Oracle of Omaha Warren Buffet, without question one of the most brilliant business people of all time, is getting a lot of attention for his New York Times op-ed begging the government to raise taxes on him and other billionaires and millionaires.
"While the poor and middle class fight for us in Afghanistan, and while most Americans struggle to make ends meet, we megarich continue to get our extraordinary tax breaks," Mr. Buffett wrote. "Some of us are investment managers who earn billions from our daily labors but are allowed to classify our income as 'carried interest,' thereby getting a bargain 15 percent tax rate."
Meanwhile, he notes, "It's a different story for the middle class" for those who aren't making money with money. "Typically," Mr. Buffett notes, "they fall into the 15 percent and 25 percent income tax brackets, and they are hit with heavy payroll taxes to boot."
Mr. Buffett calls for an immediate tax hike on the 400 Americans who made hundreds of millions as well as those who make over $1 million, or 236,883 households in 2009, he reports.
But perhaps Mr. Buffett might be interested in trying something else?
Now, it is clearly understood that an ink-stained wretch from Santa Rosa -- once referred to derisively by a New York acquaintance as a mere burg -- has little standing to recommend anything to the famed Mr. Buffett.
But here's the idea. Sure, Mr. Buffett can send more of his earnings through the filters of the federal bureaucracy if he wants.
But how about instead issuing shares in his famously successful Berkshire Hathaway Inc. -- which is invested in Geico auto insurance, Wal-Mart, a railroad and Costco, among others -- directly to every household in America? How about that for spreading the wealth around?
You're probably thinking I have lost my senses. Mr. Buffett's Berkshire Hathaway was trading at $105,000 a share (plus or minus) last week. A single share sent to every one of America's 117 million households would have a total value at last week's price of more than $12 trillion, enough to nearly wipe out the federal debt. But, of course, everyone knows that's not the way things work. Issuing 117 million shares would so dilute the value of current Berkshire stock to make it almost worthless. So this is a non-starter.
So, how about a fractional share of, say, one-tenth for those households? At a value of about $10,000, selling that share might save someone's home or pay for a year in college. Some others might hold on to it for retirement or to start a business.These are the kinds of activities that will build the economy.
Alas, this would be too dilutive of current shareholders as well to be practical. That's capitalism. But this is more about the principle: Do we send more dollars into government to be transferred to people or go about creating economic opportunities in the private sector for all individuals? Mr. Buffett has become rich doing just that. Besides, raising taxes on "billionaires" and "millionaires" never seems to stop with them. Current proposals target individuals and couples making over $200,000 to $250,000.