To my mind, one of the most difficult matters in economic policy is the decision about setting tax rates for income by individuals and by corporations. It is also one area in which ideology can get intelligent people twisted in their"you know what". As a libertarian, I start with the sensible view that taxes should be moderate not only to avoid the distortions that it creates in addition to giving people an incentive to work and keep a higher proportion of what is legally earned. Such a view seems sensible until people have to argue about whether a 20% tax on income is sufficient or not.
Warren Buffet pitches into the discussion that animated the US Presidential elections with firmly argued points. His most potent statement in this article is that those who are ideologically committed to lower taxes overstate their case by making the claim that investors are preoccupied with tax rates as a determinant of capital deployment. In the article, he makes a very solid case that both investment rates, growth and income levels in the United States have been substantially higher than they are today and therefore it is improper to state that any upward tax adjustments for wealthy people would harm economic growth. As he argues in , the lower tax burden has contributed to a redistribution of income from the middle class towards the wealthier Americans and thereby exacerbated inequality, while denying the public sector of revenue to meet existing obligations.
Towards the end of the article, he goes out to state that given the federal government's finances today and in the medium term, a minimum tax rate for high income earners should be set. Warren Buffet is correct because he argues that tax rates must respect context and are not n end unto itself. Clearly, every hard working entrepreneur wishes to keep most of his income but the decision for tax rates is about a political discussion. Which brings me back to the fact that I prefer lower tax rates but there is no rule that states that raising taxes is by itself good economic policy.
Warren Buffet pitches into the discussion that animated the US Presidential elections with firmly argued points. His most potent statement in this article is that those who are ideologically committed to lower taxes overstate their case by making the claim that investors are preoccupied with tax rates as a determinant of capital deployment. In the article, he makes a very solid case that both investment rates, growth and income levels in the United States have been substantially higher than they are today and therefore it is improper to state that any upward tax adjustments for wealthy people would harm economic growth. As he argues in , the lower tax burden has contributed to a redistribution of income from the middle class towards the wealthier Americans and thereby exacerbated inequality, while denying the public sector of revenue to meet existing obligations.
Towards the end of the article, he goes out to state that given the federal government's finances today and in the medium term, a minimum tax rate for high income earners should be set. Warren Buffet is correct because he argues that tax rates must respect context and are not n end unto itself. Clearly, every hard working entrepreneur wishes to keep most of his income but the decision for tax rates is about a political discussion. Which brings me back to the fact that I prefer lower tax rates but there is no rule that states that raising taxes is by itself good economic policy.
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