What Warren Buffett doesn’t understand about taxes.
Two-thirds of millionaires left Britain to avoid 50 percent tax rate.
Danish government rescinds its fat tax.
Dog’s heart surgery costs only 3,000 euros.
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Buffet undoubtedly understands much about company value. He isn’t a student of economics and human nature, however. He buys strong companies he believes can continue to grow; but he rarely sells them. If your goal is to accumulate wealth to give away, you are not the typical investor who evaluates potential investments on a risk/reward ratio. Higher taxes reduces the reward. I would argue higher taxes also increases the risk (assume risk is the sum of all probably outcomes). Higher risk and lower reward translates into fewer deals people are willing to invest in.
You know what Buster, it seems like Buffet knows enough to become a billionaire, by most standards, that’s pretty good…right?
there mere announcement that the british government would lower the rate resulted in millionaires coming back.
The larger issue is that Buffett may be smart or not so smart. For him, this is a low-stakes statement because even very large taxes wouldn’t really do much to change his life.
He’s famous because he’s in the minority. Other “high-income” individuals would see a big difference in their standard of living with higher taxes. Buffett can say what he wants, but holding him up as the spokesperson for all those who would be taxed is erroneous and dangerous.
Look to France also; high tax rates drove the wealthy out of the country.
Buffet has already pledged to give away 99 percent of his wealth to philanthropic causes when he dies. Undoubtedly he views taxes a la the public good the same way. There was some research done at NYU this spring that suggests the wealthy are often inclined to pay more in taxes because of diminishing marginal utility of private goods.
Raising the tax rate on billionaires to 39.6% still only generates less than $30 billion in additional revenue. Where does the debt stand again?
Our current federal tax receipts as a percentage of GDP is a half century low. If low taxes generated high growth, why isn’t growth at a half century high?
I’d say because of underlying structural problems and distorting incentives. Reducing tax rates won’t solve this, but a better tax code would.
I’m pretty sorprised it only costs that much money to operate this labrador, especially if they are using all the cutting-edge technology they mentioned in the article. However, I’m not sure how I feel about the fact that surgeons for humans will operate this dog. I didn’t even know that was possible.
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