Warren Buffett and President Obama have a better idea than taxing the rich.
They just want to start with a tax on the “mega-rich” and see how it goes.
Look, I’m an admirer of Warren Buffett’s investment accomplishments. But he should have stayed out of politics. A guy can be good at one thing and not so admirable at others.
I always think that it’s a mistake for someone to borrow their expertise from one area and try to leverage that into moralistic homilies on tax policy for the rest of us.
Especially when that guy won’t come clean about his motives for the homiletic or his tax-return.
Because as the character Aaron Altman in the movie Broadcast News observed about his nemesis, I believe that Buffett, while a very nice guy, is the Devil.
“What do you think the Devil is going to look like if he's around?” said Altman in the pivotal scene, “Nobody is going to be taken in if he has a long, red, pointy tail. No. I'm semi-serious here. He will look attractive and he will be nice and helpful and he will get a job where he influences a great God-fearing nation... he will just bit by little bit lower standards where they are important.”
Because Buffett has lowered the standard when it comes to truth.
In short, Buffett’s not telling the truth.
Buffett via CNN: I have worked with investors for 60 years and I have yet to see anyone -- not even when capital gains rates were 39.9 percent in 1976-77 -- shy away from a sensible investment because of the tax rate on the potential gain.
Investors make investment decisions all the time on the basis of total return after taxes. Anyone figuring out the rate of return without taking into account what they have to pay in taxes is not really figuring out their rate of return.
Want proof? Ask any investor why municipal bonds have lower rates of interest than taxable bonds. It’s because taxes make a difference.
The tax rates of the rest of the world are going down, not up. Raise tax rates here and watch money go to other countries. A trillion in U.S. cash is already sitting in foreign accounts legally. That money won’t come back to the U.S. because were it to be invested here it would immediately be subjected to higher U.S. corporate taxes.
It’s staying offshore for one reason, and it isn’t financial. The Democrats’ ideology of “fairness” prevents them from allowing them to bring tax rates in line to capture the extra revenue these foreign profits would add.
We know from experience that when we lower tax rates to be competitive with the rest of the world, money comes back here.
“Back in 2004, Congress passed a bill that allowed corporations to bring back to the United States after-tax dollars earned in other countries relatively tax-free,” writes the Daily Caller. “This ‘repatriation holiday’ was in effect for all of 2005. The result was that at least $320 billion of money was brought back to the United States. This increased corporate tax revenue by nearly $17 billion — tax revenue that otherwise would have been indefinitely deferred into the future. The money was used to fund pension plans, raise wages, create jobs, and invest in new plants and equipment.”
None of that money would have come back if what Buffett said about tax rates being of no consequence to investors was true. Oh, and unemployment dropped from 5.4 percent in 2005 to 4.4 in December 2006.
Buffett via CNN: To those who argue that higher rates hurt job creation, I would note that a net of nearly 40 million jobs were added between 1980 and 2000. You know what's happened since then: lower tax rates and far lower job creation.
Is Buffett really trying to make the argument that lower tax rates equal fewer jobs? Because job creation and tax cuts correlate pretty well on a timeline. When Reagan cut taxes, jobs were created; when Clinton cut taxes jobs were created, when Bush cut taxes, jobs were created. When taxes went up? Not so much.
And there was a lot more going on than lower tax rates after 2000. The Twin Towers came down, the Pentagon was attacked and we’ve been involved in a war on a few fronts. I bet the global war has a lot more to do with job creation than the government not collecting enough in taxes.
For those who would argue that peace would be a better policy, I say, great. Bring it on. But first, maybe you should talk to your Prince of Peace. Perhaps you can get him to undeclare his undeclared war in Libya.
Or does he have to declare war first before he can make peace?
Add to the litany that we hit 3.8 percent unemployment in April 2000. Ask Mr. Buffett how we create jobs when we were already at full employment? The fact that under Bush the economy created 3 million jobs net while unemployment rose to 9 percent by April 2009 is vindication of the tax cut policy.
Lastly, Buffett is advocating tax changes that will largely subject him to no additional taxes.
As our colleague Greg Pollowitz at NRO observes, Buffet’s money is already tax sheltered as unrealized capital gains and “Buffett has committed the bulk of his fortune – these billions of dollars in unrealized capital gains to the Bill and Melinda Gates foundation, among other foundations, upon his death.” Thus none of that money will be taxed.
In all, the tax-the-mega-rich tour is a shameful performance by Buffett because he knows exactly what he’s talking about. But for reasons of ideology or pride or passion or moral penury he has decided to lower his standards just enough to become at least a demon of the Democrat wing of the Democrat Party.
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