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What the author has overlooked is that taxes lower the effective return on all investments. If capital gains generating investment X is better than capital gain

What the author has overlooked is that taxes lower the effective return on all investments. If capital gains generating investment X is better than capital gains generating investment Y when capital gains is taxed at 15%, X will still be better than Y if capital gains is raise to 20% or even to the 39.9% it was in 1976, and so in choosing between X and Y, the rational investor will still choose X. This certainly might be a true statement, or not, depending on the specific tax policy. Can you tell me exactly what policy Buffett was advocating? Because I couldn't find it. There are 3 possible arguments here. Argument 1: I, being rich, should pay more money. I don't think Buffett is saying that, because if he felt that way he would just pay more. Argument 2: The government needs money. We have it. They should come and take it. I couldn't find any mention of government need. He's not saying that the super rich should pay more because it's needed. He's saying they should pay because it's the right thing to do. Argument 3: The rules should change so that things are "fairer". If this is his argument, which I think it is, then what, exactly does he want to change? Without knowing that, you can't make heads or tails of whether or not tax policy would effect everybody the same or not. Note that if he's arguing for specific policy, it might be that he personally ends up paying no more, or even less. If this is his thesis, then how much he or his buddies actually end up paying has nothing to do with it. He should describe what exactly would be "fair". There's no argument here, really. It's just Buffett saying he should pay more of his fair share and some friendly poking at the Republicans. His piece seeks to convey feeling, not make a case and support it (Note the folksy telling of how much experience he has and how rates don't matter.) That't great -- it could still be an awesome article. But it doesn't hold together well to try to take the ideas and go somewhere with them.

festivusr 15y ago
"But for those making more than $1 million -- there were 236,883 such households in 2009 -- I would raise rates immediately on taxable income in excess of $1 million, including, of course, dividends and capital gains. And for those who make $10 million or more -- there were 8,274 in 2009 -- I would suggest an additional increase in rate." That is his recommendation. Is it not specific enough?
- DanielBMarkham 15y ago
  By how much? 1 Percent? 20 Percent? Does "taxable income" include muni bonds? Ex-pat VCs? Enterprise zones? Minority-owned businesses? Sales of primary residences? And so on. I'm not trying to be pedantic. The tax code is a mess. Simply saying you'd raise taxes on folks making more than a million of taxable income a year doesn't really say very much. Something like an elimination of capital gains for startup investors and an increase to 35% of gains made over $5 Million per year would at least have some meat to it. Heck, just come up with a number. 20% rates good enough? How can I evaluate "fair" based on that statement? Could you? I could make assumptions -- such as the definition of "taxable income" staying the same or perhaps the capital gains tax matching the income tax rate, but then I'm arguing with myself, because I'm adding detail that wasn't present. Nobody needs a 30-page whitepaper. A couple of paragraphs with specifics isn't too much to ask. After all, it's the core of his argument.
  - festivusr 15y ago
    He posits that people making over a certain amount should be ponying up more in taxes. A reasonable assumption to make is that taxes would be raised in such a way that those people would be taxed more, and people who make less, wouldn't be. The specifics are irrelevant to the general argument.
    - DanielBMarkham 15y ago
      You asked me a specific question: was that detailed enough? The answer was no. Simply because it's detailed enough for you doesn't enter into it. Unless you're prepared to say that those folks paying one dollar more is fair, then we have to have a number. And note: Buffett didn't say they should pay more. He said the rates should be raised. These are two completely different concepts. You could raise the rates and have people move their money in such a way as to not pay any more at all. From Buffett's position, simply talking about rates, this would be an acceptable outcome. I think we're at a spot where we can agree to disagree. Whether or not rich folks owe their fair share or not is a meaningless conversation unless and until you can actually start describing what you mean by "fair share." Without those details, it's just political feel-good bullshit, sadly. I expected more from Buffett.

festivusr 15y ago

"But for those making more than $1 million -- there were 236,883 such households in 2009 -- I would raise rates immediately on taxable income in excess of $1 million, including, of course, dividends and capital gains. And for those who make $10 million or more -- there were 8,274 in 2009 -- I would suggest an additional increase in rate." That is his recommendation. Is it not specific enough?

DanielBMarkham 15y ago
By how much? 1 Percent? 20 Percent? Does "taxable income" include muni bonds? Ex-pat VCs? Enterprise zones? Minority-owned businesses? Sales of primary residences? And so on. I'm not trying to be pedantic. The tax code is a mess. Simply saying you'd raise taxes on folks making more than a million of taxable income a year doesn't really say very much. Something like an elimination of capital gains for startup investors and an increase to 35% of gains made over $5 Million per year would at least have some meat to it. Heck, just come up with a number. 20% rates good enough? How can I evaluate "fair" based on that statement? Could you? I could make assumptions -- such as the definition of "taxable income" staying the same or perhaps the capital gains tax matching the income tax rate, but then I'm arguing with myself, because I'm adding detail that wasn't present. Nobody needs a 30-page whitepaper. A couple of paragraphs with specifics isn't too much to ask. After all, it's the core of his argument.
- festivusr 15y ago
  He posits that people making over a certain amount should be ponying up more in taxes. A reasonable assumption to make is that taxes would be raised in such a way that those people would be taxed more, and people who make less, wouldn't be. The specifics are irrelevant to the general argument.
  - DanielBMarkham 15y ago
    You asked me a specific question: was that detailed enough? The answer was no. Simply because it's detailed enough for you doesn't enter into it. Unless you're prepared to say that those folks paying one dollar more is fair, then we have to have a number. And note: Buffett didn't say they should pay more. He said the rates should be raised. These are two completely different concepts. You could raise the rates and have people move their money in such a way as to not pay any more at all. From Buffett's position, simply talking about rates, this would be an acceptable outcome. I think we're at a spot where we can agree to disagree. Whether or not rich folks owe their fair share or not is a meaningless conversation unless and until you can actually start describing what you mean by "fair share." Without those details, it's just political feel-good bullshit, sadly. I expected more from Buffett.