Thursday, June 26, 2008

Warren Buffett Can Pay Higher Taxes Right Now

CNBC: How do you think the tax code should be changed?

Warren Buffett: I think the super-rich should pay more and people in the middle-class and lower should pay less. I think there should be a major overhaul of the payroll tax. I think guys like me should pay more.

Dear Mr. Buffett:

If you think that you should pay more in taxes, you don't need to wait for Congress to change the tax laws, and you don't have to wait for the repeal of the Bush tax cuts. You can voluntarily pay more taxes right now, today by making a gift to the United States Government. Simply write a check or money order payable to the "United States Treasury," and mail to the address below.

Gifts to the United States
U.S. Department of the Treasury
Credit Accounting Branch
3700 East-West Highway, Room 6D17
Hyattsville, MD 20782

45 Comments:

At 6/26/2008 12:07 PM, Anonymous Anonymous said...

So you're not really commenting on Buffett's opinion, which you obviously disagree with. If you're going to make a snide counter-remark to his quote, at least give some rationale for your own position.

 
At 6/26/2008 12:13 PM, Blogger Mark J. Perry said...

I'm suggesting that anybody who is super-rich, and advocates that the super-rich pay higher taxes in the future by changing the tax code, (like Mr. Buffett), can demonstrate their support of higher taxes on the super-rich, by voluntarily paying higher taxes NOW, instead of waiting to be forced to pay higher taxes LATER.

There's nothing stopping Warren from implementing his own ideal tax code on himself right now. With voluntary gifts to the government, Mr. Buffett could pay at whatever highest marginal tax rate he feels is approriate for the super-rich, 40%, 50%, even the 91% tax rate of the 1950s.

 
At 6/26/2008 12:26 PM, Blogger Gregory said...

If warren buffet made a charitable donation to the U.S. treasury, would it be tax-deductable?

 
At 6/26/2008 12:28 PM, Blogger bobble said...

interesting that mr. buffet started his company, worked just as hard, and made most of his money, when marginal rates were high.

 
At 6/26/2008 1:05 PM, Blogger Walt G. said...

I’m middle-class, so Mr. Buffet could eliminate the middleman (IRS) and just send me the money directly. I’ll await his reply, and I will supply mailing instructions with a sase to him at that time.

 
At 6/26/2008 1:28 PM, Anonymous Anonymous said...

Whether it is Mr. Buffett's true opinion or not, it probably does a lot of good for his goodwill with middle class and "lower" employees, customers and potential customers. Smart man.

 
At 6/26/2008 1:35 PM, Anonymous bob wright said...

anon 12:07

The post is not a snide comment.
It is merely pointing out the obvious.

What is your opinion? What rationale did you provide in your comment?

 
At 6/26/2008 1:39 PM, Blogger Marko said...

I like part of what Mr. Buffet is saying - lower taxes on the middle class. Three Cheers for that!

As for him paying more taxes, MP has it right. If you think that asking him to set the example by going ahead and paying more without being required to do so, you aren't thinking carefully about the subject. Most rich folks (some presidential candidates excepted) donate huge amounts of money to charity. Give it to the government if you think it is so great!

If you still think it is snide, then how about a softer suggestion - how about if Buffet stops paying accountants to help him pay the least amount of taxes possible? I have not seen his return, but I bet he is doing his darndest to pay less.

Either way, why doesn't he pay more than he has too? Does he think it won't be fair that his super rich buddies don't have to also pay their fair share? He shouldn't care what others do if he thinks giving more to the government is good. He can afford it. Walt is right, he can send us normal folks a check directly if he thinks the government will waste it. But if the thinks the governement won't distribute it properly, that kinda defeats his whole argument, doesn't it? I don't see Buffett arguing that we should start taxing net worth, rather than income. He probably doesn't have that much income. Let's see how he likes it if the government confiscates 70% of his net worth. Or, better yet, says he only really NEEDS an income of maybe 40k a year, and takes the rest of his assets and redistributes them to the poor, like they did in Eastern Europe when the communists take over (like they did to both my parents).

Doesn't sound so good now, eh Mr. Buffett? Be careful what you wish for.

 
At 6/26/2008 5:08 PM, Blogger juandos said...

"If you're going to make a snide counter-remark to his quote, at least give some rationale for your own position"...

