Warren Buffett’s ‘nuclear bomb’

Class warfare? Yes, it’s real, and it’s a war.  Indeed, it is an ‘unjust war,’ and immoral. It is not … Continued

Class warfare? Yes, it’s real, and it’s a war.  Indeed, it is an ‘unjust war,’ and immoral. It is not wealth itself that is immoral in America today; what is immoral is the growing political influence that extreme wealth can buy.  It’s a struggle for political influence to get economic advantages, including tax advantages, and in this kind of class warfare, only the mega wealthy have “the nuclear bomb” as Warren Buffett has recently said .

What Buffett means about “his side,” i.e. the mega rich, having all the nukes in class warfare means the very affluent have the means to pay for heavy hitting lobbying and influence in Congress. According to Buffett, the mega wealthy like him can pay for the best weapons. “We’ve got K Street and lobbyists. We’ve got money on our side in terms of contributions.”  Indeed, as Buffett said last fall, this is a war his class already “has won”.

What have the mega wealthy gotten for their “win”? One important win is highly favorable tax policy that benefits especially the very wealthy. The difference in what the wealthy and the rest pay in taxes is one of the major factors in creating accelerated income inequality since 1979, as the well-known CBO report
documents.  Republicans cry “class warfare” when the extremes of income inequality are critiqued, not only by President Obama or #OccupyWallStreet, but also by clergy like me .  But it’s not “class warfare” to critique, from a Christian perspective, the deliberate efforts to create gross economic inequality; to me, that’s just following Jesus and what he taught.  

But “class warfare” is going on, as Buffett so clearly explains, and it is a war of the super rich against the rest, a war they have already won. For example, the mega wealthy have bought themselves a tax structure where someone who is very wealthy, like Mitt Romney, pays far lower overall tax rates than the vast majority of Americans.  This is an income war, and it is a war against the majority of income earners in the U.S. who are largely unarmed in terms of political influence. 

 This is, by any measure, an ‘unjust war,’ and that is what makes it immoral.  Some of the mega wealthy have engaged in a deliberate and sustained effort to “un-level the playing field” in America. They have been spending enormous sums to create conditions that hugely favor one group (the very wealthy) over another (the rest).  To set out to do this on purpose is immoral precisely because it is creates a society that is structured to be unfair. 

Fairness and justice are bedrock issues in moral philosophy, and few have explained this better than John Rawls, one of the leading thinkers in moral philosophy in the 20th century.   His greatest work
, A Theory of Justice
(1971), is an acknowledged classic.  The theory takes its starting point from the argument that “most reasonable principles of justice are those everyone would accept and agree to from a fair position.”

“A fair position” means the kind of position people would adopt if they didn’t know what hand they would be dealt at birth.  Wouldn’t you want to be born into a society that was fair and equitable if you didn’t know who you’d be, either the child of a well-off family or of one that was less well off?  Or, as in an example I often use to help people understand Rawls, what smart parents do when you’re trying to settle an argument between two of your children about sharing a piece of cake.  Tell them one child will cut the cake, and the other child will pick first.  You can see the scrupulous attention to equality that the cake-cutting child pays, trying to make every crumb equitable.  That’s Rawls. 

 The “Wizard of Omaha,” Warren Buffett, is doing a great job teaching Americans how and why the wealth cake is cut so unfairly today.  This really helps people who, like myself, have a hard time understanding the ins and outs of the tax code, especially since it seems to change all the time.  Buffett gave a face and a name to this inequality in the “tax playing field” through highlighting the real difference between what he pays and what his long-time secretary, Debbie Bosanek, pays.  A person like Debbie, with a good job and a good boss, can’t put as much of her income toward investing, like her boss recommends people do, because she pays so much in taxes.   It’s a simple picture that tells a complicated story very clearly.

Buffett has a gift for clarity.  His witty critique of “trickle down economics” in the same interview, is that “a rising tide lifts all yachts,” not all boats. 

Buffett was asked in the interview cited above whether Mitt Romney, a very wealthy man, has a “moral obligation to pay more.”  No, says Buffett, the “moral obligation is to change the tax code.”  What’s critical to understand, both from Buffett’s perspective and from that of John Rawls, is that structural inequality is not an individual moral problem. It’s a structural decision that we make about what kind of society we want to be.

This is the purpose of the  “Buffett rule,” where those who earn “a million dollars a year” should pay a tax rate of 30%.  There is a growing and influential group of wealthy Americans who agree.  Bill Gates also thinks that the rich should pay more taxes .  The group “Patriotic Millionairessupports the Buffett rule and has released this video
to make their case that members of Congress who are millionaires are part of the problem.

The wealthy need to start paying their fair share in America because it is immoral for this country to continue down the road of widening inequality.  Raising what the rich pay in taxes is not the only solution to rapidly accelerating income inequality, but it is a significant part of the solution, especially since it would take more of the burden of debt reduction on to the shoulders of those who can afford it, instead of placing on the backs of those who can least afford it.   

