It was reported in Mr. Reilly’s August 15, 2012 article in Forbes.com titled “Warren Buffett Benefits More From Deferral Than a Low Rate” that his wealth increased by $3 billion last year and if “he had to realize those gains, even at 17.4%, he would have had to pay $522,000,000”. If he had to pay the proposed 30% “Buffet Rule” rate the tab would be $900,000,000. The net wealth tax approach does not tax the capital gain but would assess 2% against the average principle of $41.5 billion (beginning with $40 billion and ending with $43 billion for the year). This computes to $830,000,000 – (an amount less than the “Buffet Rule” computation if deferral were eliminated and the capital appreciation was taxed as income).
In fact Mr. Buffet only paid $7 million in taxes on income of $40 million and that is one reason why tax reform is needed. Those at the top really don’t need the cash income and can hold on to their appreciated assets indefinitely so as not to trigger capital gains income. From a tax philosophy perspective it may be better to view a net wealth tax as a tax on the imputed income that should be realized from the investment of the net wealth.
248TaxBlend (talk) 19:41, 1 September 2012 (UTC)