Stop Coddling Warren Buffett
16th August 2011
Arnold Kling calls out the fat cat of Omaha.
His prescription is to raise taxes on capital income, otherwise known as savings. He is totally wrong about this. Editorial pages should stop coddling him by running his op-eds. The statistic I would like to see is the amount of tax paid relative to consumption. By that measure, it is possible that Buffett’s tax rate was more than 100 percent.
I do not care if he pays very little tax on saving. I would rather he pay zero tax on saving. His taxes are too high, not too low.
The point being that the reason rich people pay a lower percentage of their income than less-rich people is because more of their income is in the form of dividends and interest, and dividends and interest have a lower tax rate precisely to encourage savings (interest) and investment (dividends). Savings and investment are the engines of economic growth, and any tax on them is a drag on the economic growth that ‘raises all boats’. But ‘progressives’ are illiterate when it comes to economics (or, in the case of Paul Krugman, just flat wrong), so we have to suffer through this sort of drivel every day.