Many on the losing side in this class warfare are suffering, just like in a real war.  Fifty percent of Americans now live at or below the poverty level. Just like in a shooting war, there are casualties. Real casualties.  Pain and suffering, illness and even premature death from continued food insecurity are some of the consequences.  “In the United States, more than one out of six children lives in a household with food insecurity, which means they do not always know where they will find their next meal.”  Continued inadequate nutrition depresses the immune system and leads to vulnerability to a range of diseases, some of them very serious. 

Great wealth is not, in itself, immoral.  What is immoral is when some of the wealthy their means to lobby for an unfair advantage that tilts the economic playing field so grossly in their favor.

All Americans have a moral obligation to level the playing field again.  We need to end this class warfare through policies that promote fairness.

Susan Brooks Thistlethwaite is a professor of theology at Chicago Theological Seminary and a regular contributor to
On Faith.

 

 

About

Susan Brooks Thistlethwaite Rev. Dr. Susan Brooks Thistlethwaite is Professor of Theology and immediate past President of Chicago Theological Seminary. She is also a Senior Fellow at the Center for American Progress. Her most recent books are "#OccupytheBible: What Jesus Really Said (and Did) About Money and Power" and, as contributor and editor, "Interfaith Just Peacemaking: Jewish, Christian, and Muslim Perspectives on the New Paradigm of Peace and War."
  • John_in_Seattle

    I guess I want to be one of those immoral wealthy who wants an unfair advantage.

    Over the past 30 years I’ve built a business, starting from nothing, taking only a minimal salary to keep enough money in the company for working capital. During this time I have put many more hours than any employee into making the company a success. I’ve missed my children’s birthdays while I’ve been traveling to trade shows and technical conferences. I’ve generated and paid out over 500 years of wages to employees, paid untold business taxes and filled out numerous government forms. And yes, we have a corporate yacht – a 35 year-old aluminum canoe.

    Now I’m nearing retirement. If the Buffett rule takes effect, when I sell the company for say $2M, to spend during retirement, then I would make more than $1M in that one year, and I will instantly become immorally wealthy.

    Would I consider myself a millionaire? Absolutely not. I could have made nad spent more as a small wheel in a large company or a government employee, “working” 40 hours a week and taking all my vacation time. Instead of putting the money into a single, risky company, I could have saved and invested it in a low-risk, diversified portfolio and taken capital gains each year that averaged about $66K per year. Smart. Then I would have been considered by Buffett and his “patriots” to be just a middle-class guy, like most of those who work in his empire of companies. However, I would not have had the joy of worrying about making the next payroll.

    Instead, I choose to be an entrepreneur with few opportunities to spread the income out over time. I can only sell the company once and make my money in one year. And now Buffett suggests his rule, penalizing me for taking that road.

    Would I do it again? Absolutely yes. The thrill of creating a successful business from only an idea is something you cannot get by being a cog in a large machine. It adds to the meaning to life that does not occur when you work fo

  • eugenepatrickdevany

    Your conclusion that, “[a]ll Americans have a moral obligation to level the playing field … and “to end this class warfare through policies that promote fairness” is something I share with a deep passion. I have spent years working on the problem and sincerely believe I have found a tax solution to eliminate “class warfare” by restoring economic vitality and mobility. I would be remiss if I did not invite you to consider the 2-4-8 Tax Plan.

    1) Make all business tax returns publicly available online for free. Cheating will be substantially reduced. Business contributions (political or otherwise) will be public and become part of the business’s reputation. The market will more easily and transparently identify the businesses which are productive.

    2) Adopt the 2-4-8 Tax Plan which is a simple mix of three flat rate taxes. Tax 2% on individual net wealth, 4% on retail sales and 8% on individual and corporate income. The exact same rates apply to the rich and poor. There are no different tax brackets, deductions or credits, and no favoritism. The three taxes would yield about $2.6 trillion per year (slightly more than the current combination of Income, Social Security, gasoline and other federal taxes and fees).

    At the risk of over simplification the process of upward mobility can be illustrated by contrasting a flat rate income tax of 28% versus a combined 8% income tax and 2% wealth tax for each of the next ten years. The latter combined tax would permit an individual to keep 20% more salary each year and tax another 2% of the amount not consumed for the next ten years. If one saved the 20% for 5 years it would be like having a year’s of salary in the bank on top of what might have otherwise been saved under a 28% flat tax rate (conservatively assuming the 2% wealth tax was offset by investment interest).

    It is hard to imagine anyone that wouldn’t welcome a 2% tax on net wealth and a small 4% sales tax, in exchange for drastically reduced 8% individual income tax rate. Ev

  • dfolk

    At least be honest.

    Its a “straw man” argument to suggest that Democrats say the wealthy are intrinsically immoral.

    No one suggests that.

    Its right wing propagandists like FOX and Limbaugh who suggest that Democrats push such an idea, when in fact they do not.

  • persiflage

    The migrant laborers that I’m familiar with work harder, work longer, and work for less than the equivilant non-Hispanic labor force – this is why Hispanics have a corner on several labor markets, including residential construction and landscaping – and why white business owners overwhelmingly employ Hispanic workers in certain trades.

