The Buffett Tax Explained Using A Hippopotamus And An Oxpecker

Tyler Durden's picture

Via Michael Cembalest, CIO JPMorgan

When Warren Buffett claimed that a lot of secretaries pay higher tax rates than the super-wealthy, JPMorgan's Michael Cembalest wanted to take a closer look. As shown in the first chart, Buffett’s assertion is only the case in a minority of situations (like his own).



The vast majority of taxpayers with adjusted gross income over $1 million and over $5 million have effective tax rates in the 22%-35% range, considerably higher than the range of tax rates paid by those with AGI below $100k. As a result, Cembalest notes he was not expecting to see large revenue estimates from an analysis of the fiscal impact of the proposals in the Fair-Share Act of 2012, since if the first chart is correct, there are not that many people that would be impacted by a minimum 30% effective tax rate. Now let’s look at some numbers.

The Congressional Joint Committee on Taxation and the Brookings Tax Policy Center analyzed the proposal, under the assumption that the Bush tax cuts sunset for the top two brackets. If that’s the case, the incremental revenue raised by the Fair-Share Tax Act is around $8 billion per year.

This is real money and may be sound public policy, but in the context of a $1 trillion budget deficit expected for FY2013, it’s a rounding error.


To convey this zoologically, we show two animals whose volume is proportionally the same (125 to 1): a hippopotamus, and its symbiotic companion, the yellow-billed oxpecker.


I would like to think that elected officials and political commentators would avoid grandstanding and not mislead anyone on the fiscal impact of their proposals, but right now, there are some people who need help distinguishing between birds and hippos.


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Thecomingcollapse's picture

Weeeeeeeee, it's fixed

It's more easily explained by the debt hippo, and the cocksucker

TruthInSunshine's picture

I don't know about all of that, but I think I do finally understand --

Ben Bernanke's Virtuous Circle

-- finally!

Zero Govt's picture

i would have preferred Pixiebell (a small productive Angel) on the bloated tummy of Jabba the Hut parasite Govt as images go 

Uncle Warren could shed a few pounds (stone) too 

Pladizow's picture

Hungry, Hungry........Warren? - Da na na na na na!

nope-1004's picture

Charlie Munger is the hippos' asshole.


TruthInSunshine's picture

Don't you see?!!! Don't you see....??? It's all right there!!! The proof of fractional reserve fraud/chicanery!!!

Paddy's Dollars = FRNs

Chuck Walla's picture

It's more easily explained by the debt hippo, and the cocksucker.

There is just no excuse to drag Becky Quick into this!


Hippocratic Oaf's picture

Fuck Buffet.

That greasy old fuck.

Nobody cares about him anymore.

Tell me you old shit-stain......what came to you this time while taking a bath?


geewhiz's picture

There is no need to be disrespectful to the Senile of Omaha.

Zap Powerz's picture

You guys realize we are a minority right?

You do realize,, of course, that almost everyone else in this stupid fucking cuntry doesnt care about the debt and if they do say they care and you confront them with the fact that in order to eliminate the debt they would have to give up a lot of social programs they depend on then they suddenly dont care about the debt.

The incentive to continue this bankrupt, corrupt system of govt and finance is HUGE compared to the disincentive to stop it.  And so it wont stop until it cant go on anymore.  Then it will stop abruptly (like a plane stopping when it nose dives into the ground).

Of course, it will be up to guys like us to put the shit back together once it breaks.  Of course the parasites will be begging us to "fix it"!!!!!!  And what they will want is a return to the status quo that broke in the first place because they are stupid.

I hope that when SHTF it happens in the winter.  The fucking dead of the coldest, brutalist winter ever.  Freezing temps will cull the herd nicely.  They will be too cold to plunder and destroy.  Movement will be difficult in the snow so they will stay in their urban concrete jungles and starve/freeze.

Meanwhile, those that have been reading the writing on the wall will be hunkered down, warm and well fed,and we will wait them out.

