Warren Buffett’s NY Times op-ed of last week generated a substantial dose of self-righteous indignation.
I mean, really. If someone as wealthy as Warren Buffett thinks that the mega-rich people should pay more taxes, then why shouldn’t they?
Although the issue seems so simple, as with many things in life, it’s not.
Apart from the fact that Buffett is not averse to taking positions that protect himself at the expense of others, the taxes that the mega-rich pay are already highly disproportionate.
And as Jeff Miron notes, assessing even an additional 10% surcharge on taxpayers earning over $1 million would not generate enough to make a meaningful difference in reducing the budget deficit. Miron zeroes in on Buffett’s error in reasoning in the following passage:
Buffett errs, most fundamentally, by focusing on outcomes rather than policies. The right question is which policies promote differences in incomes that reflect hard work, energy, innovation and creativity, rather than reward the unethical, the politically connected and the tax-savvy.
In economics, as in sports, we should adopt good rules and insist that everyone play by them. Then we should stand back and applaud the winners.
Indeed, check out what David Logan discovered when he crunched the numbers:
So taking half of the yearly income from every person making between one and ten million dollars would only decrease the nation’s debt by 1%. Even taking every last penny from every individual making more than $10 million per year would only reduce the nation’s deficit by 12 percent and the debt by 2 percent. There’s simply not enough wealth in the community of the rich to erase this country’s problems by waving some magic tax wand.
Finally, to put everything in perspective, think about what would need to be done to erase the federal deficit this year: After everyone making more than $200,000/year has paid taxes, the IRS would need to take every single penny of disposable income they have left. Such an act would raise approximately $1.53 trillion. It may be economically ruinous, but at least this proposal would actually solve the problem.
And as Charles Koch and Harvey Golub note, it’s not as if government has distinguished itself in the way in which it has used tax revenues.
Meanwhile, Peter Gordon insightfully points out why indulging in class warfare against the wealthy is dangerous.
Timothy Snyder’s Bloodlands (Basic, 2010) reminds us of the horrors of what occurs when the dynamics of racial and class warfare collide.
Are those who fan such flames confident that similar outrages could not happen here and now?
Or do they even care?
“I mean, really. If someone as wealthy as Warren Buffett thinks that the mega-rich people should pay more taxes, then why shouldn’t they?”
Because it’s the right thing to do, and thank good- ness Mr. Buffett has the courage to say so.
There is nothing stopping Buffett from donating additional funds to the government that he believes should be subject to additional taxes. Also, Buffett could subject his fortune to the draconian U.S. estate taxes. He has chosen not to do so. I suspect that one of the reasons that he has done so is that he concurs with Messrs. Koch and Golub in that he believes that his investments in charitable causes will be more effective than how the government would deploy those resources.
I agree there’s nothing stopping anyone from donating to the government, and there’s no lack of
rich people (and their cheerleaders) who believe that the only role of government is to facilitate the acquisition and maintenance of wealth — at the
expense of the vast majority of everyone else.
The public is bombarded daily with propaganda from the corporate media designed to convince the public that our biggest problem is the need for more policies that widen the gap between the greedy rich and everyone else.