A Ph.D. Economist Continues to Abandon Critical Thought in Favor of Bashing Warren Buffett
or “I Challenge Mark Perry to Put His Money Where His Mouth Is.”
In his Carpe Diem blog, Mark Perry has been among the most vociferous critics of Warren Buffett in recent weeks. He started off with the common first line of attack: Buffett had to be wrong since average effective tax rates are progressive up to the top 1%. Perry didn’t bother to investigate rates within the top 1%, where progressivity breaks down due to the 15% tax rate on capital income. He also quickly pulled out the “well if you’re in favor of higher taxes, nobody’s stopping you from paying extra” pseudo-argument.
You see, if you’re not wealthy and you advocate a return to historically average tax rates on the wealthy, you’re engaging in envy-driven class warfare. But if you are wealthy and you advocate a return to historically average tax rates on the wealthy, you’re a hypocrite for not volunteering to pay higher taxes. Forget fact-based arguments – these folks can’t get past their ad hominems.
A couple of days later, Perry discovered the $10M+ taxpayer data. Here, his argument changes to this: even if we took every dollar earned by those making more than $10M, we wouldn’t make much headway in our budget mess. This would be a great argument, if anybody was arguing that all problems would be solved by taxing the top 1% or the top 0.1%.
Then Perry laid an egg by arguing that “it must be all of his itemized deductions (e.g. charitable, etc.) that reduce Buffett’s income tax rate to only 17.4% on about $40 million income last year,” apparently not considering (or knowing) that capital gains and dividends are taxed at a maximum of 15%.
Then, perhaps chastened by a realization that he had made such an egregious error, Perry stopped posting about Buffett. Until Obama’s “Buffett Rule” speech, that is. Then he put all of his best attacks together – data be damned. “The U.S. federal income tax system is highly progressive,” wrote Perry, just after showing in a table that the effective income tax rate for taxpayers with income between $5M-$10M is lower than those with incomes between $1M and $5M, and that the effective rate of those making more than $10M is lower than those making between $500K and $1M (as well as between $1M and $10M). Perhaps this link would help here.
In his posting, Perry finished with something that made sense: “Instead of raising tax rates, we should probably figure out what kind of loopholes allow Warren Buffet to pay taxes of only 17.4% on his $40 million income last year.” This is completely logical and actually is a pretty good argument for a Buffett Rule, which seems likely to end up being some sort of upper-AMT.
So, of course, Perry excised it. It no longer appears in his post. But by removing this statement, Perry’s shown that he’s seen the logic of Buffett’s argument.
Over the next couple of days Perry cited various media sources which took issue with Buffett’s claims. Unfortunately, he didn’t bother to think critically about any of them. As long as it argued against Buffett, Perry trumpeted it on his blog. The fact of the matter is that every one of the analyses he cited had problems that prevented them from reaching the correct conclusion: nothing in Buffett’s op-ed was factually incorrect.
After pulling up the “why doesn’t Buffett just pay more if he thinks that’s fair” nonsense, Perry indicates that he’s figured out that capital’s taxed at 15%, but still can’t figure out how Buffett’s figures could possibly be accurate. So he accuses Buffett of misrepresentation and distortion. Most recently, Perry’s grabbed a criticism from Nick Kasprak at The Tax Foundation. He so enamored of this particular criticism that he’s embedded Kasprak’s calculator into the Carpe Diem blog, and ended the post like this: “Bottom Line: An effective tax rate of 41% is impossible.”
So I posted on his blog, and I repost here:
Enough is enough, Mr. Perry.
I’ll bet you that the figures stated in Buffett’s op-ed are easily possible. How large a wager is enough to make it worth your while? We’re both in the D.C. area – I’m sure we could get one of the members of the George Mason faculty to hold the money.