Tax Warren Buffet??

posted by Nima

August 21, 2011 · Posted in Government 

A lively and healthy email debate emerged among my dear friends when one of them shared a message from MoveOn.org regarding Warren Buffet’s recent article about taxing the super rich (I changed the names and locations for anonymity’s sake).

It all started when “Raven” sent this concise email to several friends, myself included:

Go Warren B: http://civ.moveon.org/standwithwarren/?id=29985-2523622-%3DrmoxOx&t=2

To which “EconomicsJunke” (that would be myself) responded:

I had a discussion about this the other day. In my opinion, if Warren is so keen on helping the Feds out then I would suggest he donate money to the Treasury at http://www.treasurydirect.gov/govt/reports/pd/gift/gift.htm … in my opinion he’d just be throwing money down a hole and supplying more collateral that they would only borrow more against, as they have been for centuries, but who am I to interfere in his financial dealings … =)

… to which “Sebastiani” from italy chimed in:

If I had even an inkling of faith that our elected officials would put that money to good use (e.g. pay down the deficit or fund education) I’d be all over this. Instead I believe that this type of measure will only enable said leaders to continue to elude the economic realities the rest of subject to on a daily basis – like not spending beyond our means and responsible accounting. It’s almost like they’re saying “let’s rob yet another piggy bank so that we don’t have to face reality”…not a fan.

… to which “Raven” responded:

I hear you brother. But the WB group are not and have never been taxed like everyone else. So I say let them contribute fairly to the piggy bank and then maybe it wouldn’t be so empty!

… to which “Sebastiani”, after stepping off his Vespa, replied:

With very few exceptions the federal government, and most states, has been spending well beyond its means for decades. Administrations, regardless of party affiliation or current GDP, are fully expected to increase the deficit. This has gotten so bad that parties take bragging rights for having incurred a smaller deficit increase than the other guy. What sort of sick, twisted standard is that?

As businessmen we are held accountable by one rule: make money or fail.

This is what keeps us competitive and creative and forces us to never loose touch with reality. This is what keeps us healthy and in business. Why shouldn’t our elected leaders be held to the same standard?

As for the richest of the rich being given tax breaks I’d say this:

Any relevant sports team has its star players. These players can make or break a team. They win titles and draw crowds into stadiums. They benefits are reaped not only by the team owners, but also by surrounding vendors, bars, restaurants, etc. In return for being massive revenue generators these stars are given certain breaks. If the incentives disappear, the stars will find other teams who give them the treatment they “deserve”.

The same rules apply in business. Especially in an ever more globalized business community. CEO’s of many of these companies have put it all on the line to get to where they are. They have hired 10’s of thousands of tax paying citizens and are paying billions in corporate taxes.

In my opinion the reason our piggy bank has a negative balance are not the star players, who are held accountable by market economics and shareholders, but the politicians, who are not.

… at which point Sebastiani’s wife joined the debate:

OMG! Are you comparing yourself (or other heads of enterprise) to the Michael Jordans of the world? I fear for the world (and especially myself) if Sebastiani Inc. sells for a ton o’ cash. With great wealth comes great responsibility…

Regardless, I’m all in favor of EVERYONE paying their fair share and by that, I mean flat tax system whereby we all pay the same percentage of our income and eliminate loop holes for the rich (or as the GOP likes to refer them: “job creators”). That’s the fairest solution in my book.

… at which point I thought I’d throw in a well deserved dose of voluntaryism, not that I expeceted it to change the debate or anyone’s beliefs in any way:

I like the flat tax concept. Really, really flat though. Like zero percent flat …

… at which the wife laughed:

Hahahahahaha!! That is SUPER flat. If that was a wave Sebastiani would give up surfing for good.

And at that point the debate’s back and forth was confined to the typical and oft repeated Clinton’s surpluses vs Bush’s deficits debate, so nothing much interesting there, until DJ Sparklebox, Raven’s girlfriend added:

its awesome businesses can do so well these days, shit i would like to be one of them, my argument though is an ethical one not a economic one, which is that their success doesn’t negate their responsibility to pay taxes to society.

in fact, if i were one of those big corporations i would be happy to pay taxes to my country because it enabled my success in the first place. also something to think about, if all those extremely wealthy corporations and people paid their fair share of taxes like we all do, i would be interested to see the long-term effect that may have on the distribution of wealth in this country, maybe we wouldn’t see such an unbalance and such a huge the gap between the rich and poor in America (a gap that is far larger than those seen in other industrialized countries around the world, surprising considering America still considers itself the world hegemonic power).

agreed Sebastiani’s wife. flat tax. whether you make $10,000 a year or 10 billion – pay your fucking share – nobody likes a freeloader.

death and taxes………. ???? YEAH RIGHT!!!!! NO WAY! GET REAL!!!! I’M RICH BITCH!!!!!!

