Buffett and Taxes

Good for Warren Buffett for stirring up the debate on tax policy and it's effects on our economy.

Do higher tax rates affect the behavior of the wealthiest Americans?  First, we have to determine who is wealthy.  Comparing those making $200,000 with Warren Buffett is a stretch, but for arguments sake, let's stick with the Buffett billionaire universe.  

I believe him when he states that imposing higher taxes on him, would not change his behavior.  He would still take risks with his capital to create more wealth, and this would accrue to the economy.  But is he in the majority of his small universe?  If he is in the minority, then his universe's behavior would change to the detriment of the economy.  If we broaden the scope to those making $200,000, what would be that ratio?  In a perfect world, we could determine the most effective marginal tax rate.  It would be a rate that generates the maximum amount of tax revenues without siphoning away incentives to work hard, save, and take risks.

Mr. Buffet ( Berkshire Hathaway) recently invested $5 billion in Bank of America.  Because of who he is, he was able to make a unique investment not available to you or me.  He purchased preferred stock that yields 6%, and that 6% is 70% tax free.  That makes a sweet 11% taxable equivalent.  INTERESTING!

Wouldn't you think that instead of campaigning for Obama, he should be an advocate for tax reform?  It seems to me that leveling the tax code field is one great "job creating" idea.