Headlines that make you go, hmmm….

#1: A local NBC affiliate reports: Zuckerberg Joins Buffett, Asks for Higher Taxes

#2: Forbes magazine reports: How Facebook Billionaires Dodge Mega-Millions In Taxes

From the Forbes article:

Facebook billionaire cofounders Mark Zuckerberg and Dustin Moskovitz are both 27, unmarried and have no children we know of. Yet back in 2008 they both set up grantor retained annuity trusts (GRATs) that we estimate will allow them to transfer a total of at least $185 million of wealth to future offspring or others, gift tax free. That compares to a supposed gift-tax exemption of just $1 million in 2008 and $5.12 million today.

Granted, Zuckerberg may not have had his tax epiphany yet in 2008. I’m assuming he’s moving swiftly now to dissolve this tax dodge trust.

#3: Buffett writes: Stop Coddling the Super Rich in the New York Times about how the super wealthy should pay more in taxes, inspiring Obama’s Buffett rule proposal.

#4: Reuters reports: Government sues Buffett’s NetJets Unit for Unpaid Taxes

I have no problem with folks legally minimizing their tax bill.

I do have a problem when these same folks get the positive glow from voicing their opinion that their tax bill should be higher, without putting their money where their mouths are.

Of course, what really annoys me about this thread is that the whole thing is a giant red herring that misses the key issue: government spending.

Let’s say we do raise taxes on the super rich or that Buffett and Zuckerberg stop talking out of both sides of their mouths and decide to voluntarily pay more in taxes. Let’s go even further and assume that either of these efforts actually increase government revenue.

Which result do you think is likely?

A. Government maintains spending, so the extra revenue reduces the deficit.

B. Government increases spending, so the extra revenue leads to more government spending and does not reduce the deficit.

I would appreciate anyone who believes (A) is likely to provide evidence. Do we have any experience where higher government revenues were not accompanied by higher spending over a 2 – 5 year period?

I’d like to know which Buffett and Zuckerberg thinks is likely or if they’ve even given it much thought. If not, then they could do all us all a favor by 1) thinking about it and 2) using their voices to shine light on the real issue: government spending.


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