Saturday, August 29, 2015

Harvard prof: 'Buffett is wrong,' rich should pay less tax

Lower capital taxes would boost US investment, argues Jeffrey Miron

Harvard prof: 'Buffett is wrong,' rich should pay less tax

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Writes Harvard economist Jeffrey Miron at CNN here: "In a recent New York Times op-ed article, Warren Buffett asserts that the super-rich do not pay enough taxes... Buffett is wrong. Bad government policies play a major role in generating inappropriately high incomes, but singling out the super-rich is misguided...

 "Low tax rates on capital income is beneficial for the economy, including lower-income households... An efficient tax system should avoid taxing income, dividends and capital gains to promote savings, investment and growth. Tax rates on capital income should therefore be low or even zero. The U.S. is far from this ideal, especially given the high tax rate on corporate income and the additional taxation at the personal level.

"Buffet asserts that taxing capital income has never deterred anyone from investing. Well, then he has never discussed the issue with me or many of my friends... Tax-induced distortions in investment choices... reduce economic growth. High U.S. taxation on capital income drives investment overseas. So raising capital tax rates will not make the super-rich pay their 'fair' share; it will encourage capital flight, driving factories and innovation abroad. The rich will still get their high returns, but U.S. workers will have fewer jobs and lower wages."

What else should the US do? Says Miron: Stop bailing out New York banks and Detroit automakers -- and stop licensing barbers and doctors...

US interest rates are near historic lows, and still the economy is stalled. Will letting quacks do surgery bring back hiring and spending?
 Would lower taxes convince investors to spend, if low interest rates don't?

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PhillyDeals posts drafts, transcripts and updates of Joseph N. DiStefano's columns and stories about Philly-area business, which he's been writing since 1989.

DiStefano studied economics, history and a little engineering at Penn and taught writing at St. Joseph's. He has written thousands of columns and articles for the Inquirer, Bloomberg and other media, wrote the book Comcasted, and raised six children with his wife, who is a saint.

Reach Joseph N. at JoeD@phillynews.com, distefano251@gmail.com, 215.854.5194 or 302.652.2004.

Reach Joseph N. at JoeD@phillynews.com or 215 854 5194.

Joseph N. DiStefano
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