Warren Buffett: Trickle-Down Theory Doesn't Work

Yes, with legislation.

Where it should.

http://en.wikipedia.org/wiki/Ad_hominem

 

Warren Buffett is right.

Republicans are wrong.

And all the crowing about how Warren Buffett should play lone wolf martyr and sign over his fortune to the Treasury doesn't change those two basic facts.

 

Oh, I see. Everything for you, Dick, should be forced by legislation. Good to know where you stand.

 

http://en.wikipedia.org/wiki/Binary

 

Who left the lid off the jar of Shitty Logic?

 

Leave the site for a while. Turn off Rush. Turn off Hannity. Turn off Beck. Turn off Sarah. Go read a book by a real economist. Go read a policy magazine with articles written by real experts. Go read the Wall Street Journal.

Then come back when you have some actual thoughts on the matter instead of Palin-esque one-liners.

 

I don't necessarily disagree with the argument that the rich should be paying more.

However, I've never seen a good definition of where "rich" starts.

 

I thought 'Mad Men' did a fantastic job of poking fun at this disconnect between economists and modern conservative theory when it inserted casually the fact that the marginal tax rate was about 90 percent at the time for the highest tax bracket.

It's in the mid 30s now, isn't it?

I think we'd all agree that 90 percent isn't a good idea, but it seems they could work out a deal where the top bracket pays another 10 to 15 percent, but with stipulations with the increase that the government can't raise those taxes any higher over a set period of time.

It would ensure that the government didn't get the idea it could keep shaving off more and more and it wouldn't be enough to trip the dreaded anti-incentive to earn that conservatives often rail against (with good reason, to a certain extent).

 

Regardless of the general theories behind it, right now this country is in a crap-ton of debt and more taxes are going to have to be paid by everyone.

The years of borrowing are finally catching up with us, and I honestly am beginning to think politicians on all side are just desperately trying to put the crash a few years into the future in the hopes that it will be somebody else's blame or that there's some kind of economic miracle.

Right now, the government is borrowing $1.4 trillion a year and pumping into the economy, and we *still* have 10% unemployment and unimpressive growth. Take away that borrowing support, and who knows how awful it could get.

But by the same token, every year that we borrow at this level, it gets that much harder for the economy to be able to handle things on its own. We pay about $0.4 trillion (roughly 3% of GDP) in interest on our debt alone, and at the current pace, the yearly debt interest is growing by about 10% a year. That's money that gets taken out in taxes and provides us with no benefit whatsoever in the present. And if our creditors ever decide to stop buying it at the extremely cheap rates they get right now, that gets even worse.

It's scary that we've had unemployment this bad for this long. It's a lot more scary to realize we are borrowing unprecedented amounts of just to keep this good. The only time we've borrowed at this level before is for WWII, and we were able to make it up in the aftermath because every other major economic power in the world was either devastated by the war on its own soil or chaining itself to inefficient economic systems. This time, our European competitors don't look so hot, but many other emerging economies are coming on the scene.

Long story short: It's almost certainly going to get ugly eventually, and every year that we put it off, we make it that much more inevitable and that much worse when it comes.

 

Lowering spending would help too but that's not going to happen.

 

The bracket's only part of the picture. To what income does it apply? During WWII the bottom rate was 23%, and that applied to incomes over $500. The top rate was 94%, but that was only for incomes over $1 million. So how many folks during WWII had such an income. Not too damn many. And how many had annual incomes over $500. A helluva lot.

So don't focus strictly on the top rate. Keep in mind the actual income ranges toward which that rate will be focused.

 

Not, it wouldn't.

The government needs to spend more, not less.