Warren Buffet and Me

Warren Buffet is an evil man, and alas, a sycophantic Ben Stein doesn't seem to realize it. The latter's NYT op/ed promoted me to post this over at the American Scene:

I read Ben Stein's Op/Ed. He lost me here:

"[The rich] don’t pay a lot of taxes as a percentage of what they can afford to pay . . ."

What does that mean? Seriously, Ben Stein should know that "afford to pay" has little economic meaning. At best, when it is used colloquially, as in "I can't afford a new 'Vette," it means that my $60K provides better marginal utility when spent on other goods (house payment, good food, 401K, high-speed internet) than on a sports car. I can't imagine how the term applies to taxes, where my choices are to pay or go to jail.

Assuming that he isn't outright lying when he writes that "the rich" pay a lower average tax rate than their housekeepers, Stein is practically lying when he leaves out how he got that result: adding in Social Security contributions, also known as payroll taxes. True, the payroll tax only applies to earned income below $75K/year, so in that sense is steeply regressive. But since benefits are tied to contributions, "the rich" will receive no more benefits than "the poor" who make the same contributions.

So you wanna change that? Come clean and admit that the present Social Security system is nothing more than a transfer program that taxes young people to pay old people. Bush himself it last year, and we know how that turned out.

So Buffet's income presumably consists entirely of dividends and realized capital gains. As an investor, this gives him huge latitude in minimizing his taxable income long before he so much as looks at a 1040. But considering that corporations pay their stockholders dividends after they have paid corporate taxes, Buffet is, in effect, paying more taxes than he gives himself credit for.

But okay, I'm all for taxing the Buffets and the Gates of the world as much as we can without creating perverse incentives. But I am not in favor of raising taxes on people whose families scrimped and saved from modest incomes so that they could invest their way to a measure of prosperity. And I fear that this will be the result, and possibly the intent, of Buffet's advice.

Predictions

Jonah Goldberg on Trent Lott as the new minority whip. His thinking almost exactly mirrors my own, but I have a vague sense that Goldberg dislikes Lott more than I do.

Now that the Democrats have retaken Congress, herewith are my predictions:

1. This will be the do-nothing Congress. The Democrats will owe their victory to public dissatisfaction with the war in Iraq and a string of scandals bearing GOP fingerprints. Other than two excellent SCOTUS justices, the only accomplishments of the GOP in the last six years have been a flood of red ink and an unfunded border fence authorization. About these, the Democrats can do nothing substantive that they are likely to do. Their refrain is that the war is being "mismanaged," but they will not try to "defund" it in a way that will put their imprimatur on a policy of "cut and run." Nor will they weaken the iron triangle of K-street lobbyists, bureaucrats, and congressional staffers; after, their view is that there are no bad processes, only bad Republicans.

2. The name of the game will be avoiding responsibility. Other than, say, human cloning, the Democrats will not launch any bold new initiatives. There is no mandate for them, and they know it. Instead, we will watch them consign any conservative initiatives to subcommittee hell, as one pundit put it. The border fence will not be funded and will not be constructed. Appelate court nominees will not receive hearings, nor votes. The Child Custody Protection Act will disappear from the Congressional calendar. But the flip side of this is that there will be no new gun control laws passed. (The Dems learned this lesson in '94.) Kyoto will not be implemented. Healthcare will not be further nationalized. And, if I may go way out on a limb, the President will probably NOT be impeached.

3. So what CAN we expect from a Democrat congress? Its primary function will be to harass the executive with endless hearings and subpoenas, all in an effort to embarrass the president. They will conjure "scandals" at every move the President makes. His every enforcement of the law will be portrayed as its violation. Every military and covert operation will generate its own set of hearings. Every effort to defend America's security will be criticised.

4. Congressional Republicans may recover their soul, but the odds are, at best, 50/50. They can't criticize the war without making themselves and their party even weaker. They can criticise runaway spending, but unless Bush, who has never shown the least resistance to it after six years, joins them in their criticism, this, too, only serves to highlight the party's disarray.

Link Love VII

John Derbyshire reviews Mark Steyn's America Alone.

Via Ross Douthat, John Derbyshire on religion and society.

Ross Douthat on Saddam's death sentence.

Frederick Turner rebuts arguments against God. A good read, but I think he may overstate Hume's case against the efficacy of empirical evidence (which I have not read but will accept Turner's account of it). Whatever stochasticity in the evidence collected, we can and do make causal inferences from it when the evidence is from designed and controlled experiment. But otherwise, many good points.

I comment on a post on the minimum wage over at Half Sigma. I know: shameless self promotion.