Let’s talk taxes. In a New York Times op-ed yesterday, famed investor and Berkshire Hathaway CEO Warren Buffett once again argued that the wealthy should be taxed more.
This isn’t the first time Buffett has made the case for higher taxes, and it’s not the first time he’s been wrong. Here are four reasons he is wrong to push for tax hikes.
1. Buffett says tax hikes won’t hurt jobs.
Fact: Tax hikes, especially those he espouses, hurt jobs.
Buffett cites periods when tax rates were high and says that “Under those burdensome rates,” employment “increased at a rapid clip.”
This country has an employment problem right now, and tax rates aren’t even as high as Buffett wants. The tax increases President Obama champions would hit small businesses that create jobs. According to Treasury figures, 1.2 million Americans who employ people are paying their taxes through the individual income tax, and they would be hit head-on. The amount that their taxes would go up could be roughly equivalent to one employee’s salary, meaning that’s one person they can’t hire in the new year. A study by Ernst and Young estimates that these tax hikes would kill 710,000 jobs.
2. Buffett says tax hikes won’t stop investors from investing.
Fact: Any time you tax something, you get less of it.
Buffett says: “So let’s forget about the rich and ultrarich going on strike and stuffing their ample funds under their mattresses if—gasp—capital gains rates and ordinary income rates are increased. The ultrarich, including me, will forever pursue investment opportunities.”
Let’s think about what taxes are intended to do. The cigarette tax is intended to curb smoking. Proponents of a carbon tax want to curb the amount of carbon emissions we are producing. In Washington, D.C., a plastic bag tax is intended to curb the number of plastic bags people use.
When you tax something more, people do less of it. This is how taxes work. It doesn’t change because the behavior being taxed is investing rather than smoking.
3. Buffett says the wealthy aren’t even paying a minimum tax.
Fact: We already have an Alternative Minimum Tax. READ MORE