JONATHAN CHAIT AUGUST 17, 2011
Warren Buffet's New York Times op-ed arguing that the rich are undertaxed provoked the conservative auto-response to any argument by a rich person that the rich are undertaxed -- they should write a check to the Treasury. Michele Bachmann:
I have a suggestion. Mr. Buffett, write a big check today," said Bachmann. "There’s nothing you have to wait for. As a matter of fact the president has redefined millionaires and billionaires as any company that makes over $200,000 a year. That’s his definition of a millionaire and billionaire. So perhaps Mr. Buffett would like to give away his entire fortune above $200,000. That’s what you want to do? Have at it. Give it to the federal government. But don’t ask the rest of us to have our taxes increased because you want to have a soundbyte.
If he's worried about being undertaxed, we'd suggest he simply write a big check to Uncle Sam and go back to his day job of picking investments.
Obviously this fails to grasp the fundamental collective action problem that's the entire basis for taxation. You obviously can't fund the government on the basis of voluntary donations. Buffett and other wealthy people who favor higher taxes on the rich don't just believe they should pay more taxes. They believe the government needs more revenue. It's amazing how many conservatives continue to think this just-pay-more response constitutes some kind of slam dunk rebuttal. Plus, of course, if a non-rich person proposes raising taxes on the rich, then it's "envy" and "class warfare." So, really, nobody has any business ever arguing that the rich should pay higher taxes.
Perhaps the most interesting point in the Journal's editorial refudiating Buffett was this bit of sociological analysis:
Barney Kilgore, the man who made the Wall Street Journal into a national publication, was once asked why so many rich people favored higher taxes. That's easy, he replied. They already have their money.
I think there's a lot of truth to that. But does the Journal realize that this observation dynamites the entire intellectual rationale for lower taxes on the rich? Kilgore's observation suggests that the very rich have obtained sufficient material comfort that they are motivated by things other than material gain -- the desire to build or invent or out-compete others. They are motivated, in other words, by non-financial goals. That means that raising their tax rate would not dampen their work incentive. I am waiting for the Journal to apply this insight toward its model of the effect of marginal tax rates on the rich... never.