Hmmm, one would've thought the rationale was painfully obvious...

Buffett is talking the talk but NOT walking the walk...

 
At 6/26/2008 5:34 PM, Anonymous Anonymous said...

Why would he voluntarily give the goverment more money to waste? There is nothing wrong with saying, "if this was the law I would not mind following it."

I would think that followers of this blog would support the notion that we may all be better off with the money in his hands? Any comments on that?

 
At 6/26/2008 6:37 PM, Blogger Webutante said...

Amen, brother.

Mr. Buffet ain't a friend and adviser to Mr. Obama for no reason.

 
At 6/26/2008 6:49 PM, Blogger SBVOR said...

This comment has been removed by the author.

 
At 6/26/2008 6:51 PM, Blogger David Appell said...

Please. Personally sending a check to the US government and advocating for a policy change with thousands of times more effect are too entirely different things.

Any economics professor ought to know that. I'm amazed you would even ask the question.

 
At 6/26/2008 6:55 PM, Blogger SBVOR said...

This comment has been removed by the author.

 
At 6/26/2008 6:57 PM, Blogger LowTax said...

Warren Buffett pays himself a relatively small salary (lives in the same old house he's always lived in and eats at diners) - so he pays little income tax. He plans to donate his great wealth to charity - thereby paying no estate (death) taxes. He almost never sells any of his stock - thereby paying almost no capital gains taxes.

A man who pays little or no tax relative to his great wealth has very little to offer when it comes to tax policy. What about the rest of us that like to spend more of our money than Mr. Buffett? Those of who buy and sell stock actively? Those who would like to leave our wealth to whoever we choose? Why should we be punished just because we live life differently than he does?

 
At 6/26/2008 7:01 PM, Blogger SBVOR said...

Dr. Perry,

Commenting on Buffett & the media…

Scanning all five pages of the transcript you cite, I never found the word “recession”, much less any quote from Buffett wherein he used that word.

And yet, MSNBC, reminding me of Joseph Goebbels, prints the following headline in “reporting” on the interview:

“Buffett warns that recession getting worse”

Other headlines were very, very similar.

Yes, Buffett previously declared:

“by any common-sense definition, we are in a recession”

Later on, Buffett was even more overt in acknowledging that his imaginary recession is:

“not [a recession] in the sense as defined by economists”

So, how responsible is it for so-called “journalists” to print a headline such as the above based upon a “common-sense definition”, offered by a notorious Democratic activist, when the activist himself admits his “common sense” is contrary to what is “defined by economists” and when this “common sense” version of economics is not even reiterated in the freaking interview?

GEEZ! How, in the world, do such blatant propagandists pass themselves off as “journalists”? I can only wonder if our Republic will survive them.

My own analysis finds that, by some metrics, such as unemployment and industrial production, the economy is continuing to weaken (very slightly). But, overall, it continues to appear as though we have hit the proverbial “soft landing” and that we will probably not experience a recession of any sort at any time during 2008.

If you have any comments or suggestions regarding my analysis (updated and enhanced just today), it would be appreciated.

P.S.) A quantification of the wisdom of tax cuts is found here.

 
At 6/26/2008 9:09 PM, Anonymous OBloodyhell said...

> interesting that mr. buffet started his company, worked just as hard, and made most of his money, when marginal rates were high.

Not really. The fact that someone could do it does not lessen the fact that MANY MORE people could almost certainly do it with taxes lower, who might fail with higher taxes.

> The post is not a snide comment.
It is merely pointing out the obvious.

Hey! It's clearly not obvious to Mr. Clueless, there!

Don't hate, man, just 'cause he's incredibly dense!

It's not his fault he was born with a broken cluemeter!

:oP

> Please. Personally sending a check to the US government and advocating for a policy change with thousands of times more effect are too entirely different things.

Any economics professor ought to know that. I'm amazed you would even ask the question.


Oh, Please yourself. When you're the second or third richest man on the planet, your own behavior is relevant, especially when it speaks to hypocrisy.

You want to pay more in taxes, by all means, do so... No one and No thing is stopping you. Telling everyone else they should follow suit is bogus. Even if you're saying it to rich bastards.

> Why should we be punished just because we live life differently than he does?

