TaxProf Blog

Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Sunday, September 22, 2013

Warren Buffett Shrugged: Tax Policy, Ayn Rand, and the 1%

Atlas ShruggedForbes:  Give Back? Yes, It's Time for the 99% to Give Back to the 1%, by Harry Binswanger:

[T]he 99% get far more benefit from the 1% than vice-versa. Ayn Rand developed the idea of “the pyramid of ability,” which John Galt sets forth in Atlas Shrugged. ... For their enormous contributions to our standard of living, the high-earners should be thanked and publicly honored. We are in their debt.

Here’s a modest proposal. Anyone who earns a million dollars or more should be exempt from all income taxes. Yes, it’s too little. And the real issue is not financial, but moral. So to augment the tax-exemption, in an annual public ceremony, the year’s top earner should be awarded the Congressional Medal of Honor.

Imagine the effect on our culture, particularly on the young, if the kind of fame and adulation bathing Lady Gaga attached to the more notable achievements of say, Warren Buffett. Or if the moral praise showered on Mother Teresa went to someone like Lloyd Blankfein, who, in guiding Goldman Sachs toward billions in profits, has done infinitely more for mankind. (Since profit is the market value of the product minus the market value of factors used, profit represents the value created.)

Instead, we live in a culture where Goldman Sachs is smeared as “a great vampire squid wrapped around the face of humanity.” That’s for the sin of successful investing, channeling savings to their most productive uses, instead of wasting them on government boondoggles like Solyndra and bridges to nowhere.

There is indeed a vampire squid wrapped around the face of humanity: the IRS. And, at a deeper level, it is the monstrous perversion of justice that makes the IRS possible: an envy-ridden moral code that damns success, profit, and earning money in voluntary exchange.

An end must be put to the inhuman practice of draining the productive to subsidize the unproductive. An end must be put to the primordial notion that one’s life belongs to the tribe, to “the community,” and that the superlative wealth-creators must do penance for the sin of creating value.

And Ayn Rand is just the lady who can do it.

(Hat Tip: Kyle McEntee.)

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Obvious troll, is obvious. Those poor millionaires not getting any of the benefits of food stamps - How do they even live without hot pockets and purple sugar water... and public housing! wow, man, it sure must be lonely in the acres of space with no neighbors... to bad they do not get the enjoyable experience of project housing... man, how do they even get by?

Posted by: Nick | Sep 23, 2013 7:39:20 AM

"Draining" the productive? Really Mr. Binswanger? Oh my.

Posted by: Publius Novus | Sep 23, 2013 7:46:53 AM

Out of respect for Forbes, I read this as subtle satire rather than juvenile drivel. It brings to light a deeply rooted notion: that wealth, in and of itself, is a sign of virtue. We can trace it back to the stern Puritans on the Mayflower, with an admixture of 1880’s Social Darwinism – think of it as “Survival of the Chosen-est”.

Counterexamples are easy. Should we glorify the profits of the bank robber, or is there some hidden sieve that tests for “moral” earnings? Why are there no children in Ayn Rand’s world of pyramids? Is virtue inherited in the same manner as wealth? And while taxes are, at best, necessary evils, how else to pay those who teach us to appreciate satire such as Mr. Binswanger’s?

Posted by: Gwailo | Sep 23, 2013 2:09:01 PM