Monday, October 18

Why Warren Buffett is wrong on tax hikes

Heritage’s Morning Bell supplies four reasons why Warren Buffet is wrong when he argues for higher taxes, especially on high earners. The reasons:

  • Buffett says tax hikes won’t hurt jobs.
  • Buffett says tax hikes won’t stop investors from investing.
  • Buffett says the wealthy aren’t even paying a minimum tax.
  • Buffett says we need to raise taxes to bring in more revenue for the government.

Heritage’s explanations for each reason are at Morning Bell: 4 Reasons Warren Buffett Is Wrong on Tax Hikes.

Hauser's LawHauser’s Law illustrated. No matter what the top marginal tax rate, taxes collected remain an almost constant percentage of GDP.

In Buffet’s New York Times column, he mentions that in the past, marginal income tax rates have been much higher than at the present. Two things: First, we ought to be glad that marginal tax rates aren’t 70 and 91 percent. Second, not much income was actually taxed at those rates. As explained in Hauser’s law, or raising taxes won’t work, no matter what the top marginal income tax rate, the tax paid (as a percent of GDP) remains nearly constant, the same year after year.