Tuesday, November 27, 2012

Warren Buffett's weird editorial on capital gains taxes

Normally, you'd expect a columnist who's claiming that a tax isn't going to have any deterrent effect to have to make an argument for why not. But when Warren Buffett writes an editorial for the New York Times, it seems to be good enough for him to say, in effect: Trust me, I'm rich!

Buffett wrote a similar NYT editorial last year.

Thomas Sowell has made the case for keeping capital gains taxes much lower than income taxes. Even the left-leaning Matthew Yglesias has supported that position, saying:

[T]his is definitely an issue where the conservative position is in line with what most experts think is the right course, and Democrats are outside the mainstream.
Maybe Sowell and Yglesias are wrong. But if they're wrong, there must be some reason why, and the reason isn't that Warren Buffett has more money than them.

Should we be so trusting of the super-rich in making claims about taxes? Or could it be that a multibillionaire like Buffett, who has a lifetime guarantee of  having more wealth than he could possibly spend, might be out of touch with the kinds of incentive effects that apply to most people?