Warren Buffett thinks the rich should pay more taxes. So do I—at least since the election. Call the bluff of the liberals, and demand they meet you half way. They won’t, of course; they’re so far from serious about budget responsibility and entitlement reform, they’d need two years on a wagon train to get there. And still get lost on the way.
But let Warren ‘splain hisself (New York Times site, if you’re counting):
Between 1951 and 1954, when the capital gains rate was 25 percent and marginal rates on dividends reached 91 percent in extreme cases, I sold securities and did pretty well. In the years from 1956 to 1969, the top marginal rate fell modestly, but was still a lofty 70 percent — and the tax rate on capital gains inched up to 27.5 percent. I was managing funds for investors then. Never did anyone mention taxes as a reason to forgo an investment opportunity that I offered.
Under those burdensome rates, moreover, both employment and the gross domestic product (a measure of the nation’s economic output) increased at a rapid clip. The middle class and the rich alike gained ground.
So let’s forget about the rich and ultrarich going on strike and stuffing their ample funds under their mattresses if — gasp — capital gains rates and ordinary income rates are increased. The ultrarich, including me, will forever pursue investment opportunities.
Warren Buffett uses himself as an example because he’s Everyman. And the era of the 50s and the 60s is entirely relevant to today, isn’t it?
But let’s at least try to engage him on his central tenet: the rich will continue to try getting richer, regardless of the tax situation. Obviously, the rich (whom I might call “business owners” or “wealth creators”) will do business in whatever circumstances are in play—but they will do more or less business depending on the particulars of those circumstance. What, do you think they’re stupid?
It’s happened through recent history—you cut capital gains tax rates, and you reap higher revenues. He must know this. Why doesn’t he acknowledge it?
What else does he have to say:
In 1992, the tax paid by the 400 highest incomes in the United States (a different universe from the Forbes list) averaged 26.4 percent of adjusted gross income. In 2009, the most recent year reported, the rate was 19.9 percent. It’s nice to have friends in high places.
Yet more than a quarter of these ultrawealthy paid less than 15 percent of their take in combined federal income and payroll taxes. Half of this crew paid less than 20 percent. And — brace yourself — a few actually paid nothing.
Again with the dishonesty! How many “ultrawealthy” are on the payroll? Their money is after tax profit, shrewdly invested. It is money on which tax has already been paid. Buffett is calling for double taxation.
And now, his prescription:
I support President Obama’s proposal to eliminate the Bush tax cuts for high-income taxpayers. However, I prefer a cutoff point somewhat above $250,000 — maybe $500,000 or so.
Additionally, we need Congress, right now, to enact a minimum tax on high incomes. I would suggest 30 percent of taxable income between $1 million and $10 million, and 35 percent on amounts above that.
I’ve written something like this recently. It’s not like I think it’s good policy, but if these superwealthy are so hot to pay more, let them. They’ve never checked the box to pay more taxes voluntarily, but if the jack-booted thugs of the IRS show up at the mansion gates, they might begin to see the error of their ways.
I see it as an investment. Not in reducing the deficit, oh no. The entire accumulated wealth of the Forbes 400 is a cool $1.7 trillion—or about 15 months of Obama’s rate of deficit spending. We could (and maybe should) confiscate Bill Gates’ and Warren Buffett’s and Oprah Winfrey’s—and 397 other billionaires’—every penny, turning them into beggars in rags, and we’d pay off our accumulated debt back to September 2011.
Buffett doesn’t even bother telling us how much his tax hike would raise (if it would raise anything), but that’s my point. The revenue doesn’t matter; the dog and pony show does. If Republicans are going to have a political leg to stand on in cutting spending, reforming entitlements, etc., they can’t be seen carrying fat cats on their backs. And they would do well to seize this initiative as their own.
A Buffett tax (confiscation more like) might raise revenues by the millions or billions, while the deficit grows by over a trillion every year—less than pennies on the dollar. It would be unfair (double-taxation) and fundamentally un-serious—but so what?
Obama will have racked up nearly $6 trillion in debt on his own by the time he takes the oath of office for the second time. But he will be taking the oath of office for the second time. As he told us last time, he won. He can afford to run this country into the ground because desperate people vote Democrat. We can’t afford to go along because we’re the ones paying his deficits. You can’t reason with a madman, but maybe if you talk calmly at his own level, you can minimize the carnage.