And then finally “Roommate” summed it all up and supplied the closing arguments:

Executive Summary:

If the goal is a civil society which fosters the emergence of personal rights, property and wealth:

- Taxation under threat of violence is unethical and not a valid solution.
- Hording wealth to a degree which destabilizes civil society is unethical and not a solution.
- Acknowledgement of the individual’s social responsibility and their willful participation, via investments of both money and time, in programs and organizations which fosters civil society and creates the conditions for the accumulation and securing of property and wealth and emergence of rights is both ethical and the logical solution.
- The words and actions of People with unparalleled access to the media and means to contribute to a solution, who fail to understand the true issue or deceptively misrepresent the true issue, can be frustrating and detrimental to clarity.

I’m noting two main themes in this thread:

01) Those that think Warren is correct and would like to see the wealthy pay more taxes as a solution to a tanking economy
02) Those who want to point out Warren is free to pay more taxes if he wants but hasn’t done so which would itself seem to render his proposed solution invalid

It’s worth pointing out for the sake of clarity that Warren’s lack of apparent action isn’t an invalidation of his suggestion. Nor is the lack of ‘apparent’ action a true indication of a lack of action on his part. I doubt the people reflexively decrying him for not taking public action are aware of his private actions and anyone who has experience with human behavior probably has witnessed the phenomenon of the greedy being quick to point out the apparent lack of charity in others as a justification for their own greediness. That is a universal, childish response some humans grow out of.

Here is a more effective way to frame it for those who don’t understand what type of society awaits if those who are exceedingly prosperous place greater importance on amassing wealth and the concept of private property than on the health and security of individuals in their community.

Keep in mind, most of the people in this video probably aren’t starving and the shop owner may be a nice enough person without any real wealth. Imagine what is in store for those who are greedy within a society of recently dispossessed people who can’t even secure their basic needs for survival. Fleeing with their wealth to Europe will soon be eliminated as an option. If they learn a popular Chinese dialect they might have some luck there but that is also growing more improbable.

Returning to Buffet; I would not be surprised if his recent public words are actually the first part in a series of releases and actions designed to ‘reveal’ the pettiness of his critics and set an example for the wealthy people he and many others seem to take issue with. Considering how well orchestrated the progressive movement is, I would not be surprised to see him on Jon Stewart or Colbert in the next phase of the campaign. When it comes to politics, and considering how much money is at stake, there are few events left to chance. So many actions and statements are orchestrated for maximum populist effect. The timelines of these election propaganda campaigns have stretched to years now, instead of months.

I do not think increasing the tax burden on the American population, or any population, is the solution to a dysfunctional government and an uneducated/unsophisticated citizenry. On a personal level, if your bankers and investors are corrupt or incompetent, why give them more money? If the government is ineffectual and wasteful, why give them more money? That doesn’t make any sense. Giving them more of someone else’s money is not only unkind and unintelligent but criminal.

Warren’s suggestion of increased taxation isn’t wrong because he hasn’t turned over all his money… it is an invalid solution, considering the intended goal, for other reasons. At the best, the threat of taking money from the exceedingly wealthy will prompt them to invest in government approved job-creating enterprises to avoid heavy taxation, at worst it will trigger their greed and deceptiveness which will result in the hording and hiding of wealth. Being forced to invest in unwise ventures at the dictates of a government agency can result in waste of wealth and the creation of useless and unsustainable jobs/products. The former Soviet Union comes to mind.

I do not think we need to tax the wealthy more, I think the wealthy need to invest more of their wealth into research & development and manufacturing & production. And I think the incentive for them to do so will come not from their own insight and philanthropy or government coercion but from the increasing number of dispossessed citizens in this nation. Whenever the government continuously fails and a perverted sense of self interest impedes, the pissed off electorate will take its own action.

I suspect the coming era will remind the advocates of property rights and wealth accumulation that rights and wealth are not granted by a divine being thus inalienable, they are consensual and alienable. We, as individuals, have private property and wealth because others consent to it. (On a personal note; James was recently reminded the concept of private property is only valid if others choose to consent to it. I am disturbed by his loss as well because I remember how much enjoyment he derived from his collection. I am a fellow collector so I can empathize with him. It was an egregious but luckily non-fatal violation of trust, unless James Daniels finds the thief)

By offering the video above as an object lesson I’m not advocating the disintegration of civil society and property rights. It can and does happen without my endorsement. I’m simply pointing out the obvious for people who might prefer wealth and property rights to the welfare of people.

