Sunday’s New York Times ran an op ed by Warren Buffet, “Stop Coddling the Super-Rich,” in which The Oracle of Omaha chided our legislators for failing to tax the rich at sufficiently high rates.
He points out that he paid nearly than $7,000,000 in taxes last year. Sounds like a lot, but since most came from taxes on dividends and capital gains, his tax rate was actually lower than most of the folks he pays to work for him at Berkshire Hathaway. Unfair, he thinks. Thus he proposes raising taxes on people with incomes of over $1 million (including dividends and capital gains), and even more for those making over $10 million.
I’m always a bit suspicious of wealthy people who want to raise taxes on income. Don’t get me wrong. I’m sure Warren Buffet is a stand up guy. But he does like to invest in companies that have what he calls “moats,” which his way of describing strong protections against the profit-reducing effects of competition. And what better way to suppress competition for super-wealthy status than to raise taxes on income! If we slow down wealth accumulation with higher marginal tax rates, then the already super-rich will enjoy a moat, as it were, because they can arrange their financial affairs (as does Buffet) to minimize transactions, suppress taxable income, and otherwise preserve their wealth.
So I propose a better approach, one that actually targets the super-rich, and one I’m sure Mr. Buffet will endorse: a 2% tax on any net worth over $50 million. Let’s see, his net worth is $60 billion or so, which means that after my proposal is enacted, his tax bill will be $200 million.
That should make him feel like he’s pulling his weight.