Two Questions...

For Warren Buffet.

First: do you think your capital gains taxes should be compared to others' income taxes?

I'd ask this because Warren Buffet continues to claim that he pays lower taxes than his secretary. This, however, is wrong/misleading for two reasons. First, Buffet is comparing capital gains from stock to his secretary's income from wages. But he is not including the income taxes paid on the corporate level in his tax rate. Unless the corporations from which Buffet gets dividends are making less than his secretary, they are paying taxes in a higher bracket. That higher bracket added to the percent tax he pays in capital gains is his tax rate. This rate is undoubtedly higher than what his secretary is paying. What Buffet is doing is buying into the corporate fiction. The corporation isn't earning money for itself, however; it is earning money for it's shareholders. Therefore, any tax the corporation pays is really paid on behalf of its shareholders who have capitalized the corporation.

Furthermore, any dollar invested in a corporation has usually already been taxed once. It is arguable that any future revenue from that dollar has already been paid. That's because the net present value of every dollar is one dollar. Any future tax from income is also reflected in that present value tax that has been paid. Thus, this lower capital gains tax rate Buffet complains about is really the second tax on the same dollar. There is, however, a counter argument that the economy rewards investment with a higher return to compensate for that double tax. Still, it is likely that the tax payer looses some money he would otherwise have because he will pay tax on the same dollar twice.

Buffet should understand all of this if he is really the financial genius that he is supposed to be. If he understands this, as he must, he is intentionally deceiving the weak minded to get his policy preferences.

Second: Why don't you donate the money you save from having lower taxes to the government?

A number of rich people are always telling us that they should be taxed at a higher rate. But why don't they impose a tax upon themselves and give that money to the government? I think it is because they tacitly realize that they are better at spending that money than the government. But while they realize they are better at spending their money, they, for some reason, don't think others will be better. It's an arrogant approach to tax.