warren buffet summed it up in this little story.


There was two isolated, side-by-side islands of equal size, Squanderville and Thriftville. Land is the only capital asset on these
islands, and their communities are primitive, needing only food and producing only food. Working eight hours a
day, in fact, each inhabitant can produce enough food to sustain himself or herself. And for a long time that's how
things go along. On each island everybody works the prescribed eight hours a day, which means that each society is
self-sufficient.
Eventually, though, the industrious citizens of Thriftville decide to do some serious saving and investing, and they
start to work 16 hours a day. In this mode they continue to live off the food they produce in eight hours of work but
begin exporting an equal amount to their one and only trading outlet, Squanderville.
The citizens of Squanderville are ecstatic about this turn of events, since they can now live their lives free from toil
but eat as well as ever. Oh, yes, there's a quid pro quo—but to the Squanders, it seems harmless: All that the Thrifts
want in exchange for their food is Squanderbonds (which are denominated, naturally, in Squanderbucks



Over time Thriftville accumulates an enormous amount of these bonds, which at their core represent claim checks
on the future output of Squanderville. A few pundits in Squanderville smell trouble coming. They foresee that for
the Squanders both to eat and to pay off—or simply service—the debt they're piling up will eventually require them
to work more than eight hours a day. But the residents of Squanderville are in no mood to listen to such doomsaying.
Meanwhile, the citizens of Thriftville begin to get nervous. Just how good, they ask, are the IOUs of a shiftless
island? So the Thrifts change strategy: Though they continue to hold some bonds, they sell most of them to
Squanderville residents for Squanderbucks and use the proceeds to buy Squanderville land. And eventually the
Thrifts own all of Squanderville.
At that point, the Squanders are forced to deal with an ugly equation: They must now not only return to working
eight hours a day in order to eat—they have nothing left to trade—but must also work additional hours to service
their debt and pay Thriftville rent on the land so imprudently sold. In effect, Squanderville has been colonized by
purchase rather than conquest

Funny you should mention Buffet.
He's in Obama's camp.
Did you know that he agrees with Obama and thinks the rich should be taxed more?

yeah, i'm trying to figure out the reason for his stance. he's a smart man, doesn't do things that won't benefit himself in some way.

Why do you think he supports Obama's plan then?
Maybe because its sound, and the best was to economic recovery?

Who would you rather be?
Someone making 400 dollars a week with 100 dollars in income tax deducted from your check each week,
or someone making 500 thousand a year and paying 100 thousand in taxes?
Whose spirits do you think will be higher?
How productive and loyal do you think the 400 dollar a week employee will be?

Maybe Buffet knows that the key to a productive and profitable business is its people.

While Buffett is in Obama's "camp" (other than being a life long democrat), the first logical question I would ask would be "why"? One of the wealthiest people in the world, the man probably knows every single angle on how to invest money and wouldn't miss a trick to earn more. Lo and behold... guess what?

http://www.stockpickr.com/problog/820/

Capital Gains: Obama wants to raise long-term capital gains taxes. Under Bill Clinton, they were 20%. Under George W. Bush, they were reduced to 15%. The idea behind raising the taxes is that this primarily effects the wealthy and does not affect middle-income or lower-income people.

This is a not a Democrat vs. Republican issue. In fact, the largest increase in capital gains occurred when Richard Nixon became president in 1969 and raised the tax from 28% to 49%. What happened then? It effectively eliminated the revenue that the government collected from the capital gains taxes, because there was a negative incentive to sell shares.

When there is negative incentive to sell, not only is less revenue raised by the government but there is less money reallocated from older business to new, entrepreneurial ventures. The market and the economy began to slide in the early '70s, creating the worst bear market since World War II, until Buffett, in 1974, found himself in a situation in which he felt like an "oversexed man in a harem" because stocks were so cheap.

Buffett would like to find himself in that situation again.

Well, will Buffett be penalized by any raise in capital gains taxes? No. Buffett has already determined that the bulk of his estate would be left to charity (notably the Bill & Melinda Gates Foundation, Microsoft (MSFT) founder Bill Gates being one of Buffett’s closest friends), making it tax-free.

