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Thread: Warren Buffett's 'tax me' plea: A Machiavellian masterstroke?

  1. #1

    Warren Buffett's 'tax me' plea: A Machiavellian masterstroke?

    No doubt many of you will have read, or heard about, Warren Buffett's recent <a href="http://www.nytimes.com/2011/08/15/opinion/stop-coddling-the-super-rich.html" alt="Warren Buffett: Stop coddling the super-rich">New York Times op-ed</a> in which he called for the US government to tax the super-rich more. If you haven't, this is the basic gist (but do read the whole article):

    <em>"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...My friends and I have been coddled long enough by a billionaire-friendly Congress. It's time for our government to get serious about shared sacrifice."</em>

    Hard to argue, you might think – America's wealthiest don't exactly struggle. (Though one wonders if the Buffett Foundation, his philanthropy vehicle, couldn't spend the money more wisely than Washington's fiscal incompetents.)

    But here's an interesting take from Michael Arrington, the founder of the hugely influential TechCrunch blog – <a href="http://techcrunch.com/2011/08/15/screw-the-rich-heres-how">Screw the Rich (Here's How)</a>.

    Far from selflessly playing his part to solve America's woes and rallying his billionaire buddies to the cause, Arrington argues Buffett is shoring up his position among the world's wealthiest men by preventing others from attaining super-rich status. Any further taxes on earnings will leave his existing pile untouched. (Money quote: it's 'like a steroids-ridden baseball player declaring that steroids are bad and from now on no one gets to take them. But paying for past sins? Shhh.')

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    For context, TechCrunch is a blog about Silicon Valley startups read by entrepreneurs and venture capitalists, so to an extent he's writing on behalf of his readers. But he's also writing on behalf of himself – he sold TechCrunch to AOL for an estimated $40m, and invests in startups himself. Whereas Buffett has earned a reputation for being a pleasant, down-to-earth sort of chap, Arrington has been described as a <a href="http://www.women2.org/entrepreneurs-should-say-no-to-silicon-valleys-bully/" alt="Women2: Entrepreneurs should say no to Silicon Valley's bully">bully</a> with <a href="http://www.forbes.com/sites/jeffbercovici/2011/04/28/arrington-makes-a-mockery-of-aol-huffpo-ethics-policy/" alt="Forbes: Arrington makes a mockery of AOL-HuffPo ethics policy">dubious ethics</a>.

    But if you ignore the people involved, it seems that Arrington might have a point. Personally I believe that raising taxes are rarely a good solution to any problem, and wealth taxes have particular issues. But these are extraordinary times. Could this extraordinary measure be the answer?

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    The way to spread the current financial burden equitably is to tax wealth rather than taxing incomes. A lot of the super wealthy don't have incomes in the usual sense and have arranged their companies so as to minimise tax.
    Osborne is a fool if he thinks that cutting the top income tax rate of 50% is going to help matters.
    It would be quite easy, one would suppose, for the european UK and US presidents and/or PMs (G8 or G20...) to agree a strategy of equitable wealth taxation so as to limit the possibilities of people threatening to take their business elsewhere.

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    This is a non story, Buffet has long called for higher taxes for the super rich and if his only aim was to prevent people becoming as rich as him, why would he be giving away so much of his money ($11bn to date).

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    I suppose it is beyond the likes of Arrington to imagine that anyone might actually be motivated by principle rather than naked self-interest. Buffett simply states the moral truth as he sees it when he says that it is wrong that he pays a much lower rate of tax on his millions than his secretary pays on her thousands. But moral principle and self-interest are not necessarily in conflict: there is always the risk that, where grotesque inequalities of wealth and income are compounded by such inequalities of taxation, the more numerous ranks of the highly taxed will become nurseries of social unrest and political radicalism.
    As George Osborne reviews the 50% tax rate, he might consider that even if it does not raise much revenue, it has the symbolic value of signalling that, in times of economic hardship and tight public finances, those most able to pay are actually doing so...

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