Photo: Jeffrey’s blog
Jeffrey Miron, the Director of Undergraduate Studies in the Department of Economics at Harvard University, rips apart Buffett’s op-ed about why the rich should pay higher taxes.In an op-ed in CNN, he writes that capital gains tax breaks (the ones that allow hedge fund managers to write-off most of their pay as an investment that only gets taxed 15%) “should be expanded, not eliminated.”
He gives three big reasons why Buffett’s tax proposal is a bad idea:
— More taxes hurts economic growth. “Economists broadly agree that an efficient tax system should avoid taxing income, dividends and capital gains to promote savings, investment and growth. Tax rates on capital income should therefore be low or even zero.”
— The number of super-rich is too small. “In 2009, the income earned by the 236,833 taxpayers with more than $1 million in adjusted gross income was about $727 billion. Imposing a 10% surcharge on this income would generate at most $73 billion in new revenue — only about 2% of federal spending. And $73 billion is optimistic; the super-rich will avoid or evade much of the surcharge.”
— It’s counterproductive. “The way to promote a hard-working, entrepreneurial and innovative society is to celebrate great wealth.”
Miron gives a couple of other reasons, like that there are other things that need solving first (like we should stop bailing out banks), but those are the main ones. Critics might argue that the U.S. still has some of the best taxes and investment opportunities in the world, and taxing them more won’t stop people from wanting to profit off of them.