Here is an entirely plausible scenario described in broad terms:
01) Many people who are used to a particular level of affluence and conditioned to believe they have a right to it will want to restore it or an acceptable portion of it.
02) They are aware that neither increased taxation nor the government will be effective in achieving that goal because of impracticality and right-wing resistance.
03) They see others enjoying an exceeding degree of affluence and ask themselves; ‘why them and not me. I’m just as capable?’
04) They have witnessed revolutions and protests all over the world and realize there is strength and anonymity in numbers.
05) They will escalate their efforts to take what they want while the rich will reflexively employ violence to try and keep what they have, which enforces the perception the rich are at the least in different to the suffering of others and at the most are actively behaving in a manner to intentionally increase that suffering.
06) We will see a revolt in which the American wealthy class will play the role of the English royalty, at least in the minds of those who need to rationalize their use of violence.

The scope of civil society’s disintegration will be determined by how quickly people wake up to reality and work together instead of against each other. As an interesting example; The Tea Party will claim they tried negotiation but the government wouldn’t cooperate on significant, immediate and major spending reductions. Making those compromises is actually the first practical step towards an agreeable arrangement more conducive to a real solution. Their party may be riddled with fundamentalists, racists and uneducated, belligerent contrarians but their insistence on this point was not unreasonable or illogical. So they can now justify (amongst the believers in their cause) more aggressive, provocative and violent responses to what they perceive to be illegitimate government actions, policies and programs.

What I would like to see is the wealthy tap voluntarily into the entrepreneurs within the pool of unemployed and invest in business ventures which create long-term jobs and useful products/competitive ideas. This requires neither government interference, increased taxation nor a disintegration of civility and loss of the resulting rights which the participants in a civil society enjoy.

It is ultimately an ethical issue, as Sparklebox pointed out, but not one of taxation (which itself is unethical if enforced by violence). Since many of the exceedingly wealthy appear to be devoid of ethics, based on their very vocal public resistance to what others see as a charitable or fair action (as misguided as that perception may be), it seems inevitable that social unrest will arise. I think Warren and others are trying to use populist power, channeled through government coercion, to force the wealthy to share because they want to prevent the coming domestic turmoil which he and many others foresee. Thousands of pissed off wealthy people, many of whom will be afraid of outing themselves as the economy continues to tank, would be less of an immediate political and social threat than millions of pissed off non-wealthy people. See this article.

I think Warren and his supporters should be more frank in their dialog with the American media and public and I think the wealthy and their cheerleaders should spend less time diverting the discussion from the real issue. If they don’t want higher taxes imposed as a “solution” then they have to acknowledge the reality that personal social responsibility is required by all, commensurate to their abilities, if a civil society is the goal (an acknowledgement of this is required of the wealthy and non-wealthy alike). If anyone wants a relative guarantee of property rights and personal wealth, which civil society provides, and they are intelligent, they will seek to contribute to the extent of their abilities to the establishment and maintenance of a civil society. This includes the wealthy. They are not exempt and they even have a greater stake in the game.

Or they can pool their personal fortunes and invent a device which can either erase the individual’s instinctual sense of self-preservation and evolved sense of fairness from the minds of those whose productivity they derive their wealth from or a device which would allow them to create then escape into a virtual world where theories have no errors in application. Working as a QA Engineer I know how unlikely both are at this point in the evolution of our technological capabilities. There is often a startling discrepancy between the result of clicking on a button and our expectation of what will happen when we click on a button.

Having written all of the above, I would like to preempt one probable response, from those who don’t like the concept of social responsibility, which is simply a diversionary version of what the wealth-obsessed are now offering as a counter-argument: What have you done for the poor lately? How socially responsible are you? .as I mentioned before, this is to be expected from those who don’t like the solution because they may not have any sense of social responsibility themselves, outside the scope of trendy activities like charitable cocktail happy-hour events and donating to goodwill. All of which I’ve tried in my journey to define my purpose correctly. However, there can be validity in them if they are rephrased and asked by those honestly looking for ways to contribute.

What I have done, both good and bad, is known to friends and family. What I want to do is find a way to use the coming turmoil as an opportunity to step into or even create a role which has a broader, more positive impact on the society we live in. My will is engaged in a race against age on a course which is undergoing seismic shifts in its topography but will most certainly produce new opportunities to define purpose along its path.

I suspect we are all approaching another branch on the path which will allow us to participate as part of the solution. If we are and we don’t define that role, others will for us. I think that should be a main point in Warren Buffet’s message.

To which I respond: Amen to that. :)

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