(Note: I strongly believe that the Carried Interest provision needs to be fixed.)
Really? So his advocating taxing his income more so the fed can take more of his money is a PR stunt? And what kind of stunt is he actually trying to pull here? Enlighten us please as what his ulterior motive may be kind sir.
What kind of PR stunt?
IDK exactly what's driving him, but I think the following need to be weighed when listening to W Buffet:
1. Buffet has gone to great expense and efforts to structure his business so that he personally profits from the (true) loophole known as the Carried Interest Provision. This wasn't thrust upon him, he purposefully sought it out. I think he's gone so far with that he skirts the law and the IRS should pursue him.
2. Buffet has stepped forward with this stance only AFTER he does NOT need any more money. What's his personal sacrifice here? Heck, he's got so much money he's busy trying to give it away, he's got no real use for it.
3. Examine some of his comments closely. He's talking BS. E.g.,:
"I have worked with investors for 60 years and I have yet to see anyone - not even when capital gains rates were 39.9 percent in 1976-77 - shy away from a sensible investment because of the tax rate on the potential gain," he said
"People invest to make money, and potential taxes have never scared them off."
This statement appears to be crafted to give the impression Buffet assures us that tax rates have no influence on investments. That's utter BS. I think he knows it and has cleverly added a 'modifier' to cover himself.
Firstly, investments are, to a large extent, valued on their AFTER-tax RoR. You increase the tax rate, you devalue the investment. If this wasn't so we wouldn't have tax-free and double tax-free municipal bonds and bond funds.
There's also a large element of 'risk v reward' in considering investments. Higher taxes reduce the reward thus altering the balance between the two in the analysis.
Our tax law has been littered with tax incentives such as sec. 179 business expense, Investment Tax Credit, Green Energy Credits etc. All these have encouraged investors to take advantage of the tax benefits etc as intended by Congress. We've had people invest large sums is otherwise stupid tax shelters merely for the tax effects. To say that taxes don't affect investment is utterly and blatantly false.
(The 'modifier I referred to above was his curious and seemingly unnecessary inclusion of the adjective "sensible" in describing investments. Do we really need to be reminded that consideration of non-sensible investments shouldn't be considered? What makes these investments sensible? Why likely the consideration of the tax effect and whether they make sense on an after-tax basis. I.e., it's a circular logic-type statement that actually says nothing.)
His remarks are not beyond questioning. (And I say while remaining in strong agreement with him wtr to fixing the carried interest loophole.)
Fern
