I actually agree that the ultra rich should pay more in taxes, and do agree with Buffett that the line should be drawn somewhere around the $1 million mark, not the $250K mark as others would suggest. One tax analyst I was watching said that this would raise something like $50 billion in the first year… but that is supposing that all of the people who make $1M decide to stay in the country. I imagine at least some would leave the country. Let’s say they don’t, and the gov raises an extra $50B… so what. That’s a drop in the bucket compared to the… what $12+ trillion of debt?

It’s silly to figure out what the government is spending, and then just try to raise that much money. That presupposes that everything the government spends money on is worthwhile… including war, the “vanishing 25 billion,” TSA, etc. What if the government decided to provide computers for all of us… that’s obviously not the role of government, but should we just raise taxes to meet that demand, or should we actually question what the government spends money on?

The end issue is philanthropy. They tell us that taxes feed the hungry and educate small children and every other fluffy thing they can think of. The reality is that most of the income tax goes to pay the interest on our debt to the federal reserve… so it goes to the bankers. State property taxes pay for schools, and capital gains taxes pay for defense. Federal money does not cover local roads, etc.

At the end of the day, I’d like to see money going to the disadvantaged, not lining the pockets of bankers and politicians, or funding wars and corrupt governments of other countries. What I’d like to see here is some REAL incentives to give to charities. Now, you get a tax deduction that is so small, it’s hardly worth declaring unless you are ultra rich in the first place, and donated tons of money. If in place of a deduction, I could outright REPLACE my taxes (or some percentage thereof) with charitable gifts, I’d make a freaking HOBBY out of charity. In other words, if I could pay 30% in taxes, or pay 10% in taxes and give 20% to give to the charity of my choice, I’d much rather give to charity directly. This also cuts the fat out of the middle man so that the people in need get a higher percentage of my gifts. I don’t have to pay someone to give someone else my money. I’d also feel like I was actually making a difference as opposed to throwing money into the black hole of government.

Another idea is the “opt out” idea. I’d like it if there was an option to pay 10% – 15% federal income tax, and then opt out of some of what the federal government provides. Opt out of social security (because let’s face it, we won’t get it anyway), opt out of medicare and medicade and save/invest/ get our own insurance. Then if the people who believe in the system decide to pay 30%-50% in taxes, more power to them.

I digress.

As it relates to this article, I think Buffett sort of implies in on sentence in the middle that higher taxes means more jobs… which is obviously silly. Even if the government could create jobs, we have no indication that the jobs they decide to create are worthwhile. One of my favorite economists Milton Friedman was in China and some of the government officials were showing him around. They went by a construction site, and there were hundreds if not thousands of Chinese citizens digging a foundation. He asked why they were not using modern machinery – that would make their task much more efficient. The government officials that he was with said “that’s true, but this is a jobs program.” He replied, “I see. Well, if you wanted to create more jobs, you could take away their shovels and give them spoons.” Having jobs for the sake of having jobs is as silly for taxing just for the sake of taxing. The market leads people to make good decisions on how to spend their money carefully. Central economic planners are wasteful because they can’t be as precise as lots of collective individuals.

I’m also wondering how long it takes to raise the taxes for the rich… it seems as though Obama has been in office for a while, and enjoyed a democratic house and senate for the first two years of his term… is it naive of me to think he could have done this? I think not; I think it’s naive for anyone to still believe there is any difference at all in these two parties.

P.S. the Super Committee is ridiculous. No constitutional authority, and small groups are very susceptible to corruption.


Thanks for asking for my opinion 🙂 Sorry you actually got it.