Investing in government is a losing proposition

There's no questioning Warren Buffett's ability to invest. People who sink their money in dry oil wells and earthworm farms don't become billionaires. Buffett is one of those rare people who can spot a winner, act on it, and turn a tidy profit. Thus he's amassed a sizeable fortune. What's wrong with that? Ask Warren Buffett.

Buffett is one of the "super rich." He controls vast capital resources and he enjoys his wealth. But he doesn't believe he or his super rich friends pay enough federal income tax. The tax code, according to Buffett, includes too many loopholes through which the super rich can shelter their earnings. According to Buffett's own assessment, he pays a lower percentage of his income in taxes than do the people who work for him. To rectify that disparity he looks to the federal government -- under the leadership of Barack Obama, the man he endorsed for president -- to equalize the playing field.

Right on cue, one of America's wealthiest men echoes the White House's call for "shared sacrifice." However, Buffett's apparent love for taxation isn't new. The Oracle of Omaha is known for endorsing higher income taxes and the estate tax, as are many of his super rich friends. But there's something dangerously wrong with this mindset. If the super rich are indeed concerned with the fiscal struggles lower economic classes face, they have the means to singly address the issue. Why do they need government to do for them what is well within their individual power?

Buffett lamented his "low" tax bracket in a recent New York Times editorial. According to Buffet's numbers, America's 400 richest people reported a combined taxable income of $90.9 billion in 2008, an average of $227 million each. If the top 400 contributed half their incomes to people of lesser means, they could make instant millionaires out of 45,450 of their countrymen. Such charity would be private and voluntary, without a dime being filtered through the federal government, except for the gift taxes of course.

I'm not suggesting wealthy people actually surrender any portion of their fortunes to anyone for any reason, nor am I denying their authority to do so. Indeed wealthy people, including Warren Buffett, have entered a compact to contribute at least half their fortunes to charitable causes. That's fine; their wealth is theirs to disperse as they please. But no wealthy person need lobby government to tax their incomes and redistribute their wealth when they alone are perfectly capable of doing so.

On the other hand, let's suppose Buffett succeeds in raising taxes on America's top earners. What then? Well, for starters, even if the federal government had confiscated every nickel of the $90.9 billion the top 400 earned in 2008 it would barely dent the federal deficit and wouldn't scratch the national debt. In fact, $90.9 billion dollars will fund government spending, which exceeds $3.6 trillion annually, for only nine days. We can share the sacrifice until everyone sings Kum Ba Yah and still not solve our fiscal ills.

For Warren Buffett to scratch out an editorial about being under-taxed is utter nonsense. No one who pays a tax based on their earnings, whether great or meager, is under-taxed. Washington receives enormous revenues no matter the income tax rate. Buffett's own numbers prove that lower tax rates create more revenue for government. Decide for yourself if that's beneficial.

Citing IRS data, Buffett points out how the top 400 earners in 1992 produced $16.9 billion in taxable income and paid 29.2-percent in taxes. As mentioned earlier, the top 400 earned $90.9 billion in 2008, but paid only 21.5-percent in taxes. In using these numbers Mr. Buffett misled his readers, prompting them to believe the rich paid fewer taxes in 2008 than in 1992. Actually, only $4.93 billion in taxes were collected on the 1992 incomes while $19.54 billion were collected on the 2008 incomes.

The highest earners obviously netted more income and paid a lower percentage in taxes in 2008 than in 1992. But they paid more in real taxes, meaning Washington received more actual dollars. Furthermore, America's wealthiest people have for years shouldered the highest percentage of the tax burden.

There's nothing to be gained in demonizing wealthy Americans. As long as their wealth isn't the product of criminal endeavor, shady dealing, or government cronyism, it's no one's business how the rich became rich or how rich they became. Class envy dogma is as disingenuous as it is deceptive, and it's equally disingenuous for multi-billionaires like Warren Buffett to preen and crow about the need to pay more taxes. Such rhetoric seeks public admiration for offering a fraudulent solution that ignores our fundamental fiscal problems, government's profligate spending.