Of course. Isn't that what liberal guilt is all about? Forcing everyone else to live to some arbitrary ethical standard defined by The Left (strangely, they often manage to have excuses why it should not and does not apply to them)

> pass themselves off as “journalists”?

Many, many decades of the Germanic System of Education, me boyo. We're about 40-60 years behind the Germans, but we're trying hard to catch up with the system that produced Gerbbles -- oops, sorry, "Goebbels" -- and the populace to listen seriously to him. See anonymous 12:07 above for a typical example. A 5-watt bulb in a 100-watt pack, Dr. Perry has to spell out his point for him.

 
At 6/26/2008 9:48 PM, Blogger SBVOR said...

This comment has been removed by the author.

 
At 6/27/2008 12:51 AM, Blogger SBVOR said...

“We're about 40-60 years behind the Germans, but we're trying hard to catch up with the system that produced Gerbbles -- oops, sorry, ‘Goebbels’ ”

Are we (40-60 years behind the Germans)?

 
At 6/27/2008 9:19 AM, Anonymous Anonymous said...

Buffett is a hypocrit on this issue. He structures his finances to minimize his taxes in the extreme. He need not even both to write a check to the government. He can simply ignore the tax consequences and make the best financial and economic decisions with his money. Shame on you, Mr. Buffett.

 
At 6/27/2008 9:56 AM, Blogger fpprof said...

Mr. Buffet gave away most of his wealth to a charity. Surely he doesn't believe that a charity could more effectively and efficiently use his money than the U.S. Government. Secondly, given most of the companies he owns are C- corps isn't his actual tax rate much higher than he is leading everyone to believe? Knowing his luck, he will die in 2010 and not pay a dime in estate taxes!

 
At 6/27/2008 10:01 AM, Blogger juandos said...

"I would think that followers of this blog would support the notion that we may all be better off with the money in his hands? Any comments on that?"...

Anyone who thinks giving the taxman more money than they already extort from the productive citizen is NOT someone I would trust to deliver the time of day let alone work with my money...


"Please. Personally sending a check to the US government and advocating for a policy change with thousands of times more effect are too entirely different things"...

Hmmm, apparently like Buffett the idea of the government extorting earned income from productive citizens and wasting on Constitutionally questionable nanny state programs ...rampant with waste & abuse isn't a problem for you either...

"Are we (40-60 years behind the Germans)?"

Well said!

Yeah, let's give the federal government more of our earnings...

I'm sure there isn't nearly enough PORK as far as those on the Hill are concerned...

 
At 6/27/2008 10:06 AM, Blogger Monkeydarts said...

Over the years I have sent that address and instruction to many liberal pals who advocate higher tax rates. Every single time they get angry. So, I had to laugh when I saw your very first comment. It probes at the real issue-- punishment for success. As for Buffett, his investment strategy is well-known. He is helped by anything that drives down entrepreneurial upstarts that would challenge the crusty, legacy companies he owns.

 
At 6/27/2008 12:07 PM, Blogger bobble said...

OBH:"The fact that someone could . .[get rich with higher tax rates] . . does not lessen the fact that MANY MORE people could almost certainly do it with taxes lower, who might fail with higher taxes."

i'm not against lower taxes, but i venture you "almost certainly" have no proof for that statement.

the *fact* is, no matter what the tax rate is, the amount raised remains the same, so if people are not paying any more taxes, what's the differance? soak the rich? not likely

 
At 6/27/2008 1:48 PM, Blogger SBVOR said...

Bobble sez:

“the *fact* is, no matter what the tax rate is, the amount raised remains the same”

Bobble has overstated his/her case. Tax at 100% and you get $0.00 revenue. Tax at 0% and you also get $0.00 revenue. It’s called the Laffer Curve.

But, yes, for at least the last 28 years, we have been on the wrong side of the Laffer Curve. We could probably lower the marginal tax rate even farther and still see a slight increase in revenues.

Bobble also asks “what’s the difference”. The answer to that question is incentive to earn produce and innovate. With higher taxes, the tax revenues remain the same largely because the entrepreneur who would otherwise have invented the next source of energy, made a fortune and paid a boat load of taxes decides there is not enough monetary incentive to bother trying. Those few who innovate anyway wind up paying the taxes the others would have (and then wondering why they bothered).

