Howard Buffett was the Ron Paul of the late 1940s and early 1950s: the most libertarian member of Congress. There have only been two of them since 1965. They and Grover Cleveland were all we have had in Washington.
His son Warren is the most successful investor in modern times. There is no question that Warren Buffett will go down in history as a legendary investor. But along with that investment wisdom has come a commitment to Keynesianism. The media love to promote Warren Buffett’s view of taxes.
Buffett believes that people like himself will always invest, no matter what the tax rate is, as long as it is reasonable. Reasonable in this case means about 35% of their gross income if they are multimillionaires. In other words, he says, rich people really do not care, or act any differently, just because a government agent comes to their door, pulls out a gun, sticks it in their bellies, and says: “Fork it over, you rich SOB. You owe it to the government. You owe it to the people. You owe it to us federal bureaucrats, and I’ve got a gun to show you beyond a shadow of a doubt that you will pay. Got it, fat cat?” This wouldn’t bother Warren, and he thinks it would not bother any of his peers.
Well, it bothers me. It’s my money. I don’t like having it taken by a government I do not trust.
When the government taxes us at these rates, it always wastes most of the money. The government gets stronger, and the public gets weaker. This is what high taxes do, and if Buffett thinks taxes don’t do this, then he needs to pay somebody to collect all of his father’s speeches, and then he needs to lock himself in a room for a week and read them.
Buffett is a classic Keynesian liberal. He appeals to the middle class voter, and anybody else who might be reading his New York Times op-ed piece, on this basis: “Tax the rich. Make the rich guy pay as high a percentage as you do.” Rather than saying that the middle class ought to have their taxes cut, so as to match whatever percentage the rich are really paying, he says that the rich should pay more.
This is always the strategy with Keynesians. They believe that taxpayers are never paying enough. They believe that the public should not be allowed to retain the vast bulk of their earnings. They always want the government to get bigger, and the only question for them is a technical one: “Is it better to hike taxes on the rich, thereby imposing an envy tax, or is it better to collect more revenue by getting rid of their tax breaks, and taking advantage of the Laffer curve?” The question is never this: “How can we shrink the government?”
Buffett does not want to see a balanced budget. He says:
Our government’s goal should be to bring in revenues of 18.5% of G.D.P. and spend about 21% of G.D.P.– levels that have been attained over extended periods in the past and clearly can be reached again. As the math makes clear, this won’t stem our budget deficits; in fact, it will continue them. But assuming even conservative projections about inflation and economic growth, this ratio of revenue to spending will keep America’s debt stable in relation to the country’s economic output.
Why shouldn’t the government’s revenue be twice as much as government spending? Why shouldn’t the government be paying down the federal debt to zero? Why is it that Uncle Sam has always got to have a deficit? The reason is obvious: Buffett likes big government, and Buffett likes to have the government-issued debt, which he and his cronies can purchase. They want guaranteed returns for part of their portfolios. They like big government. They make money through big government.
Buffett gets lots of attention when he makes his annual statement calling for higher taxes. He knows that Congress isn’t going to do it. He gets lots of good publicity for making the statement, and he gets richer the following year.
He complains that there ought to be higher capital gains taxes. Why shouldn’t there be zero capital gains taxes? That’s what you pay in an IRA retirement fund. Why not have 100% of capital gains as part of an IRA retirement fund? Why should the government get any money from profitable sales of assets? Why not just tax all income as regular income, except that income which is kept in the market, expanding the capital base, and providing jobs?
In 1933, rich people would have called Buffett a traitor to his class. In fact, his father was a traitor to his class. Wealthy people since World War II have called for higher taxes, as long as the taxes fund big government projects, which they can get rich from by manipulating the system.
I say this: “Impose high taxes on the government.” How? By cutting its revenue stream. Cut spending and taxes. Push America over the fiscal cliff this way, not Buffett’s way. I believe in austerity: for the government.
I am a true son of Howard Buffett. I believe what he taught. I approve of how he voted. Call me an S.O.B.: son of a Buffett. Howard, not Warren.