The problem with the proposed “Buffet Tax” is that it does little more than fan the flames for class warmongers. Without knowing all the details, I can tell you, with confidence, that the “Buffet Tax” would amount to nothing more than an increase in the tax on investment success. I.e., an increase in the capital gains tax rate, although it’ll come disguised as an alternative minimum tax.
The following is a hypothetical Q&A with a “Fat Cat”. Understand, as Milton Friedman pointed out (see video), that a tax on business is a tax on people…
Interview With a Millionaire (M)
Q: You understand that, should the President’s proposal pass, making over $1 million per year will subject you to the “Buffet Tax”? Plus he’s proposing a tax increase on those earning over $200k/year. So you could be looking at substantially higher taxes in the years ahead…
M: Yes, that’s what I understand…
Q: How do you feel about that?
M: I think it’s very unfortunate…
Q: So it’s unfortunate that you’ll have to scale your lifestyle back a bit?
M: Honestly, that’s no big deal. My family and I will still enjoy our homes and vacations. But to the extent that we do cut back others will be hurt.
Q: What do you mean?
M: We’ll have to wait and see, but if we decide to lay off some of our housekeeping staff and/or vacation less, that hits everyday people who rely on our spending. Which of course could add to the unemployment and welfare rolls…
Q: Come on! You’ve got millions in the bank! You’re not going to have to cut back a thing…
M: Well you know, I didn’t end up with millions in the bank by spending irresponsibly. Make no mistake, I will cut back. But let’s, for conversation sake, say you’re right. Were I not to cut back, I’d either have to pull from my “millions in the bank”, or add less, to pay the higher tax. You do know what banks do, don’t you? You know that banks lend that money out in the form of home mortgages, loans to small businesses, etc., right? You understand that less capital in the bank means less economic activity, right?
And we haven’t even touched on my businesses. While it’s too soon to tell whether I’ll lay anyone off, make no mistake, to the extent that my tax burden increases, the lesser the prospects for raises, benefits packages and additional hiring going forward…
Q: So you would have other people suffer so you can continue to live the high life?
M: I’d like you to take a look at the benefits packages enjoyed by the politicians who are pushing at my lifestyle. Just take a look. And then ask yourself, what are they ultimately contributing to the economy, to jobs growth, to bettering the life of the average American? Then take another look at me—look at the people I employ, both in my homes and in my businesses. Look at the people I support as I lavish the world’s luxuries onto myself and my family…
But let’s say, for conversation sake, I do decide to cut my lifestyle and not my number of employees. Will you help me decide whom to hit first? Should it be the individuals and businesses who rely on my capital in the bank to expand? The busboys, etc. at the restaurants we frequent? The maids and other essential employees at the hotels/ski resorts, etc. where we vacation? The cotton farmers, pickers, etc. and the hundreds, if not thousands, of individuals it takes to bring all those clothes we buy to market? I could go on all day…
So where do we start?
Q: Silence….
Here’s Milton Friedman on the subject:
http://youtu.be/YmqoCHR14n8