Also, a raise in capital gains taxes will penalize any long-term shareholders of Berkshire Hathaway should they want to invest elsewhere or start new companies, in the case of significant changes at Berkshire. This helps Buffett’s estate by freezing the mobility of cash. An increase in capital gains is, in effect, a tax on asset mobility. This freezing benefits Berkshire Hathaway and hurts newer companies in need of capital, driving down asset prices of growth companies.

Congress finally slashed the Nixon capital gains raises in 1978 (under Carter), giving rise to the venture capital boom that spurred on Silicon Valley all through the '80s and '90s. Anybody who thinks an increase in capital gains taxes will result in more government revenue only need look at the '70s as a prime example of the reverse.

Obama has stated that he will most likely go beyond the 20% long-term capital gains tax that existed during the Clinton administration and aim for somewhere between 20% and 25%.

Higher Estate Taxes: Both Buffett and Obama are against repealing the estate tax. Obama has stated: "Let's call this trillion-dollar giveaway what it is: the Paris Hilton Tax Break. It's about giving billions of dollars to billionaire heirs and heiresses as a time when American taxpayers just can't afford it."

Obama has proposed to "reverse some of those tax cuts that went to the wealthiest Americans." Buffett has stated that repealing the estate tax “would be a terrible mistake.”

The estate tax is at the crux of a philosophical debate going back to the founding of America, which rejected the idea of privilege and status being inherited from one generation to the next. Buffett has said: "The idea that you get a lifetime of privately funded food stamps based on coming out of the right womb strikes at my idea of fairness." This statement has its roots in Thomas Paine’s Common Sense, which states: "Hereditary succession ... is in its nature an absurdity, because it is impossible to make wisdom hereditary."

The big problem with the estate tax as it is right now is that it forces inheritors to value illiquid assets -- for instance, a family business. Once those illiquid assets are valued, the inheritor pays a tax.

I don’t want to argue against a founding father such as Thomas Paine. Perhaps heirs should not inherit family businesses they are ill-equipped to run. However, because of this quirk of the estate tax, founders of businesses, or their immediate heirs, are often forced to sell the businesses they spent a lifetime building. Because of the forced motivation of the sale, it's often done at depressed prices before the IRS comes calling.

Who benefits? Well, the deep-pocketed, entrenched corporations whose business it is to buy stable family-run businesses that are forced to sell. Who could that be? Berkshire Hathaway.

Quite easy, actually-- he favors meritocracy and rightly predicted a plutocracy as America has had for some time now, could be well its undoing.

-Kerry O.

the star belly sneetches have stars upon thars
but the plain belly sneetches have none upon thars

I tend to believe he supports Obama's plan because he has something to gain. Nobody (in their right mind) does things that would intentionally harm their own financial interests (especially at Buffett's level). His whole life has been nothing but conquering (I.E. acquisitions) in the markets. Wealth, power, and influence. Once one has accumulated more wealth than most everyone else in the world, what worlds are left to conquer (other than obtaining more wealth)? What greater power could a private citizen have than having influence advising a president or world leader?

Once one obtains a high level of income (500K +) on a consistent basis, I believe worrying about taxes is one of their least concerns. They usually retain others to worry about that and to find other "investment shelters" to either retain or increase their personal wealth. For good public relations (and a tax shelters), endowment foundations are created. Surrounding yourself with the best and brightest people is the key to optimal success.

In matters of employment, loyalty can not be bought... just rented. The more valued the employee to the business the more the employee gets paid. Hopefully to expand the wealth, value, and production of the company. The lower the pay, the more expendable (and more easily replaceable) the employee. Whose spirits do you believe someone like Buffett would be concerned about is the true question I believe- the 17K a year janitor who cleans his office or the 500K a year broker who helped him make millions of dollars? Buffett didn't become as wealthy as he did by having a clean office.

you must enjoy holding a convrsation with yourself..

lol

Bee / Gio
2112 tax it...you get less of it....subsidise it...you get more of it...