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Wayland Student Press

The student news site of Wayland High School

Wayland Student Press

The student news site of Wayland High School

Wayland Student Press

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Compromise on the “Warren Buffett Tax”

(Credit: Matthew Gutschenritter/WSPN)

Nobody likes taxes, but everyone has to pay them.

Depending on who you are and how much money you make, different tax rates apply. The different rates, corporate taxes, dividends and federal and state income taxes affect all working people in America.

The Democrats are trying to push through a bill that includes a section commonly known as the “Warren Buffett Tax.”

The reason this tax is getting so much publicity is that it calls for a radical change in the tax system. It states that those making a million dollars or more from stocks will have to pay a higher rate.

Millionaires generate profit from their stocks, known as capital gains. The money the government will make from the Warren Buffett tax will fuel the spending in Washington so the economy can make the “jump start” Obama’s been promising for three years.

It certainly sounds like a plan. Who wouldn’t want the millionaires to help out with our suffering economy?

Surely they can do something. Warren Buffet said himself that he should be taxed more. He cited that his 17.4% tax on his income was less than that of most of his employees. That may be because his salary is only around $100,000.

All that aside, let’s look at what the Democrats really want out of this bill.

It sounds great when the President says he wants to increase taxes for those with lots of money. Sadly, it’s all about the politics. Obama is looking for a quick fix to his downward sliding approval ratings.

Republicans and Democrats alike have concerns about this bill, and it is all too clear that Obama is using this platform as a way to get the voting population to support him.

There is no easy solution to the deficit. There needs to be a combination of measures that are implemented quickly to get our economy back on track. Part of the issue comes from the fact that economy is in such a volatile position, so nothing should be changing too rapidly.

Having a massive tax hike or massive spending cuts could throw the economy wildly out of control. We need a long term comprehensive plan to be set in place.

As far as the deficit goes, most Republicans are looking toward spending cuts as opposed to tax hikes. This would help to decrease the deficit in the long run. Of course, we still need programs like Social Security, Medicare and high quality education. We certainly can’t stop spending altogether on vital projects.

There are many programs that Republicans see as unnecessary spending. However, lawmakers are wary of cutting spending, especially if it involves their own project.  Leaders of these programs insist that their spending is essential.

Everyone has heard this word and we keep bringing it up in this blog. Compromise. Obama needs to reduce the extreme nature of his Warren Buffett Tax. Republican leaders like Speaker of the House John Boehner need to allow for tax reforms.

It is clear that Republicans are not going to allow this bill to pass in Congress. Obama has made it clear that he will veto anything that doesn’t include a tax hike for the wealthier class. Once again, the parties are at a standstill. With the election coming up, neither party will want to be seen buckling under pressure.

That attitude certainly won’t help the U.S. economy. Taxpayers need to see government be fiscally responsible. What we need, and soon, is a plan that includes both tax hikes on the capital gains for the wealthy and massive spending cuts. This plan has to look to the future, not only until the 2012 elections.

View Comments (7)
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  • A

    AnonOct 25, 2011 at 1:25 PM

    See, this bill doesn't go far enough. The top 5% of this country holds a disproportionate amount of wealth, which, as Marx explained 165 years ago, can only be gained through exploitation. It is only through heavy taxation that the rest of this country can get their fair share.

    Reply
  • A

    Another LiberalSep 26, 2011 at 8:20 PM

    There is no easy solution to the deficit. There needs to be a combination of measures that are implemented quickly to get our economy back on track.

    You might not want to assume so knowing a tone in this matter unless you really are more knowledgeable about the issue than America's leading economists, many of whom have themselves had difficulty explaining the breadth of the issue.

    "Of course, we still need programs like Social Security, Medicare and high quality education. We certainly can’t stop spending altogether on vital projects."

    Vital projects, I agree. Too bad our military budget is more important to us. Our budget:
    MILITARY: 54% and $1,449 billion
    NON-MILITARY: 46% and $1,210 billion
    And this data is only from 2009.

    Reply
    • N

      nobodySep 27, 2011 at 9:11 AM

      So the moral of the story is we should stop war.

      And next elect a president who not only promises to pull out of the Middle East, but will actually follow through.

      Reply
  • S

    Say what?Sep 26, 2011 at 5:08 PM

    this is awful

    Reply
  • L

    liberalSep 26, 2011 at 12:17 PM

    How is this tax plan radical? It is basic Keynesian economics- tax the rich to stimulate the economy. The tax plan wont make $1 million earners pay disproportionate amounts. They will pay the same proportionally as the working class, around 30%. That's not radical at all.

    Reply
    • W

      Wait a minuteSep 26, 2011 at 5:07 PM

      Keynesian economics may be basic, but its fundamental assumptions of fluid prices are far from "proven" (let's remember that Keynes was one of the first macroeconomists, looking back at the Great Depression with limited data). Furthermore, a tax increase without increased government spending (actually decreased in this case) will do anything but stimulate the economy—these measures are meant to reduce government debt. Attempts to "stimulate" the economy through fiscal policy involve injections, either through tax cuts or increased government spending (the cause of our debt problems).

      And should the government somehow decide to spend its extra tax revenue (instead of paying off urgent debt), actual data (contradicting Keynes) has shown the tax multiplier to be greater than the spending multiplier (multipliers being effect on GDP per change in amount), so GDP would still decrease (causing investment, consumption, and unemployment to worsen).

      Reply
      • L

        liberalSep 27, 2011 at 7:45 PM

        I misspoke when I said "to stimulate the economy"; what I meant was that taxing the rich to help pay off the deficit is a good first step towards getting our economy back on track. Also, you make a good point that a tax increase without increased spending will hurt the economy. That would destroy competition and discourage corporations from innovating and creating jobs.
        However, I still don't understand why you consider the tax plan "extreme". It really isn't that drastic- the Buffet Tax is pretty much going to close loopholes that allow millionaires to dodge taxes for their main source of income, investments. Millionaires already pay the same proportion of taxes as the middle class in terms of their wage, which is often pretty low, as you pointed out; Buffet's wage is only $100,000 a year. However, the millionaires have far bigger sources of income, which very often are taxed at lower rates; therefore, they often don't pay their fare share. Is closing up this loophole in the current state of the economy really that extreme? Also, you said yourself that we can't cut spending for important programs like Social Security, Medicare, or education. And cutting military spending doesn't seem to be a realistic measure; I highly doubt lawmakers will sacrifice security to pay off the debt. How else can we ease our deficit besides taxing those who aren't paying their fare share?

        Reply
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Compromise on the “Warren Buffett Tax”