    Deporting illegals will of course impact these markets, but that doesn’t mean that the labor voids will be filled with qualified non-Hispanic citizens………..not by any means.

  • persiflage

    ‘According to the Economic magazine, seventy percent of black male HS dropouts 24-54 aren’t working full time. Who do you think took the jobs they used to do?’

    I’d venture to say that it was not illegal immigrants – in fact, I’d all but guarantee it. This is an apples and oranges issue………

    Illegal immigrants filled voids that were completely open and otherwise unoccupied. This cyclical employment of immigrants has been heavily supported by big commercial farming and argricultural concerns for probably the last 100 years or more.

  • persiflage

    I’d personally be more than glad to pay a 15% capital gains tax on the unearned gains pouring in from my $100 million dollar investments.

    My dear friends, that is the good life. What’s left but politics??

  • Bluefish2012

    Nicely said.

    What galls me the most is that the rich have duped so many of the middle/middle to lower/middle classes to take up arms in their defense. The wealthy have also allied themselves to social conservatives who would otherwise be liberal on the economy and to Evangelicals who truly believe the “gospel of wealth.” Axis of evil?

  • thebump

    More partisan cant from a reliably dim source.

    The anti-growth ideology of pampered privileged ideologues like the authoress causes more inequality and suffering than do all of the 1% (two-thirds of whom are self-made).

    When Buffett puts his money where his mouth is and sends a personal check to the treasury, and pays up the millions in back taxes his company owes, only then might we give a hoot what he says. Miss Brooks lets him off the hook with a specious remark to the effect that “structural inequality is not an individual moral problem”. Of course not—in Miss Brooks’s warped mind the concept of personal sin is positively medieval.

    She goes on to say we should decide “what kind of society we want to be.” Somebody needs to explain to Miss Brooks this whole thing about life, liberty and pursuit of happiness. No, Miss Brooks, you do not get to decide “what kind of society we want to be.” In America, NOBODY gets to decide “what kind of society we want to be” — everybody gets to decide for himself. And we’re going to keep it that way.

    We’re taxed enough already. If there is insufficient opportunity for some, the only solution is unrestrained economic growth that does in fact lift all boats—as it has done throughout our history for wave after wave of poor immigrants, and in recent decades has done throughout Asia and elsewhere.

  • thebump

    “Fifty percent of Americans now live at or below the poverty level.”

    Do you really believe that in America in 2012 every other person you encounter on the street is impoverished?

    Pampered privileged ideologues like the authoress do no service to the truly needy by parroting meaningless gibberish.

  • persiflage

    ‘What’s critical to understand, both from Buffett’s perspective and from that of John Rawls, is that structural inequality is not an individual moral problem. It’s a structural decision that we make about what kind of society we want to be.’

    Buffett completely understands that the institutional protections of the rich is further enhanced by the fact that our own federal government is filled with those same wealthy, privilaged few that are found in the private sector. Money controls every move in the nation’s capital. The democrats are apparently the solitary political party that recognizes the problem, and are prepared to do anything about it.

  • persiflage

    The fact is, the wealthy will never suffer a moment of economic strife or deprivation, regardless of the prevailing economic and tax policiies – they are invulnerable to the vicissitudes that impact the lives of a dwindling middle class …..the poor are completely off their radar, as one of their distinguished candidates for president recently remarked.

    Statistics showing the continuous transfer of wealth upward are plentiful – and this is in part a function of the Reaganomics that is still in place as operational economic policy – except that no one even pretends that the myth of trickle down supply side economics has any validity whatsoever.

  • persiflage

    Buffett correctly calls this class warfare – and no one would know better than Warren Buffett. Bill Gates and other ultra-rich folks are apparently in agreement….more and more of the weatlhy in this country understand the fundamental inequity of today’s economic situation, and are fully prepared to pay higher taxes.

    Republican ideology ignores all of these incipient cultural changes in perception, and instead offer up more ways by which the middle class are further disenfranchised economically.

    Their candidates for president understand the job that’s expected of them – and Romney is by far the best qualified to keep the money moving in the right direction, along with the continued protection of the corporate aristocracy. Why ordinary voters find these completely regressive social and economic policies appealing is a mystery for the ages. They’re only hurting themselves.

  • persiflage

    ‘Great wealth is not, in itself, immoral. What is immoral is when some of the wealthy their means to lobby for an unfair advantage that tilts the economic playing field so grossly in their favor.’

    Great wealth is only a tool – as a political prybar it’s unexcelled. As a method of sefl-replication, it has no peer. It’s good to be rich…..it sure beats the alternatives.

  • thebump

    “transfer of wealth upward”

    Gotta love this moonbat canard. [A] If you have wealth to transfer, how can you be poor? [B] If this alleged transfer has been ongoing for more than three decades and you’re still not depleted, how can you be anything but wealthy?

    The beauty of moonbattery is that you never have to make sense.

  • Kingofkings1

    A+

  • lr4567

    In a sense, the Government is the motor of the economy; it buys the products of these big companies, cars, software, award service contracts. Government money is tax payers’ money the majority is paying for the 1% to have the privilege that they have. So it is fair to level the tax balance.

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