Bobble, every change in human behavior boils down to which incentives (perverse or otherwise) are created and which incentives (perverse or otherwise) are destroyed.

 
At 6/27/2008 2:34 PM, Blogger OBloodyHell said...

> Are we (40-60 years behind the Germans)?

Well, we aren't quite to the point of having actual Nazis, but there are uncomfortable signs that strike me as though we are a major economic disaster or other serious event from the possibility.

So that would put us at least 40-60 years behind the Germans, wouldn't it?

There are all too many people for whom "safety" matters more than liberty, so I consider it more possible than I'd like. The idea of a true American despotism (none of this faux-we-have-no-clue liberal crap ideas) is quite scary in its potential to put a bootheel on the neck of humanity, and the very difficult time we'd all have getting it off.

One reason that libtards are absolute idiots when it comes to guns, they simply can't grasp the amount of "fun" it would be reigning in a woefully perverted U.S. Military without them.

A Monarch's neck should always have a noose about it... It keeps him upright.
- Robert Heinlein, 'The Cat Who Walks Through Walls' -

In the USA, that noose is the individual right to bear arms.

"That can't happen here!?!" you say? Hey, the Germans went from the fairly benign Wiemar Republic to gassing Jews in under 20 years. I think that the people of the USA are pretty damned good stock, but they are no more angels than any other bunch, and can be led astray when desperate, like anyone else.

.

 
At 6/27/2008 2:51 PM, Blogger OBloodyHell said...

> the *fact* is, no matter what the tax rate is, the amount raised remains the same, so if people are not paying any more taxes, what's the differance?

Bobbie, I don't qualify as an expert on this, but my own readings suggest that, while the tax rate has limited effect on the income of the government, it does punish the successful when high. This means that people who are successful are not going to take risks to become even more successful. They're going to do something else with it... most likely move it to somewhere that they CAN be successful and not be punished for same. So people who might get good jobs and have a better life lose out for no valid reason.

One reason Ireland has so much foreign investment is that their government wisely adopted a "hands off" policy -- so that all the people in the high-tax states of Europe took their money to Ireland. The result has been a great deal of wealth and prosperity for the Irish. And economic stagnation for the high-tax states.

So, while I'm not exactly providing you proof, I believe if you research it, you will, indeed, find that more wealth is created for EVERYONE when taxes are lower (This, by the way, is one of the reasons cutting taxes DOES NOT cut government income -- the increase in taxable wealth offsets the lost revenue from lower taxes).

By my lights, anything that makes people as a whole richer is A Damned Good Idea. The richer we all are, the more we effort we can devote to doing things RIGHT rather than solely by cost-effectiveness. We can justify paying more money to generate power using more expensive low-sulphur coal, requiring costly scrubbers on smokestacks, etc., because those expenses are no longer taking away food we eat from our tables but cutting into other quality of life things we might spend the money on.

So we trade one quality of life thing for another, not a basic requirement of life for quality of life, the latter of which will usually lose out.

For all the whines about how awful pollution is here, I suggest you look into just how insanely bad it was in the centrally-controlled USSR. The USSR was responsible for Kyshtym, as well as Chernobyl, and turned the former Czechoslovakia into a dumping ground for all manner of toxic wastes.

Bad as corporations may be, they do respond to public input. Centralized government bureacracies IGNORE public input.

But I digress, somewhat...

.

 
At 6/27/2008 2:53 PM, Blogger bobble said...

thanks for the link sbvor. but i see nothing on that page that supports your main point:

"With higher taxes, the tax revenues remain the same largely because the entrepreneur who would otherwise have invented the next source of energy, made a fortune and paid a boat load of taxes decides there is not enough monetary incentive to bother trying."

for instance, gdp growth and business investment during the tax cutting bush43 years is less that that during the high tax clinton years. where are all the entrepreneurs? see charts 1 and 2

 
At 6/27/2008 3:41 PM, Blogger SBVOR said...

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At 6/27/2008 3:43 PM, Blogger SBVOR said...

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At 6/27/2008 3:48 PM, Blogger SBVOR said...

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At 6/27/2008 4:04 PM, Blogger SBVOR said...

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At 6/27/2008 4:08 PM, Blogger SBVOR said...

Bobble,

1) For those of us with enough life experience, some things are just intuitively obvious elements of Natural Law.