All through human history it has been the elements, starvation and disease that have killed most humans.  Not war or violence.  It will happen again.

Havea  nice day.

smiler03's picture

Because of course none of the lower waged on food stamps are involved in keeping energy supplies going to keep you warm.

blunderdog's picture

$8 billion certainly isn't enough to bother worrying about. 

That's only about 5 times the cost of free phones for po'folk.

odatruf's picture

I see two hippos.


LoneStarHog's picture

Tyler, "Oxpecker" should be two words.

venturen's picture

You have to tax wealth creation...regardless if it is income or capital gain(or off shore). It should be a flat tax across the spectrum and should be done on a yearly basis with no deductions and only credits for child. Then the you and Buffet pay the same percentage....of course he would hate his wealth builds tax free till he sells....where your income is taxed yearly. Of course Hell hasn't frozen Goldman, Blackrock, etc don't want people to accumlate wealth...they are happy to grow their wealth tax free at your expense!

alien-IQ's picture

Yes because surely, JPM can be relied upon to present us with honest, unbiased and factual information...right?

Tyler Durden's picture

Here is the same data presented from other "honest, unbiased and factual" sources (as presented previously here in April).

alien-IQ's picture

It's all irrelevant really. When you are staring at a tax code that consists of more than 13,000 pages worth of obfuscations, the results of any tweak here and there can be spun to look like whatever it is the author is trying to make it look like.

All this talk of Buffet rule and shit like that is just window dressing and pacification in the form of obfuscative gobbledygook. It's meaningless, divisive and a complete waste of time. It is arguing for the sake of arguing with no intent to actually fix anything. We already have a congress and a senate that gets paid to argue without the intent of fixing anything...why must we all play the same useless game?

GernB's picture

I don't think attempting to exposing a bogus debate as bogus is meaningless. I don't think attempt to get people to stop thinking we can solve our fiscal problems by just raising taxes on a few rich people is a waste of time. And the truth is only is divisive in a society that has been steeped in lies. I don't think the people that will loose their jobs when taxes on the rich go up will consider it a useless game. If your solution is to roll over and let whatever happens happen without trying to spread the truth, then you are the one arguing with no intent to fix anyting.

Urban Redneck's picture

19,270 pages


26 CFR is 15,460 pages (Apr 1 2012 printing)

26 USC is 3,837 pages (2011 edition)

Clever Name's picture

+1000 for "obfuscative gobbledygook"

Yen Cross's picture

Tyler the chart wasn't necessary/ Warren is looking for vindication. 

Sextus Empiricus's picture

*Grain of salt*

Sometimes even liars have to tell the truth in order to protect their own interests. Data is data.

Zero Govt's picture

as JPMorgue are one of the subversive mega-parasites behind Govt wrecking the country i suspect this piece is counter-propaganda

Uncle Warren may be in JPM's crosshairs next after doing-over MF Global

francis_sawyer's picture

Fuck Warren Buffett & the hippo he rode in on...

e_goldstein's picture

and the morgue, and any who may work there.

Cognitive Dissonance's picture

I see a soon-to-be-dead hippo.

<Long live the prepared Oxpecker.>

Debtless's picture

That's the problem with any solution anyone puts on the table at this point - it's not enough to dent the big nut - so let's not do it. I hear it all day on every solution's this one solution must fix all of it nonsense that is gridlocking the US. Just shut the fuck up with that arguement - time to pay up now. And then onto capital gains bitchez, we're going to need some of them too.

alien-IQ's picture

The current multi-thousand page tax code has far too many loopholes and workarounds to be in any way an accurate measuring tool of who is paying a larger percentage than who in taxes.

If you really want to know who's getting fucked on taxes and who's doing the fucking, just apply a 25% flat tax on gross income with no loopholes or deductions and then you'll really clearly see who screams in pain.

fuu's picture

Someone should say it, fuck taxing income. Tax purchases of non-essentials.

The argument over what is essential will be more illuminating.

Hell with Americans all being gluttonous sloths there is way more money in the purchases.

