The Buffett Rule: Creating Wealth is just Moving around Big Bucks

In a remark that seems extremely obtuse for someone who has spent his life investing, Warren Buffett says that it is the fault of Congress that Mitt Romney pays only 15% of his income in taxes. The 15%, of course, is the same amount that Buffett himself pays. According to the Bloomberg article Buffett "supports president Obama" and wants the wealthy to pay at the same rate as those with earned income. After all, according to Buffett, what Romney does is "just moving around big bucks" which Buffett agrees is the same thing that he himself does. It is not "straining his back or going to work and cleaning toilets or whatever it may be."

Either Buffett has lost it, or the reporters for Bloomberg do not understand what he said.

First, as to Buffett, he makes clear that he does not fault Romney in the least for paying taxes at the rate set by the law. After all, how could Buffett complain about this since he does exactly the same thing. Further, since these tax rates have been in effect for over a decade, it is hard to blame the current Congress for them, particularly since there has been no real effort by either the Democrats or the Republicans to end the capital gains tax rates. Even president Obama has not proposed equalizing capital gains taxes with regular income tax rates on earned income. Under the descriptions that Obama has used in his speeches (he has never actually put forth any proposal), Buffett and Romney would still be paying taxes at a much lower rate than those with high earned income. In all the talk, Buffett never explains how he would deal with the depressing effect that raising capital gains taxes would have on the economy. Investment is the mother's milk of economic growth, and taxing it with much higher rates would necessarily reduce the amount of investment in the USA. Slower growth would hurt everyone. Buffett never even mentions this, and the reporters, of course, never even ask.

The Bloomberg reporters are even worse, if that is possible. They write that Buffett supports the Obama proposals even though 1) there are no such proposals, and 2) in his speeches, Obama also calls for a capital gains rate that is much lower than that for earned income. Then they do not bother to ask Buffett about the effect his beloved high capital gains taxes would have on economic growth. The reporters simply cannot be that dense.

But the final straw when it comes to the reporters is the headline on the article. It screams that Buffett "slams" Romney on taxes. Yet here is what Buffett is quoted as saying on that score: "[Romney's] not going to pay more than the law requires, and I don't fault him for that in the least." In other words, Buffett did exactly the opposite of slamming Romney; he does not fault Romney in the least. So we have reporters who claim falsely that Buffett is supporting the Obama proposals and also falsely claim that Buffett slammed Romney on taxes. In short, the entire article is BS designed to help Obama and hurt Romney. How pathetic.