Monday, August 15, 2011

Tim Worstall must be an "Intellectual Conservative" (!)

He's got a post today in Forbes critiquing Warren Buffet's opinion piece in which Buffet explains that his personal income taxes (and those of other ultra-rich folks) is effectively lower than most middle-income Americans and many poorer Americans.

Worstall says that Buffet's dividend income from stock is actually taxed twice - which is true - first at the corporate level, then at the capital gains tax, personal investor level.  But that's tortured logic.

For Worstall to apply double-taxation onto any person's effective tax rate, the following conditions would necessarily apply: all corporations must hand out dividends and the only people who feel pain from corporate taxes, are investors.

Let me explain: companies without a dividend would only have their profits taxed once -- at the corporate level -- resulting in instantaneous failure of his argument; likewise, if he wishes to assign corporate tax rates to an investor as a measure of pain that investors feel, then he cannot assign that same corporate tax to anyone else.

Well, Berkshire doesn't have a dividend.  And Worstall writes in a previous blog posting, that corporate taxes are an effective consumer tax.

And like I said previously...an "intellectual conservative" is actually an oxymoron.

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