The Buffett Tax

http://blogs.wsj.com/wealth/2011/10/27/most-millionaires-support-warren-buffetts-tax-on-the-rich/

The “Buffet” Tax

Consistent with the “Occupy movement”, Warren Buffett agrees that the government should impose higher tax rates on the rich, or, the top 1% like him. Besides Buffet, there are also voices supporting the “rich tax” across the country. This can be explained by the theory we learned from class. When tax rate increases for the top bracket, the person with higher income is required to pay more. The increased tax revenue would create a larger pool of fund for wealth redistribution. So, the lower income people would have more gains from the redistribution of wealth through various subsidies and transfers. Given the high income inequality of the country, it is expected that most people would be benefited from the “Buffett tax”; therefore, if there is a voting on the implement of the “Buffett tax”, we would expect it to pass.

Majority of the supporters of the “rich tax” would not be the rich (except the few like Buffett), but those who oppose the new tax policy may not be necessary the rich. In this article, an interviewee said, “I think theoretically it would be good for this country and put some more money in the coffers, personally it wouldn’t be good for my family so I’m kind of at conflict between self interest and what might be good for the country.” This indicates that people have doubts on government’s ability to redistribute wealth efficiently to those who need it. So, there are other considerations besides the pure economic rationales that affect the wealth redistribution in U.S.