Why Warren Buffett and Mark Cuban are Old Farts With Too Much Money
on April 10th, 2012 at 10:36 AMWarren Buffett, Mark Cuban, and even Bill Gates, Sr. have all come out in favor of higher taxes for the rich. The first two have even called it a patriotic duty of wealthy Americans to pay more taxes.
That is the biggest crock of stewed d00die I’ve heard in ages. The most patriotic thing either one of them could do would be to start another company that hires hardworking Americans and makes a boatload of money and returns it to the employees in the form of stock or stock options.
If they’re too tired to do that, then invest in venture capital funds that will do that for them.
Clearly, these these three billionaires have forgotten what it is like to actually run a small business. Typically, small business owners go into a considerable amount of personal debt to get things off the ground. We don’t all get millions in venture capital. In fact, VCs won’t even talk to most small business owners–if a business doesn’t have the potential of returning 10x the VCs investment, they’re not interested. So mom and pop’s grocery store or even their son’s software consultancy is going to get zilch that way. So they do what most American small business owners do: They self-finance, by hook, crook, second mortgage, credit cards, and the skin of their teeth.
Back in our hometown, if that business takes off like crazy, if things go the direction of “taxing the rich”, the lucky business owner might actually find himself subject to the now-infamous “Buffett Rule”. So instead of paying off that aforementioned debt, he has to carry it longer and give Uncle Barack his new share.
Now imagine another recession hits. Receipts plummet and the business owner has no cushion. In fact, it is just the opposite: He’s still carrying a lot of more of that debt then he meant to. He has no money, no more available credit (since in a recession banks get so tight they squeak), and has no choice but to lay off workers.
In the worst case, the company goes out of business. I have been there and done that; I know what I’m talking about and have experienced it firsthand.
So here’s the bottom line: Higher taxes cost jobs. Now you know why.
The only way I could support higher taxes on the “rich” is if congress reinstitutes some sort of income averaging. There is a huge difference between a small business owner who has one really good year and Warren Buffett, who has made millions every year for half a century. Even if they each make the same amount of money, it is neither fair nor smart economics to tax them equally. Income averaging was around in the early 80s and I wish it still was.
Even so, I don’t think congress should be allowed to increase revenues through tax increases without matching it dollar for dollar with cost reductions. They are out of control.

