Warren Buffett’s Call for Higher Taxes on the Rich

Wednesday, January 25th, 2012

President Obama again pointed to Warren Buffett’s call for higher taxes on the rich in making the case for tax increases during his State of the Union address.  Indeed, ever since Mr. Buffett’s August op-ed ran in the New York Times claiming that he does not pay enough in taxes and urging higher taxes on the wealthiest Americans, Mr. Buffett and his secretary have become a favorite example for President Obama and others determined to raise taxes and make class warfare a central issue in the nation’s current political and economic debate.

But are the claims made about Mr. Buffett’s taxes true?  What’s more, would raising taxes on the “mega-rich” significantly help the nation’s budget woes as the President and his friends argue?  The evidence on both is an unequivocal “NO.”

As Dr. Laffer explains, the “mega-rich” do care about marginal tax rates as they make decisions about investments and their tax liability.  Even Mr. Buffett.

In fact, millionaires and billionaires “can afford armies of tax accountants and lawyers, and can alter the timing, location, and composition of their income.  They can always shift their investments into tax-advantaged strategies.”  Mr Buffett’s own practice demonstrates this truth as he shields his income from the government just like the supply-siders claim.

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