BLOGNAME: LOUDER THAN WORDSAn informal, stream-of-consciousness reflection on business ideas, events and issues in modern business, modern life and with some specifics to the web-software industry by Paul Tomori, Internet Entrepreneur
|Warren Buffett Offers The Wrong Fix|
Don't tax the rich, encourage the able!
By Paul Tomori
Wednesday, October 06, 2010 at 22:00:54 (EDT)
Do I dare contradict the great oracle from Omaha? Let's give it a try so y'all don't think I am just an all-in fanboy of Mr. B.
Have you heard his latest suggestion? He says that the rich should pay more taxes. We have heard that before, but normally NOT from rich people.
His reasoning is that most rich people get taxed at a lower rate than the average citizen. Note: this does not mean that they pay less taxes - it just means they get taxed at a lower percentage.
His reasoning continues with ominous observations of the growing government budget deficits and the conclusion that only the rich can afford to cover all those checks the governments keep writing.
Here's why I think he is wrong.
First of all, the solution for fixing budget deficits is not to throw more money at them. The solution is to reign in spending.
Next, the rich people Buffett refers to represent just 2% of the population. If we really want to see light at the end of the tunnel, we need the other 98% of the people (that includes me by the way) to be more productive, more industrious, more entrepreneurial and less needy. What is required is that people lose their sense of entitlement as to what the government ought to give them. We need more entrepreneurial minds. We need more invention. We need more people to be turning on their brains and tuning into a world filled with opportunity.
I have always said that a shortage of work is really just a failure of imagination. For example, as long as I have even a spark of imagination, I personally will NEVER be without a job. Simply, I will look around, spot a need that must be filled or a problem that must be solved and then I will fill it or solve it. I intend to do this til I die. For me, retirement will be at most just a "slow down", but it will never be a complete stop of productivity. My mantra: To live is to be productive. Barring some terrible illness, I can't imagine being a drain on government dollars - I hope to always be a fountain of supply.
If we can get the 98% of the people to generate more wealth for themselves, then the government will have more tax revenue and less outbound dollars.
Also, if it becomes government mandated that rich people would have to pay an even higher percentage of their wealth to government, what does that do to their beneficence? If I ever make it to that top 2%, I know for sure that I will want to be the director of my charity. I will not want the government forcefully taking my extra dollars and depriving me of the right to disburse what I have earned.
I once heard Dr. Nathaniel Branden reply in person to someone who said that "rich people have a moral obligation to 'give back' to society". This offended Dr. Branden who replied. To give 'back' is to imply that something was 'taken' in the first place. If you have stolen your wealth... for example, through unethical appropriation of valuable shares from a dying sister... or if you have set your failed business location on fire in order to collect a fraudulent insurance claim.... then you have a moral obligation to 'give back', because you really have 'taken' something that wasn't yours. However, if you have captured your wealth through industrious, profitable trade, then you have 'taken' nothing... but you have 'earned' much.
To his credit, Warren Buffett has given (of his own volition) many billions of dollars to charity. And, he has encouraged and inspired other billionaires to give similarly of their wealth, so I don't see the need for him to be advocating excessive government taxation from the rich to fix sloppy budgeting. I wish Warren Buffett would expound more on his abilities regarding fiscal restraint than on a policy that will keep us spiralling downward to an unsustainable financial future.
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