The Only Time the Conservative Politicians Ignore Warren Buffett
It’s when he tells them it’s okay to tax the rich more, as he does in this New York Times opinion piece. Indeed, Buffett is not only saying that it’s okay to tax the rich, but that the rich ought to be taxed more, because they are disproportionately shielded from the “shared sacrifice” that the rest of America’s citizens are being asked to shoulder:
While the poor and middle class fight for us in Afghanistan, and while most Americans struggle to make ends meet, we mega-rich continue to get our extraordinary tax breaks. Some of us are investment managers who earn billions from our daily labors but are allowed to classify our income as “carried interest,” thereby getting a bargain 15 percent tax rate. Others own stock index futures for 10 minutes and have 60 percent of their gain taxed at 15 percent, as if they’d been long-term investors…
Last year my federal tax bill — the income tax I paid, as well as payroll taxes paid by me and on my behalf — was $6,938,744. That sounds like a lot of money. But what I paid was only 17.4 percent of my taxable income — and that’s actually a lower percentage than was paid by any of the other 20 people in our office. Their tax burdens ranged from 33 percent to 41 percent and averaged 36 percent…
[T]hose making more than $1 million — there were 236,883 such households in 2009 — I would raise rates immediately on taxable income in excess of $1 million, including, of course, dividends and capital gains. And for those who make $10 million or more — there were 8,274 in 2009 — I would suggest an additional increase in rate.
Buffett’s opinion piece does not only suggest raising taxes on the rich; he also and reasonably points out that there is a need to trim back spending, obliquely referring to “promises that even a rich America can’t fulfill.” Fair enough; there’s not a lot of specificity there, but then, the piece isn’t about those things, it’s about taxes. Buffett’s point there is simple: The rich, in fact, will do just fine if you raise their taxes a bit. They will do just fine because, among other things, they are doing just fine already.
The worries for the tender sensibilities of the rich has been a hallmark of conservative American politics since time immemorial, but the current gag-inducingly lickspittle levels of it are a bit much. Among other culpable parties, I lay some blame for this at the altar of Ayn Rand, who imagined a world in which the titan of industries “go Galt” in the face of creeping socialism. Over time the rather silly book this scenario plays out in has been confused by the greedy and clueless (and cynically touted by the greedy but somewhat more crafty) as a reasonable simulacrum of the real world, to the extent that I think there’s a genuine fear by the credulous — which unfortunately correlates to the most vocal elements of both Republican primary voters and politicians today — that if the state moves to raise taxes on the wealthy, the lot of them will flounce in a huff, taking their money with them and retiring to a crevasse where they will await the end of the world. This sort of madness is gussied up and made slightly more respectable by rhetorical feints, like calling the very rich “job creators,” as if the investment bankers profiting by passing off crappy mortgages as AAA investments ever created a job, or the folks who increase shareholder value by laying off ten of thousands of workers are job creators.
Leaving aside the fact that raising taxes on the capital gains that people accrue by pushing around electrons in a financial system that ultimately is not tied into any tangible measure of value is not the same thing as nationalizing real-world industries, in the same way that being tickled by a feather duster is not the same thing as being attacked by a large flock of angry geese, this misapprehends the psychology of those who desire to become very very rich, or who are already very rich and wish to be more so. The sort of person who is very rich does not become so by flouncing when the rules of the game change, to sulk in a gully. The sort of person who is very rich becomes so by understanding the rules of the game and leveraging them to their maximum benefit. This is why there have always been the ridiculously rich, even in times when the top marginal tax rate in the United States was 92%. They very rich don’t flounce, they fiddle. They always have. They always will. The fantasy of the enraged rich packing up and going is just that, a fantasy.
It’s not a particular surprise that recent polls say the majority of Americans would like to see the wealthiest Americans taxed more (pdf link), because most Americans seem to realize that bringing in more revenue is an essential part of dealing with debt. The problem here as I see it is that the majority of people who agree that taxes need to be raised are somewhat squishy on the subject, while the minority of people who are opposed to any taxes being raised ever are very very very very opposed. They are so opposed that there’s little chance of reasoning with them; even Warren Buffett, by many measures the most successful investor of the last half century, is unlikely to get them to entertain the possibility that the very rich will survive a few ticks up on their marginal income rates. They’ll happily take his advice on any other aspect of the business world except for this.
This does raise the question: In matters of governmental fiscal policy, if one is to follow the advice of someone who is not an economist by profession, is it smarter to follow the economic advice of a man who has played the financial world to the tune of $50 billion in personal wealth, or that of a writer who bent her own moral and philosophical rules to take government assistance when it was fiscally convenient for her to do so (although she of course had a fine rationalization for that, which is generally consistent with many how many conservatives square away their use of government services and programs they oppose)? The answer to this question for many conservative folks is not about what is smart, but rather what is politically and philosophically orthodox, so I wouldn’t expect much by way of an answer here.
As someone who in the short term benefits from the current conservative overweening solicitousness for my financial well-being, but who in the long-term would like solvent, financially-stable country with a healthy middle class and solid if basic social net, I find myself generally aligned with Buffett here. Yes, please, raise taxes on the wealthiest Americans, and I include myself in that (although I’m definitely waaaaay down the list from Mr. Buffett, and indeed below his suggested cutoff; even so). It’s not the only answer to the financial mess the United States finds itself in these days. But it is part of the answer. You don’t have to be worth $50 billion to see that.