Why Doesn’t Warren Buffet Pay Extra Taxes?
I wish I had a dollar for every time a wealthy liberal has declared he thinks he should pay more taxes. That list includes Warren Buffett, George Soros, Bill Gates Sr., Mark Zuckerberg and even Barack Obama, who now says that not only should rich people like him pay more taxes, they want to pay more. “I believe that most wealthy Americans would agree with me,” he said of his tax-hike plan. “They want to give back to the country that’s done so much for them.”
So why don’t they? There is a special fund at the Treasury Department for taxpayers who want to make “gift contributions to reduce debt held by the public.” But very few do. Last year that fund and others like it raised a grand total of $300 million. That’s a decimal place on Mr. Zuckerberg’s net worth and pays for less than two hours worth of federal borrowing.
I understand the basic satisfaction of saying, “Look, mister, if you really want to pay more taxes, no one is stopping you,” but I don’t think that it’s actually a very good argument. The reason why people like Bill Gates and Warren Buffet advocate for higher taxes but don’t voluntarily pay higher taxes than the law requires is pretty obvious: If the US raised the top marginal income tax rate and the capital gains rate in order to try to collect more money from people like Buffet and Gates, this would affect all people in that tax bracket. (If the current tax brackets were used, that would man any married couple making more than $379,000/yr.) This would mean that while high tax advocates such as Warren Buffet would pay more taxes, their relative wealth compared to the other wealthy would remain the same. Thus, Buffet’s ability to buy or control things via his wealth would not diminish relative to the other wealthy.
On the other hand, if Buffet decided to simply write an extra check to the Feds each year for $10 million, the result would be that his relative income (and thus buying and influencing power) would fall somewhat relative to other members of is class. Now, as someone who makes a number of high profile donations, Buffet is clearly willing to give money away, but when he makes a direct donation to a non-profit he has a pretty good say in how that money will be used. If he simply writes a check to the Feds, he has very little. As someone who supports higher taxes, he’s clearly okay with handing more money over to the Feds — but I think it’s pretty rational that he’s not willing to do so in a way that reduces his economic power, and doesn’t do all that much to stem the budget problems.
So really, I don’t see there as being much hypocrisy in the unwillingness of rich high tax advocates to voluntarily pay extra. Though at the same time, it’s important to understand there’s no virtue in their claim that “they’d be willing to pay more”. They are, clearly, willing to pay more (thus the advocacy) but only if they can do so in a way which doesn’t reduce their standing versus other rich people (and the rest of the country).