Take Buffett’s Money

Don’t let the super-rich set tax policy for the merely well-off.

Jim Lacey
Tuesday, August 16, 2011

I think it is lovely that Warren Buffett wants to give more of his money to the government. I also have reluctantly concluded that the government should grant his wish and take it from him. I don’t see how we can make folks like Buffett and Bill Gates truly happy unless we take at least half their annual income away from them. I suppose we just have to accept it as a given, as Buffett obviously does, that the government will spend . . . er . . . invest his money better than he can himself.

But if we raise taxes on the 500 richest Americans, or alternatively on all Americans earning over $10 million a year, I want something in return. For every dollar we confiscate from the super-rich, I want to lower the tax burden on small businesses and on those persons making between $250,000 and, let’s say, $3 million (often they are one and the same). We can debate specific income amounts after we have an agreement in principle.

Allow me to share my reasoning:

● The tax-the-rich mob is never going to shut up on this issue. So, let’s take the issue away from them. Since the rich are jumping up and down to pay more, we should fulfill their dreams and relieve them of that pesky extra cash. In a stroke we get to make a lot of rich people deliriously happy, while demonstrating that conservatives are just as ready to soak the rich as any mindless class-warrior. When are we ever again going to have such a confluence of shared interests?

● Interestingly, taking Buffett’s money out of the productive economy will not do nearly as much damage as taking money out of the pockets of the merely well-off. When Warren Buffett invests his billions, he almost always buys stock in established companies. The original capital had already been put to good use by the firm that issued the stock. Buffett rarely invests in new issues, where his cash would be used for building new factories or plants. In short, Buffett’s investments, as is true of many of the investments of the super-rich, do very little to grow the economy.

● On the other hand, those making between $250,000 and $3 million are much more likely to put their extra cash to good use. Every cent taxed away from these folks is one less cent available for investing in new plant and hiring new workers. In short, these persons are the wealth creators, and they need every spare cent to grow their businesses and create jobs.

By taking more from the super-rich, we can establish fiscal room to lower the tax burden on the nation’s most productive citizens. This is a win-win situation, and even anti-tax conservatives should give it strong consideration. Of course, it is possible that many of the super-rich want to keep their money. In that case, I am okay with taxing them at a lower rate for any income earned from venture investing or from placing new capital into a business.

I have one more thing to ask of Warren Buffett. As he obviously favors giving much of his income to the government, may I suggest he close down his foundations and other tax-avoidance schemes designed to keep the tax man away from his money after his death? If he were to close down his foundations, the government could lay claim to 55 percent of his $50 billion when he departs this world. That would not pay off the national debt, but it would make a dent. What I am wondering, therefore, is why Buffett is willing to pay additional taxes on his relatively trivial income, while he uses every trick in the book to keep every cent he has already stored away out of government hands. One might be forgiven for believing that Buffett, now that he is fabulously wealthy, is determined to make sure no one else ever again becomes as wealthy as he is.