2) Any properly configured system will not visit any TinyURL links (such as yours). If you use, TinyURL, I’ll never see your links.

3) If GDP growth was slightly higher during the Clinton years, chalk it up to the single largest speculative bubble ever known to humanity (the dot.com bubble). Stock market gains factor into GDP. When, over a period of almost three years, those “funny money” gains turned into losses, that counterbalanced other gains in other areas of the economy under Bush.

P.S.) Yahoo NASDAQ charts were not working, so I found another option.

 
At 6/27/2008 6:35 PM, Anonymous Anonymous said...

The whole thing is a misunderstanding. He is not advocating taxing the wealthy, he is advocating taxing high incomes. Those are two very different things. Nobody has suggested taxing wealth yet, not even Obama.

 
At 6/27/2008 8:31 PM, Blogger SBVOR said...

Anonymous (6:35 PM),

It is a quantitative and historically verifiable fact that higher taxes on higher incomes does NOT produce higher tax revenues.

In fact, owing to the Laffer Curve, it produces slightly LOWER tax revenues. And, the harm done beyond that is, by FAR, the worst of it.

The only argument for raising the nominal tax rate (on higher incomes) is a purely emotional argument rooted in the Marxist doctrine of Class Warfare.

 
At 6/28/2008 7:23 AM, Blogger juandos said...

Good stuff sbvor!

Like the info on your site...

"The only argument for raising the nominal tax rate (on higher incomes) is a purely emotional argument rooted in the Marxist doctrine of Class Warfare."...

Yes!

Why punish the successful?

Its already well known that the rich PAY much more than their so called fair share...

 
At 6/28/2008 10:56 AM, Blogger Loren said...

I look at this as a simple comment of affordability. Buffett is saying that he and his cohort can reasonably afford to pay more taxes than the middle and lower taxes and I agree. Suggesting Buffett make the IRS a gift is silly as what he is referring to is the entire group of the super rich.

I do not believe that a few percent increase in taxes will change the behaviour of the super-rich or change their lifestyle in any way. They will continue to purchase luxury goods, most of which are not produced in the US, and to invest wherever they can get the highest return on their investment which at this point is largely offshore.

 
At 6/28/2008 11:32 AM, Blogger SBVOR said...

Juandos,

Thank you.

I find your contributions informative as well.

 
At 6/28/2008 7:46 PM, Blogger OBloodyHell said...

> do not believe that a few percent increase in taxes will change the behaviour of the super-rich or change their lifestyle in any way.

loren:
1) I'd like to see you cite any reference which justifies this assertion. It does not correllate with known data on that, most particularly the application of untaxed funds to risk income and to charities.
2) As alluded to in "1" above, there is a clear and undebated reduction in charitable giving when taxes go up. The government essentially steals a percentage of its income at the higher edges from moneys given to charities. The Rich feel that they have "already given more than enough" and the heck with the charities.
3) I have to say that I, personally, would be pretty POed if I was already paying for 90% of government, but people were whining that I'm not paying "my fair share". That's just flat out bovine feces.
4) As noted elsewhere, the moneys not given to the Fed are (if not donated to charity) applied to higher-risk investments (i.e., small companies), which create jobs and wealth, which all society benefits from. This is even more so with the "super rich", since they aren't going to spend all of it on consumer goods alone, but are more likely to invest a portion of it rather than to overtly spend it on "things".

 
At 6/28/2008 11:59 PM, Blogger SBVOR said...

When debating so-called “Liberals”, one must always bear this in mind:

“ 'It is my argument that American liberalism is a totalitarian political religion”

Source: Revealed, by Jonah Goldberg: the shocking links between the fascism of the 1930s and the liberalism of today

So-called “Liberals” almost always limit their points to what they “feel” and what they “believe”. In general, substantiation and quantification are not part of their creed.

Also see my post.

 
At 6/29/2008 12:30 PM, Blogger OBloodyHell said...

> So-called “Liberals” almost always limit their points to what they “feel” and what they “believe”. In general, substantiation and quantification are not part of their creed.

I concur with you, but trying to convince a liberal is never the rational I use when approaching a debate.

