Warren Buffett is getting a lot of attention this week for his comments on the fiscal cliff.
Basically, the investing mogul says rich people, people like him, should pay more in taxes. Sounds magnanimous, but I believe the case he builds for higher taxes has a few holes in it.
Here's why: Buffett says the contention that rich people will stop hiring is nonsense, but we already know more than a million Americans who employ people are paying their taxes through the individual income tax. According to the Heritage Foundation, the amount their taxes would increase would be equivalent to one employee's salary- that's one person they wouldn't hire.
What's more, Ernst &Young says these tax hikes would kill 710,000 jobs.
Buffett also says that rich people won’t stop investing. Again, nonsense.
When you tax something, you usually get less of it- like cigarette taxes to curb smoking, or a carbon tax to curb carbon emissions.
Financial advisors say individual investors are considering doing their investing in another country because of these higher taxes.
The investing mogul believes that wealthy folks should have to pay a minimum tax.
But look, there already is an Alternative Minimum Tax set up with just that idea to catch wealthy scofflaws who don't pay their share. Unfortunately, the brain surgeons on Capitol Hill have never indexed the tax for inflation, and now it captures four million Americans, many of which it would be a strain to consider wealthy.
Even if you let all the Bush tax cuts expire, the revenue it would generate would only fund the government for 8.5 days. We need a better solution than that!
Mr. Buffett’s comments are based on the idea there are no unintended consequences of government policy. People just embrace the changes and the world keeps on spinning.
I believe the results could be catastrophic- capital flight, jobs left unfilled, and a weakened economy.
The top 10% of earners in this country, the people that the president urges to pay their "fair share" already pay 70% of the income taxes.
How are they not doing what they should?
Look, if Warren Buffett wants to pay more taxes, he can.
In the meantime, we need to get this country back on a growth track in which a vibrant economy creates tax revenues, jobs, and a better future for everybody.