NoDebt's picture

Ah, so you DO understand.  They don't want anything fixed.  They're going to ride this hippo until it collapses under them.  Then they'll look for a new hippo somewhere else.


Sextus Empiricus's picture

I've looked around a very long time and never found a "tax" anywhere.

I've found theft, though.  Lots of people even have the gall to call it something else.

Optimusprime's picture

Love your handle.  Outlines of Pyrrhonism should be a basic text.

Yen Cross's picture

 Earth to Carlos Slim?

pods's picture

Bitching about the drapes while the house is on fire.
These numbers are bad, but they are just current account.  What about liabilities like SS and Medicare?

We are toast.  Ain't no amount of taxation going to fix it.

 This "fiscal cliff" is but a small bump when compared to the mountain of debt coming due.

We cannot have a discussion about that.  For there is no solution that will keep the status quo.

Fucking theater, all of it. From the sanctimonious cocksuckers with their press conferences, to the projections that have no basis in reality.

Unless of course they can find a way to print oil?


Sextus Empiricus's picture

I'm sure as soon as they steal the world's fresh water supply (Great Lakes, etc.), viola!, all of a sudden the hydro cars will come out.  And then water will be more expensive than oil.

We'll just have to wait for the oil to run out before they move on towards a different monopoly, this time the very thing which gives life.  You know it's going in this direction... has been for a long time.

Sextus Empiricus's picture

Why doesn't Buffett just give most of his money away if it's so important for the government to have it?

Methinks he makes even more money than he already has by proposing ridiculous ideas.  Clever.  Most clever, indeed.

Dr. Engali's picture

It helps that he stashed his wealth  away in a charitable remainder tust so it avoides the estate tax and he gets all the other benefits that come along with it.

Cathartes Aura's picture

this recent "Giving Pledge" story seems to hint at an attempt to spend all the billions of pixel-allocations before they dis-appear. . .

Warren Buffett got 11 more billionaires to agree to give away half of their wealth to charity.

The Giving Pledge, a philanthropic initiative started by the business mogul and the Bill and Melinda Gates Foundation, aims to get the super rich to pledge their fortunes early in their lives, so that they can have more control of how it’s spent. In the two years since it was launched, the pledge has recruited 92 billionaires, including the likes of Facebook founder Mark Zuckerberg and New York Mayor Michael Bloomberg.

it's quite a club they've got going, steering "health" and "education" initiatives, which sounds so sweet until you really dig around,

of course, attaching the Foundations to a Philanthropist tag earns sooo much respect, very easy to get away with murder, in plain sight.


Yen Cross's picture

There is a HUGE difference between "several hundred million" and 20 or 30 BILLION!

Joebloinvestor's picture

Experts ? the symbiotic relationship with the peckers as they are known for keeping wounds open to attract more parasites which they feed on.

JohnnyBriefcase's picture

Ahh who the fuck even cares anymore?


*back to drinking*

Zero Govt's picture

we should care enough to be the historic generation that hangs, draws and quarters the biggest wrecker of society, that shithole called Govt

and in the culling point out to Warren Buffet and the handbag swinging Christine Lagarde they've got the wrong end of the stick (and the wrong answer)....a pitchfork where the sun doesn't shine to drive the point home 

Stop Paying Tax ...let them eat shit cake

Sextus Empiricus's picture

This generation might not have the courage to do it.  We're too used to our lifestyle.  But with the way things are going, the next generation will have the courage.  That's how the pattern works.  We reveal it, then they carry it out.  First the idea has to be planted and then it sprouts with the right conditions.

Yen Cross's picture

 Fuck off Mexicans! your corrupt shit hole is a Joke! Southern California is BEAN VILLE' 


 Most of the well educated HISPANICS ,I know are fed up with immigration bull shit! They are smart, and not buying votes!

   They are fed up with the crap/ politics, and working hard!

stateside's picture

By the way, speaking of Buffet, does anybody know if Becky Quick is breastfeeding?  Hard to tell on camera.