My philosphy on it goes something like this:

1) It's a mental exercise. Just as one needs to push your muscles, including aerobic exercise, so, too, do you need to exercise your reasoning faculties to keep them in good form

2) It's a check on my own notions. One tends to remember one's conclusions readily, but not the process in full which led to them. This process is relevant, because facts and knowledge do change with time. The notion that such and such was true may have been relevant to reaching the conclusion, but perhaps new knowledge or a new perception of the events surrounding that notion have changed, invalidating that notion and thus requiring the whole process to be reconsidered. "what you know gets stale". Reconsideration/redebate tosses out anything with mold on it.

3) A new viewpoint on your ideas is never a bad thing -- even if you choose not to fold it into that process to the conclusion, you can say that you have considered its relevancy. This is analogous to the idea of a "Reality Check" -- are your ideas/perceptions somehow warped by an incorrect viewpoint you have? By opening them up to this, you have at least some chance to reign in your own potential for foolishness (It's another reason why I bother to twit sophist. He might get a clue, no matter how unlikely).

4) While the idiot on the other side may not be amenable to reason, there are plenty of quiet lurkers who are actually seeking answers, and, by exposing your reasoning to them, you may lead them to, if not your own conlusions, then towards the "right" direction -- and it's not arrogant to presume/argue on the basis that your ideas are "right" -- only that they MUST be right and don't need constant testing (see above, ar ar).

After all, who the hell ever argues an opinion they think is wrong?

Unless you are playing Devil's Advocate (also of some value) you never would. There is, of course, some Socratic value in having a naysayer in any group. Another reason to treat sophist with some measure of seriousness.


So I write not for the inflexible liberal idiots who will never get its benefit, but for my own ongoing correction and clarity, and for those who may be open to the ideas I express or the facts I've encountered.

.

 
At 6/30/2008 1:23 AM, Blogger SBVOR said...

OBloodyHell,

I agree with you and would condense it to:

1) Know thine enemy

2) Test your evidence in the court of your enemy

3) Constantly refine your evidence to better challenge whatever totalitarian theocracy of The Left is presented in the court of the enemy

I’ve been doing precisely that over here. But, quite predictably, the only thing I ever get in return is the occasional utterly unsubstantiated assertion hiding within an overwhelming pile of ad hominem insults. But, lacking evidence, what else could the Dems turn to but smearing and slandering?

In the case of Mr. Reich, all we ever get is utterly unsubstantiated assertions.

When the enemy has a propaganda arm as powerful as the so-called Mainstream Media, their propaganda can be extremely difficult to overcome. We can present endless streams of solid, objective, quantitative evidence and they will still rely solely on the feelings generated by the media.

 
At 7/02/2008 10:31 PM, Anonymous Superheater said...

As far as I know, Buffett has enjoyed a unique investment record, and I presume that it attributable to a combination of his work ethic and acumen.

With that caveat, I see no reason to weigh his policy preferences above anybody else's. In fact, its just that- a preference and one without an objective and compelling social or economic justification.

It is not "snide" to suggest one lead by example, its a cardinal rule.

I've heard Buffett's opinion on taxes before. I don't care. I might give it some weight if he shut his moth and opened his checkbook.

 
At 7/04/2008 12:40 AM, Anonymous Neil Schipper said...

Warren Buffett: I think the super-rich should pay more and people in the middle-class and lower should pay less.

Mark Perry: There's nothing stopping Warren from implementing his own ideal tax code on himself right now.


Mark, two points:

1. Surely you appreciate the distinction between advocating a tweak to the shape of the rate vs. income curve (leaving net gov't inflow unchanged), and, taking on a personal competitive disadvantage vis a vis his direct competitors (other wealthy and sophisticated investors).

2. Isn't it "something like a law" of market economies that with ideally equitable starting conditions, extreme winners and losers will eventually emerge, and, that under certain conditions, this can pose enough of a threat to stability that imposed adjustments are warranted for the greater good? I'm not claiming that now is such a time, but isn't this a principle well understood by smart guys who study economics?

 
At 11/23/2008 5:09 PM, Anonymous Anonymous said...

Am I the only one who finds it a little suspicious that a billionaire businessman from the 4th most Republican state who had a Republican congressman as a father has become this huge proponet of high taxes? Really? The cornerstone of Buffets empire is competitive advantage. If taxes are high its like a moat around his wealth, no one else can touch him.

 

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