Tuesday, August 16, 2011

The Oracle Speaks The Truth

We spent some time digging through the news debating what should be the subject of today's commentary in part because - as we mentioned yesterday - August is a slow month. Yes, we could have re-hashed the Iowa Straw poll again - but we think the real winner of that poll is pretty clear, and there's little need to dig through that mess again.

The topic that kept catching our attention today was a message we've delivered before, one that Warren Buffett put so succinctly on Monday in his New York Times editorial, that we were almost loathe to focus on it again in the wake of his writing.

Buffett's message was as direct as the title of his piece - that our government needs to stop coddling the rich in this country, and collect from them the taxes they've been avoiding for too long. It's time for them to quit playing the tax system against itself and pay their fair share.

Mr. Buffett makes no bones about the fact that taxes for the wealthy must go up, if the future of America is going to be saved. He said that the debt & budget committee that has been set up in Congress for this fall needs to "turn to the issue of revenues" if we're going to deal with our national fiscal problems in a mature way.

He also says that those who earn more should pay more, a direct description of a progressive tax system, something we've advocated for years.

It's gratifying to see that a person like Warren Buffett, who always thoroughly walks his thoughts to their conclusions, agrees with our own conclusions on this matter.

President Obama also agrees with the concept of progressive taxation, a fact we've known for some time. Admittedly, that's been why we've been somewhat frustrated with the President's actions on tax policy over the last two years. He's compromised again and again with Republicans whose political party is currently gripped by illogical fanaticism, who seem to think that a world where no one pays taxes is a completely realistic thing.

The facts have always said otherwise.

As Supreme Court Justice Oliver Wendell Homes said, "Taxes are the price we pay for a civilized society." That mathematics and facts also support the idea of a progressive tax, with little to no loopholes, and higher rates for those at the top of the income scale, is something we were pleased to see being released in a recent academic paper, as pointed out by journalist and economic policy wonk Matthew Yglesias.

In short, the concept of trickle-down economics doesn't work in an open economic system. It never has. The idea that capital investment flows like water to the place with the lowest cost and the highest return is what applied macro-economic capitalism is all about. If you build - or in the case of America currently, allow - a system with a ton of holes in it, it's like trying to haul a sieve full of water from a well. If you expect to quench the economic thirst of your nation using a tool like that, you will never be anything other than disappointed.

We get it. President Obama gets it. And even the Oracle of Omaha - never one to be a wild-eyed fiscal liberal - gets it.

It's time - long past time, actually - to accept the fact that some folks on the American political right will never "get" this idea, not because it's not possible for them understand, but because they choose not to.

It's time to accept the fact: there is no needle in that haystack.

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