It has been over three years since Warren Buffett pointed out that he pays a smaller percentage of his income in taxes than his employees. In fact, his receptionist payed almost twice the percentage he pays, even though he doesn’t even take advantage of tax shelters that are available to the rich.
It isn’t like the rich don’t appreciate this. Some of you may remember billionaire real estate baroness Leona Helmsley, who was prosecuted for fraud and tax evasion by then District Attorney Rudy Giuliani. During her trial, one of her maids famously quoted Helmsley as saying “We don’t pay taxes. The little people do.”
So it is somewhat fitting that a study of the Helmsley Building shows that the rich residents of that building also pay a far smaller percentage of their income than “the little people”. The residents averaged over a million dollars in income in 2007, and yet they paid less than 15% of this in federal taxes. On the other hand, the workers in that building — janitors and security guards — who earned on average a paltry $30,000 dollars a year, paid as much as a quarter of that in federal taxes. Can you even survive in New York City on $23,000 a year?
And it isn’t just rich individuals that are making out like bandits. Corporations are using tax loopholes to avoid paying any taxes at all.
For example, in 2009 Bank of America didn’t pay a single dollar in federal income taxes, while at the same time paying their top executives salaries as high as $30 million. Another bank, Citigroup, recently reported zero taxes owed for the third quarter of 2010.
And it isn’t just banks. Boeing hasn’t paid any federal taxes since 2008. Exxon-Mobil does pay taxes but somehow manages using offshore subsidiaries in the Caribbean to not pay any of them in the US. That’s right, no US taxes, even though in 2009 they passed Wal-mart in the Fortune 500 and paid their CEO over $29 million in salary. Likewise, General Electric paid no federal taxes in 2009, and neither did Wells Fargo.
So, given this situation, why was it so absolutely important to extend Bush’s tax cuts for the rich? We had those tax cuts for 10 years — did they help the economy? Did they trickle down and create new jobs? Is our economy booming like they promised us?
And now, we are being asked to believe that in order to balance our budget, we have to cut salaries for teachers and firefighters? Seriously? How stupid do they think we are?