Warren Buffett: Higher Taxes Don’t Reduce Economic Output

In a recent interview with Charlie Rose, living legend Warren Buffett shot down the Republicans’ idea that a higher tax rate would lead to slower economic growth. Read for yourself:

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ROSE: The argument is sometimes made by people who believe that it is always good economic policy to reduce taxes that if, in fact, you reduce taxes you will create economic expansion and economic growth.  People will go out and create jobs if they’re not paying as much taxes.  People if they’re paying a higher tax will not make as many investments.

BUFFETT: Well, I worked with investors for 60 years, small ones, large ones, super large ones. I have yet– and I’ve worked with capital gains rates of 39.9 percent and 36 percent and 25 percent, I have yet to hear one person say to me, “If I call you in the middle of the night Charlie and I say Charlie I’ve got this hot investment idea.”  Your reaction is not to say “No matter what the tax rate, forget it, I’m going back to sleep because the capital gains rates are too high.”  No, what you’re going to do is you’re going to say, “Tell me the name, quick, Warren, before you change your mind.”  And you know, I have never had one person decline to invest with me. And I was running money 40, 50 years ago when rates were much higher and I never had one person to show the slightest reluctance to take an investment idea and run with it.