Monday, May 5, 2014
How Government Interference Hurts The Economy
One example from a WSJ editorial today.
"'I will do anything that is basically covered by the law to reduce Berkshire's tax rate," (Warren Buffett) said. "For example, on wind energy, we get a tax credit if we build a lot of wind farms. That's the only reason to build them. They don't make sense without the tax credit.'
Think about that one. Mr. Buffett says it makes no economic sense to build wind farms without a tax credit, which he gladly uses to reduce his company's tax payments to the Treasury. So political favors for the wind industry induce a leading U.S. company to misallocate its scarce investment dollars for an uneconomic purpose. Berkshire and its billionaire shareholder get a tax break and the feds get less revenue, which must be made up by raising tax rates on millions of other Americans who are much less well-heeled than Mr. Buffett.
This is precisely the kind of tax favoritism for the wealthy that Mr. Romney's tax reform would have reduced, and that other tax reformers want to stop. Too bad Mr. Buffett didn't share this rule with voters in 2012."