If Mr. Buffett harbors guilt over his vast wealth he can write a check to the U.S. Treasury anytime he wants for any amount he deems suitable. There are other options at his disposal, too. He can shun the tax loopholes and shelters he considers an unfair advantage. He can ignore the accountants and lawyers whose advice reduces his taxable income. Each action is unilateral and voluntary; each can be pursued without infringing on his neighbor's liberties. There's no need for Buffett, or anyone else, to invoke government's heavy hand to dispense private wealth.

The rich are too poor to satisfy Washington's spending appetite. Like a gluttonous eater, Washington gorges on the fruits of productive Americans from all income levels. The federal government could gobble up Warren Buffett's net worth in less than a week with room left for a hearty dessert.

Even if raising taxes on the rich increased government revenues there's no evidence to suggest Washington would properly manage those funds. Warren Buffett is a wise investor. But he's dead wrong if he truly believes higher taxes on the rich will improve life for the lower or middle income classes.

The perfect society: A land without wealth?

Utopia! It’s the holy grail of egalitarian busybodies far and wide. If only outcomes were equal, as defined by the egalitarians themselves, the world would become a place of balanced chi and seamless harmony. These societal engineers have long believed in their unique intellects and superlative abilities, which qualify them to distribute wealth and contentment to a longing world. Sadly, there’s no shortage of these do-gooders.

A New York State Assemblyman envisions an increased millionaire tax. If passed, high income earners--who already bear a disproportionate share of New York’s tax burden--will pitch in an additional 11-percent. The broken record known as Hillary Clinton still laments how “the rich” don’t pay their “fair share” of taxes. Oregon, too, has joined the chorus.

Earlier this year Oregon voters passed Measures 66 and 67, raising taxes on individuals and businesses that wealth redistributors, in their profundity, have deemed excessive winners in life’s lottery. Typical class envy tactics preceded that electoral outcome. Proponents argued that education, public safety and health would suffer if the initiatives failed. The poor, naturally, would take it on the chin.

The entire premise of a perceived “fair share” is ambiguous at best. Would the egalitarian consider taxation equitable if the “rich” surrender, say, 75-percent of their income to government? Hillary Clinton, Oregon voters and New York assemblymen might think so. But anyone with a toehold on reality understands that productive people shoulder the tax burden now. The top one-percent of earners pays 28-percent of federal income taxes. Additionally, over the last 30 years the taxation on incomes above $75,000 has steadily increased while declining on incomes below that threshold.

Arguing that wealthier Americans pay little or no taxes is misleading. No, make that an outright lie. And that’s not the only mischaracterization offered by the “soak the rich” crowd.

In promoting Measures 66 and 67 the Oregon Center for Public Policy claimed that “asking” Oregonians to “contribute” more in taxes would improve the state’s fiscal structure. Certainly some taxation is necessary for governments to execute legitimate functions. But referring to tax increases as “asking” people to “contribute” is unadulterated spin, sufficient to strain even the strongest gastronomical constitution. And it’s so typical of the egalitarian social engineer.

Charitable organizations solicit contributions, and contributors alone determine their level of participation. No such choice exists with taxation. Tax levies aren’t a request on government’s part, and taxes aren’t contributed sans duress. Taxes are compulsory and their collection is ultimately a matter of force.

Sadly, there’s little to be achieved in arguing taxation with egalitarians. Redistributionists are so devoted to equalizing all incomes and imposing their Marxist vision on society that debate has become futile. Equally futile are the protests of the productive, whose incomes are sacrificed upon the perverse altar of egalitarianism. The producer’s right to their production will never match the needs of the oppressed when it comes to conjuring empathy. Therefore the “rich” are safely marginalized, demonized and dismissed.

