I wasn’t going to write anything about failed President Barack Obama’s Class Warfare “Buffett Rule” and the other components of his $1,500,000,000,000 tax hike proposal because the proposal has nothing to do with reality and wasn’t proposed to pass. It was proposed to campaign on, and I’m not interested in promoting Obama’s campaign talking points.
But over the course of the day I have seen Democrat after Democrat (most recently far-left Maryland Congressman Chris Van Hollen) on television asking hosts why money earned by people going to a job should be taxed at a different rate than money earned through investing. I don’t remember one host, even the conservative ones, answering.
The reason why money earned through Capital Gains and dividends should be taxed less than money earned through a paycheck is that there’s no financial risk involved in earning a paycheck. You don’t go to a business owner’s shop every day, punch in, and then worry whether you’re going to earn or lose money that day. The business owner does, though. The business owner and investor puts his money out there, stimulating economic activity by the way, and in exchange for the risk involved in investing his money with an unknown outcome, the money he actually manages to make is taxed at a lower rate.
We want to encourage financial investment, because that’s how economies grow. That’s how innovation gets done. In a perfect world, an actual free-market economy, the government isn’t a venture capitalist. Actual venture capitalists fill that role.
So, no, money that Warren Buffet or any other investor makes through investing shouldn’t be taxed the same as paycheck income. It should, in fact, be taxed at zero, and the government should write thank you notes to large investors thanking them for stimulating the economy when nothing the government tries can manage to.
I should also highlight the point about the so-called “Buffett Rule” that Dennis Kneale made on Monday night’s Greta Van Susteren show, because it is a good one. Using Buffett, who has $50 billion, as the gateway to taxing millionaires, who make $1 million, is in itself class warfare. To paraphrase Kneale: Who in the hell is Buffet to say what a millionaire should be taxed? It would take you 50,000 years making $1 million a year to equal Warren Buffett’s money. Being Warren Buffet is not the same as being a millionaire.