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Here are the ways which Buffetts proposal works, but also how it doesnt.
If 800 other companies matched Berkshire Hathaways federal taxes, the government would receive approximately $4 trillion.
The federal government collected $4.5 trillion from taxpayers in fiscal 2023.
Buffetts proposal results in a $500 billion gap.
Those 800 companies would have to pay roughly $5.6 billion each in federal taxes.
Its also important to note that Costco is the 17th largest corporation in the S&P 500.
Moving further down the list, PayPal is the S&P 500s 114th largest holding.
The fintech company generated $4.25 billion in fiscal 2023.
Buffetts proposal still results in a higher corporate tax that would reduce the financial burden on consumers.
In theory, higher corporate taxes work.
During her campaign, Vice President Harris proposed raising the corporate tax rate from 21% to 28%.
Doing so would increase the governments revenue from corporate taxes by 33%.
Then, the government could reduce federal income taxes due to the boost from corporations.
Some corporations will go overseas to pay a lower tax rate on their profits.
A higher corporate tax rate can lead to more inflation, which is a silent tax.
In addition, smaller companies may struggle with the elevated corporate tax rate and go out of business.
A high corporate tax rate can stifle businesses in the U.S. and result infewer entrepreneurs.
Last year, the federal government spent $658 billion on interest payments thats a 38% year-over-year increase.
Even if the growth rate decelerates, its still a significant portion of total spending.
Buffetts proposal also falsely assumes that $4.5 trillion is enough to cover government spending.
Thats a $1.7 trillion deficit in fiscal 2023, which further compounds the existing debt.
It could be argued that it doesnt matter how much money you give to someone who is financially responsible.
If you give a gambler more money, the gambler will gamble more money instead of saving it.
The same principle applies to the federal government.
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