Warren Buffett has me Confused
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Warren Buffett has me Confused
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Re: Warren Buffett has me Confused
#2If there is more demand for government bonds (due to higher capital gains taxes, for example), I imagine the yields on government bonds will decrease. That would probably help the economy more than hurt it.
Taxes (in general) apply to _gains_, inflation applies to _principal_. If 30-year Treasuries start paying 2%, capital gains could be taxed at 50% and people would still invest in equities just to have a shot of not having the real value of their wealth cut in half over the next 20 years.
The apocalyptic vision expressed in the article (nobody will invest in bonds! and nobody will invest in stocks!) is overblown. The market will adjust to demand, and the fear of inflation will grow as bond interest rates decrease.
Re: Warren Buffett has me Confused
#3Wow,
I think my group should pay its fair share (paraphrasing)
OK, lets do little example.
Suppose a large group of your friends a pizza and half the people just hadn't paid. Would you say "hey, I'll pay for all these people" or "hey, we all need to pay our fair share".
How hard is that to understand?
Re: Warren Buffett has me Confused
#4The primary point of Buffett's article isn't even addressed here: most people pay a much higher percent of their income to the federal government than do the "mega-rich" (I do have to say that don't really like Buffett's term there) and, furthermore, that the economy didn't suffer one drop when the rates were more reasonable (and in fact, did much better than under the historically low capital gains rates of the last decade).
In fact, if you read this article closely, it really doesn't present an argument, it just says "I don't wanna."
Re: Warren Buffett has me Confused
#5I think the author is making a small fallacy regarding investments. He assumes that as the capital gains tax rises, investment will fall because the investor will make less money. This seems true for small investors, who might decide to "not invest" their money, and instead find starting their own business will have a higher return than buying GOOG stock.
But if I have $1 billion to invest, then I don't have the option of "not investing" that money. It has to sit in stocks, bonds, or some other financial instrument. A higher capital gains tax may change which instruments I choose to invest in, but that money will all still be invested.
A legitimate argument against higher capital gains taxes is that really great investors (i.e. the kind you want selecting investments, such as Buffet) will have less money to invest. This would hurt the economy, unless the corresponding good caused by government spending is greater.
I think everyone would agree there is a happy equilibrium somewhere. Most rich people think it lies on the side of less taxation. Buffet, in contrast, seems to think that quality investors don't add as much value as they want to believe.
Re: Warren Buffett has me Confused
#6Let's start with the first argument:
"His message seems to be 'I'm rich, and I want the super-rich like me to pay more in taxes.'
That's great. Write a check."
But him writing a check isn't the point. If Warren writes a check, we get that check's worth of new government income. If taxes are raised, for Warren's contribution of the same check, we get much larger pool of spending. Put more simply: plan (a) warren donates $10 and we get $10 of government income; plan (b) warren is taxed +$10 and we get $10K of new government income.
The rest of the blog is well characterized as Dunning Kruger in action.
Re: Warren Buffett has me Confused
#7The primary point of Buffett's article isn't even addressed here: most people pay a much higher percent of their income to the federal government than do the "mega-rich" (I do have to say that don't really like Buffett's term there) and, furthermore, that the economy didn't suffer one drop when the rates were more reasonable (and in fact, did much better than under the historically low capital gains rates of the last…
Buffett pays a lower percentage of income by choice. Meaning, he derives his income from investments that get taxed at the capital gains rate. Everyone else is free to make the same decision, but they don't. They "invest" in houses, cars and other lifestyle purchases and then rely on their daily job to provide their income...hence their tax rate being so high.
Rather than punishing the rich for making smart decisions, let's instead educate the other people so they can make the same good decisions.
Re: Warren Buffett has me Confused
#8Wow, I think my group should pay its fair share (paraphrasing) OK, lets do little example. Suppose a large group of your friends a pizza and half the people just hadn't paid. Would you say "hey, I'll pay for all these people" or "hey, we all need to pay our fair share". How hard is that to understand?
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Re: Warren Buffett has me Confused
#9Wow, I think my group should pay its fair share (paraphrasing) OK, lets do little example. Suppose a large group of your friends a pizza and half the people just hadn't paid. Would you say "hey, I'll pay for all these people" or "hey, we all need to pay our fair share". How hard is that to understand?
Suppose a large group of your friends a pizza and half the people just hadn't paid.
You forgot a verb in there. Presuming a) the intended verb was bought or ordered and b) this isn't an indicator of you being complete moron:
Assume we all paid our 1/n of the price. Then assume I eat 1/n + m (where m >= 1) pieces of pizza. My friends suggest I pay more. Do I accuse them of being communist scum? Should I pay more because I got more? Or do I do what you seem to be suggesting and try to pay less and argue it is because I got more?
Re: Warren Buffett has me Confused
#10Force is unethical. The government's fundamental tool--which distinguishes it from most other organizations--is that it forces people to do stuff under the threat of violence (and it often actually employs violence to demonstrate that it is serious). The government is therefore unethical. Taxes shouldn't exist at all, because it just a protection racket from a scaled up version of the mafia. The answer is not to scale the taxes on the rich up, but to scale the taxes on everyone down to zero. Exchanges between people should be voluntary only. This is the only ethical solution. This will require a cultural change where everyone realizes how unethical it is to employ force to get things done.
/controversial view