Tag Archives: corporations

Why Warren Buffett’s Op-ed Resonates So Much with Us

15 Aug

First thing’s first, read this.

Work of Mark Hirschey

The buzz, surprise and resonance that Warren Buffett’s New York Times op-ed has created is keeping it amongst the most emailed news stories today and a constant trending topic on Twitter. The editorial is a rare instance of a public figure taking a stand against the political winds to stand up for the long-term benefit of the country.

U.S. tax policy is far too mired by the ongoing war between short-term politics and long-term benefits. Short-term politics are what continuously keeps our government officials from tackling truly sensitive issues like Social Security reform, Medicare, universal health care and a revamp of our tax code. The political climate in Washington is so subservient to the status quo that our leaders run elections by trying to say as little as possible, offend as few as possible and hide their stances as much as possible. It’s why a discussion on tax policies always turns into: jobs are good. It’s why any conversation about entitlements turns into: old people are nice.

Poll after poll reveals that for the first time in recent American history, a majority of people believe the lives of this generation will not be better than the lives of the past generation. This is because our politicians refuse to put the long-term benefit of this country over the short-term political maneuvering that has incited the ire of the public and put Congress in a 14% approval rating.

So perhaps the very thing needed in society today was someone outside of the political system (truly outside of it, not just as a talking point). Buffett’s article has spread across the annals of social media like a wildfire –a testament to how much of a chord it has struck. It’s odd that a billionaire’s opinion on taxation would resonate so much with people who can relate to him so little –but that’s exactly the case. For those of us outside the D.C. environment, it’s quite obvious how desperately change based on pragmatic but drastic measures is to this country’s wellbeing. The majority of Americans favor increasing taxes on those earning more than $250,000 a year. Despite the fact that the public has spoken, no provision of sorts was included in the recent debt deal, much to the glee of Grover Norquist I’m sure.

Let’s not let tax policy turn into what climate change has turned into. A majority of Americans believe that climate change is occurring and we need to enact more environmentally friendly policy –but a vocal few deniers have prevented this from happening. And while a majority of Americans still believe in climate change despite PR efforts on the extreme Right to dismiss its validity, the spin-tactics have had an undeniable effect on public opinion and the percent of people who believe in global warming has declined. Yes, you read that right: as more and more irrefutable scientific evidence proving the existence of global climate change has been promulgated, fewer Americans believe in it. (You can’t refute the evidence, but maybe you can refudiate it?)

That’s why I love Buffett’s op-ed. As a billionaire himself and someone of significant fiscal acumen, spinmasters can’t just use their usual ad hominem attacks against him. Since he’s not a political figure and because he’s arguing against his own financial interests, the PR machine can’t just dismiss him. He’s given a level of credibility to this stance on taxes that no politician or pundit could give.

A focal point of his argument is that raising taxes does not kill jobs. He mentions that during periods of high taxation, significant job growth has occurred. During a recent period of low tax rates, job creation fell off a cliff (the Bush years). The main point of the argument is not that billionaires do or don’t mind paying more taxes – it’s that the rate they pay has no correlation to how many people they employ.

Fiscal conservatives will argue that you can lower taxes and still increase overall tax revenue: this is true if the employment rate is high, so more people have taxable income (If there are more incomes to tax, then it is feasible that the government could gain more revenue by taxing more people at a lower rate than by taxing fewer people at a higher rate). But, it is a farce to mistake what could be true with what always is true –and furthermore, to argue this proves a causal correlation is wrong because it doesn’t. While low tax rates and increased revenues can occur concurrently, it has never been proven that low tax rates cause the job growth necessary to increase overall tax revenue in the country.