Monday, August 22, 2011
Taxing Warren Buffet
Interestingly, if the goal of taxation to transfer consumption from one person to another, it would be impossible to at any acceptable rate to tax Warren Buffet. You would need to tax him enough to cause him to lower his consumption. Very unlikely. Saving and investing money that you will never spend is like indiscriminate charity.
By the same logic corporations cannot pay taxes. The corporate profits taxes fall on the shareholders, employees and the customers of the corporation in portions that depending on how competitive the markets are.
NOTE: That does not mean that I am for completely eliminating the Corporate profits tax because it might be good that people who work for, own or buy things from Corporation should pay a little more tax for the limited liability as a sort of as insurance premium. The corporate tax favors partnerships which are liable for more of their damages than are corporations but a few percentage points should be enough for that. Of course it would make more sense to charge more for that insurance to riskier businesses like banks and deep water petroleum drilling companies and companies with high debt than to low debt companies in safe businesses.
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If I'm investing income that I obtained through forcibly imposed rents, like principal and interest payments on a Treasury security or a dividend from Lockheed-Martin, or just outright theft, "indiscriminate charity" seems a generous description of my act; however, regardless of the semantics, I see nothing wrong with a progressive consumption tax with very steep marginal tax rates, effectively compelling Buffet to reinvest all income above some threshold. It beats transferring the income to the Congress to spend.
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