In mid-August, after the debt ceiling debacle, Warren Buffett made the announcement that the “super rich” should pay more in taxes.
Buffett is speaking in Obama “class warfare”-ese these days. But, as with most wealthy class warfare preachers, he has not practiced what he preaches.
Buffett has money to spare, apparently, but has never taken the lead on the issue and written that EXTRA check to the IRS to get the ball rolling. As a matter of fact, he even admits to using the tax “loopholes” that he now he believes are immoral or something.
And one would presume that Buffett believes that our federal government can spend and invest that money more wisely than those who earned it.
But if Buffett believes that taxing the “super rich” would make a dent in our debt (short or long term), then I seriously question the “brilliance” of this man.
Suppose Mr. Buffett got his wish and loopholes and deductions were eliminated, making it possible to tax the “super-rich” (those earning $1M – $10M per year) at an effective rate of 50%.
The result is it would theoretically (in reality people would find ways to protect their money) bring in enough to drop next year’s deficit by 8%. This amounts to 1% of our current debt. But Buffett also envisioned a super-tax on those making over $10 million a year. It’s an easy sell since few of us are so fortunate but what would it accomplish? Again, the Tax Foundation crunched the numbers and found that a 100% tax rate on these individuals would reduce the deficit by 12%.
Obviously it wouldn’t take long for a 100% tax rate to lead lots of very rich people to relocate overseas. You could probably only do this for a couple years, but apparently Buffett hasn’t thought this through very carefully.
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.
Even if we go to ridiculous extremes, i.e. 100% tax rates, Buffett’s plan could at most reduce the deficit by 20%. The other 80% has to come from cuts in benefit programs like Social Security, Medicare, Medicaid and Obamacare. This is a classic 80-20 problem.
So does Buffett really want to give away 100% of his wealth to the government? Yea, well…I didn’t think so.
So what drives a supposedly lsmart man like Buffett to propose such an idiotic way to solve the debt problem in Washington?
For starters, just look at the picture on this post. He’s cozy with Obama.
Other than that….you make the call:
Buffett is a social progressive who supports the President. Like Obama, he knows that increasing taxes is more significant as a political point than as a solution to our debt problem. His recommendation has little practical value but much rhetorical value to the left. Either Buffett is acting as a partisan or he can’t do simple math. Your call.
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