What would happen if busybodies like Hillary Clinton, New York legislators and Oregon voters fulfill their collectivist dreams? If there were no private wealth the economy would become void of capital investment. Innovation and production would decelerate, with a corresponding decline in employment and living standards. The resulting misery would create greater demand on government, which puts the do-gooders in position to distribute the remaining wealth as they so determine. They will achieve their socialist dreams, but only for a season.

Such idealism has no foundation upon which to build. Since government produces little, and that which is produced is a case study in inefficiency, the egalitarian society is doomed to failure. Only the most influential busybodies will benefit from their societal and economic transformation. The rank and file do-gooder will be destined to impoverished servitude alongside their once-wealthy neighbors, whose property they helped confiscate.

So goes the nation without private wealth. Utopia? I think not.

This column originally appeared at American Thinker.

Class envy and the selective war on success

There was a time when one generation wanted the next to achieve higher levels of success. Successful people served as role models for youth, a living testimony to the opportunities that freedom held. Somewhere along the way that became unfashionable. We now want to punish achievement, but only when it’s politically advantageous.

Remember when the Big Three auto executives flew to Washington aboard corporate jets? Congressional representatives roasted those CEO’s. It wasn’t entirely without cause, but not entirely just either.

The Big Three created a public relations nightmare no doubt. With the exception of Ford, they jetted to Washington and begged Congress to save their companies with an unborn generation’s money. Had the criticism ended right there it would’ve been warranted. Naturally, it didn’t end right there.

Those executives were held to represent anyone who has achieved a level of success that the anointed Left has deemed unfair. Soon it wasn’t only the Big Three’s jets but any corporate aircraft that was taboo. Leftists railed against private jets with the lusty zeal generally reserved for tax cuts.

The sentiment spread like wildfire. Despite a litany of logical arguments supporting corporate owned aircraft their existence was demonized as exemplary of greed and excess. It was a case study in political pandering. Unfortunately, it plays well to people who have recently lost jobs or are facing financial straits.

Why does anyone “need” a private jet? Why does anyone “need” a 25-room house? Does anyone “deserve” an eight-figure salary? Somewhere along the banks of the River Styx, Karl Marx must have felt vindicated.

Such class envy was born of a time when “the rich” were clearly defined. They were comprised of everyone who didn’t work at an hourly job, especially a unionized hourly job. Most people defined “the rich” as anyone appearing to have reached a greater level of success than their own. It was wrong, but at least understandable. Now even that line has been blurred.

Media reporters and political speechmakers excoriated any company or individual that owned a private jet, or had attained an unapproved level of success and wealth. They used the impression of automotive and banking miscreants--along with a recession rooted in the political manipulation of the mortgage and housing markets--to tar and feather achievers.

Instead of encouraging low and middle income people to adopt the attitudes of the successful, Leftists called them greedy crooks. Now, why aren’t those same people criticizing Oprah?

The talk show queen is one of the richest women in the world. She has a $42 million private jet. Luxury homes, fine cars and ornate jewelry aren’t strangers to Oprah. What’s more, she isn’t shy about liking the perks she has attained. In fact, she says it’s great to have nice homes and a private jet.

Where are the Leftists? Where is ACORN, the Rainbow Coalition and every other organization dedicated to eradicating success and private wealth? Why aren’t they shouting and protesting Oprah’s extravagant lifestyle? Their silence is deafening and their reason is plain. Oprah shares their political views; therefore her wealth is accepted, not reviled.

Don’t misunderstand; I’m not condemning Oprah at all. She was truthful. She’s not ashamed to enjoy her posh lifestyle. This is one of the few moments in which I agree with Oprah, and I respect her honesty. I only wonder why other achievers don’t adopt her attitude.

No one who earns wealth through legitimate means should fear offending others. They shouldn’t have to defend their success against the pandering, power-seeking dogma of political hacks, talking head news anchors, or meddlesome activists.

We once considered high achievers and risk-takers to be icons of the American experiment. We now determine their legitimacy based on their political viewpoints. The rest must apologize for their performance, if only to soothe our petty jealousies.