Economy & Budget

The conscience of Warren Buffett

The conscience of Warren Buffett

Warren Buffett, the tax-happy billionaire who has become the anointed conscience of the American upper class, told Matt Lauer of NBC’s “Today” that jacking up taxes on the “wealthiest Americans” won’t have any deleterious effect on job creation.  “No, and I think would have a great effect in terms of the morale of the middle class, who have seen themselves paying high payroll taxes, income taxes,” said Buffett.  “And then they watch guys like me end up paying a rate that’s below that, you know, paid by the people in my office.”

So once again, the future of America is held hostage to the paycheck of Warren Buffett’s secretary, who Buffett dishonestly asserts is paying a higher effective tax rate than he does.  That’s only true if you ignore a ton of the different taxes he pays, and the fact that much of his income is taxed two, three, or four times.  And no matter how effective tax rates are calculated, a person of Buffett’s wealth pays as much in taxes as a hundred people from the very broadly-defined “middle class.”  But why bring logic and reason into what even Buffett admits is an entirely emotional discussion?

Mitt Romney got into a lot of trouble for musing that 47 percent of Americans are getting more from Big Government than they put in, so there’s little chance of attracting their vote with a campaign based on economic liberty and fiscal sanity.  But Warren Buffett just delivered a far more brutal insult to the American character.  He’s saying that Americans are envious children, whose morale will perk up a bit when they see their class enemies getting hit with higher taxes.  As if the “morale” of the middle class had anything to do with these years of malaise, compared to the effect of government tax and regulatory policies!

How far have we fallen, when considerations of middle-class morale, or even job creation, are the primary considerations for tax policy?  We shouldn’t be trying to figure out how much blood the government can siphon out of the private sector before it becomes too woozy to create enough jobs.  We should define the minimal responsibilities of government, then devise a method of spreading that light burden as thinly and evenly across the populace as possible.  But while we’re on the subject of job creation, perhaps it has escaped Warren Buffett’s notice, but the economy is not producing enough jobs now.  We shouldn’t be trying to figure out how much money we extract from the private sector without goosing the adjusted unemployment rate back into double digits.  If we’re going to set aside the moral and ethical considerations of property ownership, and make job creation the most important factor controlling tax policy, then right now we should be talking about pro-growth tax cuts to stimulate job growth.  Buffett is saying that Barack Obama’s New Normal of 8 percent unemployment and flat GDP growth is the best America can do; all that remains is serving the wretched masses a little class warfare gruel to get them through the cold nights.

Buffett is also wrong about the effects of class-war tax increases upon job creation – and given both his investment career and his personal history of avoiding high taxes, he jolly well knows it.  As Dan Mitchell of the Cato Institute observed recently, Obama’s class-war tax hikes are the “make-America-more-like-France fiscal plan.”  The targets of these tax increases have many options for evading high tax rates, and these options generally result in less economic growth than the investment decisions they would rather be making.  The effect on job creation is, inevitably, much worse than liberals anticipate, particularly since we’re already sitting at the high end of the practical taxation envelope.  And not to put too fine a point on it, but the government’s re-distribution and “investment” of all those seized funds tends to be far less efficient and productive than private investment.  Anyone worried about the tax rates of a billionaire’s secretary should be calling for lower taxes on the secretary, not higher taxes on the billionaire.

The tax hikes sought by Democrats would have very little effect beyond boosting the morale of the envious, and buying additional social credibility for left-leaning billionaires.  As Rep. Tom Price (R-GA) pointed out during an MSNBC interview, we’re talking about raising enough money to cover Washington’s expenses for a mere eight days:

There are some private citizens out there with a great deal of money… but Uncle Sam towers above them all, with spending so obscene that the outright confiscation of the top One Percent’s wealth would only cover the government’s expenses for a few weeks.  Part of the reason the public is vulnerable to liberal demagoguery over the debt crisis is that they can’t really wrap their heads around how large the Leviathan State has grown.  Even its smaller agencies command budgets beyond large corporations; it spends more in a day than most billionaires earn in a lifetime.  And the current tax burden is so cunningly devised, so carefully hidden, that voters are all too willing to believe in the mythology of greedy fatcats skipping away without “paying their fair share.”  A middle-class taxpayer sees only a small portion of the taxes he pays, and knows nothing at all about the tax filings of small business owners or millionaire investors; he thinks they’re just filling out a 1040EZ form with really big numbers, cackling with glee as devious accountants pencil in their “low tax rates” on the bottom line.

But again, this is not a debate in which logic, mathematics, or respect for individual liberty play much of a role.  It’s all about billionaires using Big Government as a method of personal absolution, the envious using it as an instrument of vengeance, and politicians tapping into both of those impulses as a source of power.  Left in the dust are any serious questions about how any just government could possibly respect the rights of its citizens while spending, taking, and controlling such obscene sums.  So chin up, stop worrying about how the government spends your money, and remain properly obsessed with how your employer spends his.

 

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