Warren Buffet’s most recent call to tax the wealthy more has been bantered about in the press and has received several good responses. I could sum them up as follows:
- The problem is the spending . Sending them more money will only increase the spending and let them avoid the cuts we need.
- Higher tax rates do not necessarily generate more revenue. Statutory rates are different from actual rates. Marginal rates are what impact potential investment.
- By focusing on millionaires and billionaires you allow the administration to use extreme examples to raise taxes on the upper middle class. As unfair as it may seem there just are not enough super wealthy to impact the deficit Obama and his administration have created.
But the best response came from Mark Skousen in my Forecast and Strategies September newsletter. (Paid subscription www.markskousen.com ). The reason we should not give more to the government is because it would be far more productive in the private sector. The observation is both simple and profound.
If anybody should know this it is Warren Buffet. He has built enormous wealth by carefully deploying capital into businesses that use it to innovate and create jobs: jobs that support health insurance and retirement accounts for thousands of employees. The employees and Buffet’s businesses pay generous taxes to all levels of government. In fact we could say that Mr. Buffet has generated enormous revenues to the government and reduced the expenses of those needing government assistance by NOT paying more taxes.
Mr. Buffet found a better use of his money. So can the rest of us.