Debate with a Top 1% / Tax Lawyer

I had a conversation with a good friend yesterday about the tax issue and the row between We are the 99% and 53%. My friend is a tax lawyer at an elite law firm in New York, and definitely belongs to the top 1%.

It went something like this:

Me: Warren Buffet is the one who said that he paid a lower percentage than anyone in his office.

My friend: He didn't take into account that the profit from his companies and all kinds of transactions have already been taxed. In any case, the tax increase he's advocating doesn't really affect him that much -- everyone wants someone else' tax be increased.

Me: But the richest 1% control 40 something percent of the nation's wealth, and they pay so little. (and infographs here and here.)

My friend: People are easily misguided by simple comparison between some numbers. The tax system is very complicated; you can't just drag two numbers together and say it's not fair.

Me: So how come big coorporations that made a profit paid negative tax ( GE had $10.3 billion in pretax income and reported a tax benefit of $1.1 billion.) and hugely profitably oil companies like Exxon Mobile can claim nearly $4 million subsidies each year???

My friend: I don't know the details of these companies, but sometimes even when these companies are globally profitable, it doesn't mean that they made a profit in the U.S., or they had a huge loss in the past year and was rolled into the next time period. For instance, BP's huge loss would roll down to several years.

Me: So if you don't support taxing the rich, i.e. yourself, how do you suppose we resolve the revenue problem?

My friend: The current tax system doesn't work. It's much more complex than it has to be, and has resulted in a lot of inefficiencies. We don't have a straightforward tax code, instead, the Congress passed a lot of separate laws to say we'll give something tax credit up until 2016 (e.g. wind turbines), or give certain companies a tax break. Someone needs to keep track of all these miscellaneous changes all the time. Companies need to hire many lawyers and accountants to do taxes. All these costs are passed on to the consumers, causing prices to be higher than they have to be. That is such a waste.

Me: If the tax system is simple and straightforward, you, my friend, wouldn't have a job.



It's probably not smart to have a debate on tax issues with a tax lawyer, but does anyone have any evidence either to support to oppose my friend's argument?