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.