As an economic adviser to Arnold Schwar-zenegger, investment guru Warren Buffett almost derailed the movie star's California gubernatorial campaign by calling for property tax increases. Schwarzenegger, who understood that the problem with the economy was too much taxing-and-spending, quickly distanced himself from the Buffett proposal and went on to be elected governor.
Well, now the sage of Omaha has returned to the subject of taxes. In his widely publicized annual report to Berkshire Hathaway shareholders, Buffett rails that President Bush's tax cuts are boosting the deficit, which is bad for the nation's economy. The way to curb the deficit is to cut spending, not raise taxes.
Were the Bush tax cuts permanent, Buffett's opposition to them wouldn't matter because there's little likelihood, even if a Democrat is elected president, that they'd be repealed. However, the tax cuts aren't permanent. By the decade's end, the tax load will return to what it was before Bush cut taxes, including the death tax.
Presumably Buffett, whose opinion carries a lot of weight in the financial and political communities, would be against making the tax cuts permanent. We think that would be a big mistake.
First, because the nation can't tax itself to prosperity. Second, taxpayers taking the hardest hit would be family farms and small businesses, making $200,000 or more a year.
That seems like a lot of money, but it's not if you're running a business or farm that uses its income to invest in new hires, equipment or both. Increase the tax burden, as Buffett seems to want, and it will stifle economic recovery.
Remember that it's small businesses, not huge corporations like Buffett's investment firm, that provide most of the employment in this nation. About 75 percent of jobholders work for small-to-medium size companies. The more they're taxed, the fewer jobs they'll provide.
We have a lot of respect for Buffett's investment savvy. He's not the second wealthiest man in the nation because he doesn't know what he's doing. But with his remarkable success, he may be losing touch with ordinary business people. Instead of knocking Bush's tax cuts, he ought to work to make them permanent.
Augusta Chronicle - March 13
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