I can think of a lot of things that America doesn't need. It doesn't need more partisanship. It doesn't need compromise to be second (or third or forth or fortieth) best in the world. It needs a consensus to be first! And it definitely doesn't need an "adult" in the room (I might scream if I hear that stupid, childish phrase again). I don't think that I'm in the minority in America when I say that I'm not looking for a Republican or for a Democrat, I'm looking for a leader. And here's what I'm looking for in a leader.
1. A leader takes responsibility -- If you become the captain of a ship, and the ship is sinking, there's no time to blame the old captain. There's no glory in watching the ship sink. It's your ship now. What are you going to do about it?
2. A leader leads by example -- If our leaders think we should be above partisanship, then they needs to be above it first. You can't say we need to work together in one breath and then attack the other side in the next.
3. A leader keeps people focused on the goal -- If the goal is to reduce unemployment, then calling the other party terrorists or socialists isn't getting us any closer. This works on both sides of the aisle.
4. A leader brings everybody along -- Leaders define a goal and move people toward it, gaining momentum along the way. When President Reagan finally implored Mr. Gorbachev to "tear down this wall" who could disagree? Now we have partisans who use a party line vote to get their way and complain when the other party does exactly the same thing.
5. A leader is a leader all the time -- You can't be a leader in your day job and be a partisan campaigner on the side. Leaders are authentic. I'm trying to find one.
6. A leader accepts wise counsel -- Leaders know that they don't know everything. Leaders surround themselves with people who can fill in their knowledge gaps. That usually means people with different points of view, not yes men (or women) who agree with everything they say.
If I were a betting man, I'd say the best leader will be the next president. President Obama, with his position, has the best chance of carrying the day. But he hasn't done it so far. He's 0 for 6 on my scale. Can he be a leader? Will somebody else step in to fill the leadership void? We'll all find out in a year or so.
Tuesday, August 23, 2011
Monday, August 15, 2011
Warren Buffet - Why Is He Hiding the Truth?
Warren Buffet, in an op-ed piece for the New York Times, advocates higher tax rates for super rich people like him. But in his lecture to our politicians, he seems to have mastered the political art of parsing his words to shroud the truth. He identified loopholes like "carried interest" or for stock index futures, but he doesn't advocate closing the loopholes. Why not? He includes payroll taxes which fund social security, knowing that everybody's contributions are capped at $106,800 but so are their future benefits. The fact that he pays a lower overall percentage is a red herring (and he knows it and intentionally leaves that part out).
He also says that he never saw anyone shy away from a sensible investment because of the tax rate. Of course, what he doesn't tell you is that the impact of taxes is always a factor in a smart investor's investment decisions. I can't believe that he made a single acquisition of a company without knowing, in detail, what the tax consequences would be. To imply that tax rates don't play a part in investment decisions is really disingenuous on his part.
Then, he shows some amazing statistics but highlights only the one that supports his weak argument. He notes that in 1992, the top 400 taxpayers paid 29.2% of the $16.9 billion they earned. By 2008, the top 400 paid only 21.5% of the $90.9 billion they earned. Wow, the rich people's tax rate went from 29.2% to 21.5%. What he doesn't tell you is that their tax bill increased from $4.9 billion to $19.5 billion - almost 4 times as much!! That's almost $49 million each and it's still not enough. What should it be? $100 million? $500 million? Would that be fair? Maybe we should let the people who pay nothing decide what is fair?
But the real point he ignores, but his own numbers prove, is that when tax rates go down on investment income, tax revenues go up. The reason is no more obvious than is seen over and over again with capital gains rates. Capital gains occur when you sell an investment for a profit. When tax rates are high, people tend not to sell their investments which delays both their gains and the government's tax revenues. When rates are low, people are more likely to sell their investments which produces both capital gains, tax revenue, and has the added benefit of allocating capital more efficiently. Mr. Buffett absolutely knows this, but he conveniently left it out of his argument.
I don't know what the motivations are for his Obama-style love affair with higher tax rates, but when he leaves out important details - details that an Oracle of Omaha would know by heart - you have to wonder what else he is hiding from you.
He also says that he never saw anyone shy away from a sensible investment because of the tax rate. Of course, what he doesn't tell you is that the impact of taxes is always a factor in a smart investor's investment decisions. I can't believe that he made a single acquisition of a company without knowing, in detail, what the tax consequences would be. To imply that tax rates don't play a part in investment decisions is really disingenuous on his part.
Then, he shows some amazing statistics but highlights only the one that supports his weak argument. He notes that in 1992, the top 400 taxpayers paid 29.2% of the $16.9 billion they earned. By 2008, the top 400 paid only 21.5% of the $90.9 billion they earned. Wow, the rich people's tax rate went from 29.2% to 21.5%. What he doesn't tell you is that their tax bill increased from $4.9 billion to $19.5 billion - almost 4 times as much!! That's almost $49 million each and it's still not enough. What should it be? $100 million? $500 million? Would that be fair? Maybe we should let the people who pay nothing decide what is fair?
But the real point he ignores, but his own numbers prove, is that when tax rates go down on investment income, tax revenues go up. The reason is no more obvious than is seen over and over again with capital gains rates. Capital gains occur when you sell an investment for a profit. When tax rates are high, people tend not to sell their investments which delays both their gains and the government's tax revenues. When rates are low, people are more likely to sell their investments which produces both capital gains, tax revenue, and has the added benefit of allocating capital more efficiently. Mr. Buffett absolutely knows this, but he conveniently left it out of his argument.
I don't know what the motivations are for his Obama-style love affair with higher tax rates, but when he leaves out important details - details that an Oracle of Omaha would know by heart - you have to wonder what else he is hiding from you.
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