Le link: http://www.charlierose.com/view/interview/11845
The purpose of this thread is to discuss what Buffet argues in the interview.
I'll start: Rose asked Buffet if higher taxes discourage hiring on the margin (because that is the argument). Buffet replied by saying that his super-rich friends don't make investments based on their own taxes going up. He completely avoided the question.
To paraphrase Marc Faber: We're all doomed, but that doesn't mean that we can't make money in the process. Rabbi Lapin: "Let's make bricks!" Stephan Kinsella: "Say you and I both want to make a German chocolate cake."
At about 12:20, Buffet argues that the countries in Europe that gave up the printing press are in trouble because they gave up the printing press.
Until this hypocrite heads over to pay.gov and makes his contribution, I don't care to listen to anything he has to say about wanting higher taxes.
This article captures it quite succinctly with info from Buffett's most recent drivel piece published in the NYTimes:
why do Buffett and the other rich people so ready to pay more have to be told to pay more? Why don't they just pay more on their own?
The principle is simple. If you think the government is entitled to steal more of your money for dubious, stupid, and wasteful programs, then give the government more of your own money. Don't ask it to take more from those who don't think Feeding the Beast is the best way to shrink government. After all, the wealthy already pay the vast bulk of income taxes. The principle especially applies to Warren Buffett. While alone he couldn't wipe out the national debt, he could make a nice down payment. How about it Warren?
I suspect this is both a good demonstration of regulatory priceout (i.e. a megacorp making billions lobbying for a regulation that costs a million to comply with to harm potential, smaller millions-making competitors) and the fallacy of the notion of "the rich" as a tax target. The difference between a junior executive with 3 million saved in the bank and a Koch brother is as big, if not bigger, than the difference between that junior executive and a trailer trash kid making 20 grand a year at Mickey D's.
Is it safe to say that this guy wouldn't have gotten to where he is without the state?
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Cato Institute's tax expert Dan Mitchell:
[Buffett's] numbers are flawed in two important ways.
1. When Buffett receives dividends and capital gains, it is true that he pays “only” 15 percent of that money on his tax return. But dividends and capital gains are both forms of double taxation. So if he wants honest effective tax rate numbers, he needs to show the 35 percent corporate tax rate.
Moreover, as I noted in a previous post, Buffett completely ignores the impact of the death tax, which will result in the federal government seizing 45 percent of his assets. To be sure, Buffett may be engaging in clever tax planning, so it is hard to know the impact on his effective tax rate, but it will be signficant.
2. Buffett also mischaracterizes the impact of the Social Security payroll tax, which is dedicated for a specific purpose. The law only imposes that tax on income up to about $107,000 per year because the tax is designed so that people “earn” a corresponding retirement benefit (which actually is tilted in favor of low-income workers).
Imposing the tax on multi-millionaire income, however, would mean sending rich people giant checks from Social Security when they retire. But nobody thinks that’s a good idea. Or you could apply the payroll tax to all income and not pay any additional benefits. But this would turn Social Security from an “earned benefit” to a redistribution program, which also is widely rejected (though the left has been warming to the idea in recent years because their hunger for more tax revenue is greater than their support for Social Security).
What is more, with regards to payroll tax, is that he is being misleading by saying that his employees (if they have spouses who are employed) are being taxed twice; but they are not. He is making it seem as if his employee is being taxed twice the amount on the same income when, in actuality, there are two incomes. Furthermore, if Buffet's logic is followed, then the income of the spouse of his employee is not being taxed at all; but Buffet doesn't mention that.
Btw, God forbid Buffet ever say that lower-strata taxpayers ought to pay less taxes.
I wonder why Buffet tried to distance himself from his son's adopted daughter's participation in The One Percent. Given his tax-the-rich stance, it would make more sense to me if he congratulated her in trying to bring the issue to light that seems so dear to him.
Edit: I'm watching the movie now, and according to Nicole Buffet she is his biological granddaughter, and he disowned her for making the film.
Warren E. Buffett suggests that taxes be raised on the “mega-rich.” Why? Well, I assume it’s because that’s where the money is. It doesn’t make sense to rob the poor, does it?
But why stop there? Who else have lots of money? Well, how about banks? And investment funds, like, say, Vanguard S&P 500? The government could raid all of those to raise money.
And why should the government even condescend to pay for its purchases with money? It should be able to enslave anyone, including the mega-rich, and put them to work, e.g., as soldiers or peasants in collective farms.
But here’s the real reason why Buffett seems so eager to stick out his ass for raping. It’s that the super-rich are rich because of their net worth, on which all taxes have already been paid! He does not disappoint: “I would raise rates immediately on taxable income in excess of $1 million.” Wealth is not the same as income! A tax like this will make it harder for the poor to rise to the rank of the rich, i.e., to acquire the wealth they do not yet have. It will make it harder for poor entrepreneurs to challenge and possibly de-throne Buffett.
Again, Buffett is set for life. He does not have to lift a finger anymore to provide for himself. Other people who have ingenious ideas and want to become entrepreneurs, on the other hand, have yet to prove themselves. If taxes prevent them from rising into the upper class, they will remain poor and fail at the same time to create wealth for the rest of us.
Buffett is a good entrepreneur but bad economist. He fails to understand that any incentive has an effect on the margin. Not everyone will be deterred from investing. But some people will be. Buffett argues that “I have yet to see anyone… shy away from a sensible investment because of the tax rate on the potential gain.” But this is due to self-selection: opportunities uninvested into and unpursued tell no tales.
If you make $1M, then you pay a tax, so that your total income is, say, $500K. If you lose $1M, the government does not pay you an “anti-tax” or benefit to soften the blow. Thus, with taxes, the reward is made smaller, but the risk is preserved. How can this possibly not have a marginal effect? People do not shy away from sensible investments, indeed, but taxes affect which investments are going to seem sensible.
Thus, either Buffett is evil by wanting to take away people’s opportunities; or he is too stupid to grasp how society gains from successful entrepreneurial endeavors.