In a New York Times editorial published today, Warren Buffett is back up on his high horse lecturing the great unwashed about how he and his super rich buddies should be paying higher taxes.  It’s outrageous, he pontificates, that his effective tax rate is substantially lower than that of those pulling down a small fraction of his enormous income.  I know, I know, you’ve seen this movie before.  Ole Warren relishes the opportunity to do this roughly every six months or so to demonstrate to his effete friends that he is not only a swell guy, but the undisputed king of the oh-so-enlightened Left. 

The implication, of course, is that our financial woes would largely go by the wayside if he and his uber-wealthy friends would simply be required to kick in a little more.  What a patriot.

Unfortunately, there’s a fly in the snake oil that Buffett is selling.  But, if you’re going to be Obama’s top economic b*tch in the private sector, I guess that’s how the game is played.

You see folks, the numbers just don’t add up.  The feckless, lapdog mainstream media won’t tell you this.  They’re out spreading the Buffet gospel as proof that there is little/no need to veer off the social democracy path Obama and his acolytes have placed us on.  We can fund all their Utopian ideals on the backs of the “wealthy.”

Sorry.  Wrong.

Here’s the part where fiscally liberal eyes glaze over.  The facts are just so troublesome to the quixotic.

In 2008, the federal government collected roughly (before refunds) $1.175 trillion from individuals and couples filing jointly.  The top 1% (those making over $380,000), accounted for 38% of the $1.175 trillion total.  If their tax rate was raised to 100%—that’s right; if the top 1% paid every cent of what they earned—the government would only collect an additional $938 billion.  That’s about 56% of this year’s Obama deficit.  That assumes, absurdly I might add, that the top 1% would be motivated to earn at the same clip even though they’d be required to give it all to the government.

Furthermore, the amount collected would be even more insignificant given that Buffett is suggesting higher taxes “just” for those making over $1 million and $10 million, rather than the $380,000 threshold represented by the top 1%.

Still think it’s not a spending problem?

Shamefully, Buffett, Obama, the mainstream media, and the professional Left continue to inflict this canard on the masses—people who generally don’t have the time, inclination, or wherewithal to dig up the facts.

Their shamelessness doesn’t stop there.  They also tell us that job creation was strong and deficits were lower during the Kennedy and Clinton administrations when taxes were higher.  Again, they rely on specious arguments targeted at an economically ignorant general populace.  They neglect to point out that Kennedy dramatically decreased taxes, making them substantially lower than those of competing economic powers (i.e.  England and other Western European countries); thereby attracting capital and stimulating growth. 

With respect to Clinton, they fail to acknowledge that he benefited from three of the largest bubbles (Internet, Telecom, and Y2K) in the history of the world, and more importantly, that globalization had yet to fully take flight—so the options for deploying risk capital were still ostensibly limited to the United States and a few other not-so-enticing countries.

Finally, they don’t comprehend that investment capital is taxed at a lower rate than incomes because it is at risk—meaning it can go down…all the way to zero in some cases.  If we don’t properly incent people to take the chances necessary to grow our economy and create jobs, where would we be as a nation, and what kind of social safety net could we possibly provide?

Today, geo-political/economic demographics are dramatically different.  There are a myriad of global alternatives insofar as the deployment of investment/risk capital is concerned.  What fiscal liberals consistently fail to understand is the mobility of money in a global economy.  One can simply look within our own country to see that dollars flow to where they are treated most favorably (e.g. businesses, as well as hundreds and thousands of mega and not-so-mega rich moving out of high tax states like NY, NJ, and CA to the sun belt states that offer a much, much lower tax burden).

If the media were not slanted, the real story resulting from Buffett’s Op-Ed would be the need for the type of tax reform I’ve been advocating—a two tier “flat” tax with rates of 10% and 25% (exempting the first $40,000 of income) that eliminates all deductions (with the possible exception of charity).  Such a structure would greatly simplify the system, substantially broaden the base, and be a boon to growth. 

And, it would increase Warren Buffett’s  17.4% effective tax rate to 25%.  A win-win.

Of course, Warren, if that doesn’t work for you, just cut a check…and make it out to ‘Cash.’