesses and households have done the past couple of years….. and I mean real year-over-year cuts, not just reductions in the rates of increased spending. Only when they’ve done that should they expect any additional revenues from their citizens.

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The Biz of Life September 28, 2011 at 8:24 am

#1 IRS statistics on tax receipts in 2009 contradict Buffett’s assertion altogether (see http://thebizoflife.blogspot.com/2011/09/google.html and numerous other bloggers and the AP). #2 Buffett’s words are misleading– he talks about his federal tax rate and compares that to what appears to be his secretaries overall tax rate (federal, state, local and property taxes). #3 if Buffett is truly being honest (and not just making a partisan point) he must be paying his secretary in the mid to high 6 figures or more, which I seriously doubt.

There are already numerous watchdog organizations such as Citizens Against Government Waste than attempt to embarrass the government into changing their spending habits, but this approach rarely works and hasn’t made a significant difference.

Government will never spend OPM wisely. They are in the business of enriching their donors and themselves, and buying as many votes as they can with OPM. Giving the government more tax receipts will not result in a balanced budget. These people are pros at frittering away money. The Leviathan needs to be starved, and reduced back down to essential functions, and wasting money on green energy, light rails and foreign adventures in nation building aren’t essential functions of the government.

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Little House September 28, 2011 at 9:43 am

I personally would favor a plan like this. I completely agree that a lot of tax payer’s money is wasted because it gets “lost” along the way. Any company or organization or government that is too big usually has difficulties handling their accounting. As the saying goes, “There’s too many cooks in the kitchen” and that can ruin the dish. (Or something like that.) As another example, I work for the second largest school district in the nation and it frequently “loses” money, lays off teachers, then the following year says, “Oh look. We found money.” Hiring a non-profit audit team is a great idea!

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Krantcents September 28, 2011 at 3:33 pm

I am in complete agreement that the government will not do the right thing with the additional money. Rhe problem with an outside organization similar to commissions, the government does not listen to them. No president or congress will relinquish authority to change or close loopholes. I think we have to work within government or just forget about them entirely.

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Jenna, Adaptu Community Manager September 28, 2011 at 4:29 pm

Would love to see something like this happen. Be successful and maybe council the government on ways to better streamline their money and information.

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Financial Samurai September 29, 2011 at 12:35 am

Giving more money to the government is a sin. That’s why Buffett isn’t donating his money to the government. Do as I say, not as I do!

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Tiffany September 29, 2011 at 9:21 am

The bigger issue I think is are they really trying to find a solution. Like you mention with all the government is able to do and track why would dead people be getting checks or issued money. Just seems a little weird to me. I agree willingly giving my money to someone who is going to waste more than half seems a little foolish. The bailouts have done nothing what would giving up your funds do.

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Matt Wegner @ Financial Excellence September 29, 2011 at 10:57 pm

To the biz of Life’s point, it sure would be nice to see meaningful cuts in the budget instead of reduced rates of increased spending. I also think we’d see a little better fiscal responsibility from those knuckleheads if they would actually pass a bill short enough to read and know what’s in it.

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Invest It Wisely October 2, 2011 at 4:09 pm

You know what’s worse than high taxes and spending? All of the destructive regulations, red tape, favoritism, crony capitalism, government-sponsored monopolies, etc… that all destroy employment, reduce the incentive to work hard and get ahead, and destroy wealth. This is the true insidious evil of big government — it doesn’t just hurt, but it hurts even more in what we can’t see, like the jobs that were never created, the wealth that was never produced, and the people who were never able to rise up.

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Kris October 3, 2011 at 8:17 am

You are right Kevin, there is definitely a lot of ‘behind the scenes’ events that just kill our economy. Living near Detroit, I got to see a lot of government corruption that made a bad situation (Detroit) even worse. It went on for so long and nobody knew about it. So much damage done, and it takes years and years to undo.

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First Gen American October 3, 2011 at 10:15 pm

Kris, it’s a great idea. Actually a lot of big conglomerates have this type of “audit staff” that goes around and either solves problems or identified inefficiencies. It is a way for big companies to police themselves and keep from getting so big that it prevents efficient operations.

I’d also pay extra for someone to come in from the private sector and turn certain organizations around. I think the government should be operated more like a business and hiring a business person who is known for turning companies around can be a real asset vs just promoting the same people who grew up in public sector jobs.

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Kris October 3, 2011 at 11:43 pm

I totally agree with you Sandy. I would love if private sector could get more involved because the government is not doing a very good job on its own.

Audits are necessary in so many ways. With all the things that go on in goverenment, then need to be held more accountable. (Think Kwame Kilpatrick…)

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QUALITY STOCKS UNDER 5 DOLLARS April 2, 2013 at 1:43 pm

Does anyone really believe that warren buffett wants to pay more in taxes.

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