The Message

Lately I’ve seen any number of op-eds from the rich and the ultra-rich with notionally high-minded pleas to raise their taxes. Take this op-ed from Eli Broad in the New York Times:

Don’t get me wrong: I am not advocating an end to the capitalist system that’s yielded some of the greatest gains in prosperity and innovation in human history. I simply believe it’s time for those of us with great wealth to commit to reducing income inequality, starting with the demand to be taxed at a higher rate than everyone else.

This does not mean I support paying higher taxes without requiring government to be transparent, accountable and equitable about how it spends the revenue, particularly for health care, public education and other programs critical to social and economic mobility. But let’s end this tired argument that we must delay fixing structural inequities until our government is running as efficiently as the most profitable companies. That’s a convenient tactic employed to distract us from the real problems.

The apparent claim is that the only thing preventing his paying higher taxes is the marginal tax rates. That is arrant nonsense.

Let’s take Warren Buffett, for example. He’s already acknowledged that his effective tax rate is in the low double digits. That tells us that he’s taking every deduction and using every strategem at his disposal to reduce his tax burden. Paying more in taxes for him doesn’t require him to volunteer an extra check to the Treasury. All that is necessary is that he not take any deductions and take all of his income in the form of wages and his tax bill will be triple what it is now. The principle of time consistency tells us that if marginal tax rates are increased he’s likely to continue that practice. Additionally, I suspect that most people believe that Mr. Buffett’s ability to influence the tax code is greater than theirs.

So what’s the actual message being communicated? He’s saying “I want somebody else to pay more taxes”. That’s not high-minded at all.

11 comments… add one
  • steve Link

    Last week I suggested we needed a new Ultrasound machine. Everyone agreed. I didnt have to pay for it all by myself, we all pitched in. I am such a bum.

    I still have trouble with people, smart people, not understanding this. No one wants to be a chump. Basic human thinking. Change the rules so everyone pays more. No one wants to be the one person paying more than everyone else.


  • That’s the message? Raise the rates for everybody while the top .01% continues to pay less than 15%? If all they will pay is 15% with a top marginal rate of 39% they’ll be willing to pay more if the top marginal rate is 70%? I don’t think so.

  • steve Link

    No. Raise the rates and close the loopholes for everyone else in the top 0.01%. Why is this so hard to understand? He is willing to pay more, if we take him at his word, if everyone else in his group also pays more. Suppose you went to church and everyone in the church decided they needed air conditioning. Then because you were the one to initially bring up the idea it was expected that you would be the only one to pay for it. A- You would learn to keep your mouth shut. B- The church could never again buy anything.


  • The only way that would work would be to make all tax returns public record.

  • CuriousOnlooker Link

    There’s a difference between suggesting everyone pitch in and forcing everyone to pitch in, or forcing the richest 10 members of the church to pay.

    This post boils down to whether you view the op-ed as about giving or taxes.

    If it is about giving, then some would view the op-ed as virtuous, and some would say it is hypocritical (words without action).

    If it is about taxes, then the thing that matters is ROI. There’s no virtue or vice in obeying a legal obligation (as a taxpayer), or in changing the legal obligation (in raising taxes). Think about it, raising taxes to fund headstart makes sense, raising taxes to fund Congressional staffer payraises is the opposite.

    Mixing tax and collective charity is a cultural trait. As noted elsewhere, Lutherans and Scandinavians do it. Puritan-influenced culture like in New England also do it.

    So the op-ed generates different reactions (tax vs giving) depending on the cultural background of the reader.

  • jan Link

    I find rich people who call for more taxation on rich people to be more virtue-signaling than virtuous. There are so many avenues the ultra wealthy can go to help society — and many do that.

  • There’s a difference between suggesting everyone pitch in and forcing everyone to pitch in, or forcing the richest 10 members of the church to pay.

    I think these op-eds are telling us that they won’t do anything they’re not forced to do. It’s harder to apply force against the top .01% than it is against the top .1% than it is against the 1% than it is the top 10% which is how I think the dust of tax increases will settle.

  • Guarneri Link

    “Change the rules so everyone pays more.”

    LOL I hear there’s a Dem debate tonight. I won’t be watching but I’ll go out on a limb and predict not one of them proposes everyone paying more. Not one of them. As a matter of fact I think the taxes will be proposed only on the greedy, or people with horns and a reddish hue.

  • steve Link

    Everyone in the same income group. Context and reading skills. Learn them.

    Also, lets look at the other side, when conservatives say we should cut government spending, where are the conservatives who say they will give up Medicare, Social Security, etc? A conservative ought to be ale to say that with the idea that people would work towards reducing the size of government without their having to make some stupid token gesture. Again, no one wants to be the chump.


  • It will never and can never work the way you think unless tax returns are made public record.

    There are three distinct issues with respect to taxes: the rates, deductions, and how income is determined. Even if all deductions were zeroed out we’d still be left with income, the determination of income is inherently political, and the ultra-rich have far more ability to manipulate it than I do, certainly.

  • BTW I think we should be taxing compensation rather than income and that should be true for everybody from people working behind the counter at McDonalds to the CEO of Goldman-Sachs. The tremendous growth in income inequality IMO is a consequence of the enormous growth in non-income compensation.

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