QuestionerMy name is Patrick Byrne. I'm here today from Hanover, New Hampshire. What level of taxation on capital gains is most conducive to the long-term economic health of his society? And is that also the fair or just rate? Aristotle felt that systems worked better when they were generally perceived as fair. The civilization worked better if people saw the differences and rewards as having been fairly been fairly reasonably fair anyway. And I think that if you had a civilization where if you work 90 hours a week driving a taxi cab with no money, no medical insurance and so forth, and somebody else does nothing but own Berkshire Hathaway shares and sit on the country club porch and peel off a few every year to pay the bills, that would be regarded as so unfair that even if it had some theoretical economic efficiency, it would be counterproductive for our particular civilization to have that kind of a tax code.
CharlieSo I'm all for having some taxation of capital gains. Once you reach that conclusion, you get into the question of what is the fair rate? I think the fair rate might well be a little lower than it is now, but not much lower. And I thank Patrick actually for introducing me to a to a kind of a system of mental construct to attack questions like this. Patrick gave me the example one time, and I think this may go back to John Rawls at Harvard, but he said, just imagine that you were going to be born 24 hours from now and you had been granted this extraordinary power. You were given the right to determine the rules, the economic rules of the society that you are going to enter, and those rules were going to prevail for your lifetime and your children's lifetime and your grandchildren's lifetime. Now you've got this ability in this 24-hour period to make this decision as to the structure. But as in most of these genie-type questions, there's one hooker. You don't know whether you're going to be born black or white. You don't know whether you're going to be born male or female. You don't know whether you're going to be born male or female. you're going to be born bright or retarded. You don't know whether you're going to be born in firm or able-bodied. You don't know whether you're going to be born in the United States or Afghanistan. In other words, you're going to participate in 24 hours in what I call the ovarian lottery. It's the most important event in which you'll ever participate.
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WarrenIt's going to determine way more than what school you go to, how hard you work, all kinds of things. You're going to get one point. ball drawn out of a barrel that probably contains 5.7 billion balls now. And that's you. Now what kind of a society are you going to construct with that in prospect? Well, I suspect you would focus on two issues that Patrick mentioned in this question. You would try to figure out a system that is going to produce an abundant amount of goods and where that abundance is going to increase at a rapid rate during your lifetime and your children and your grandchildren, so they can live better than you do in aggregate, and the grandchildren can live better. So you'd want some system that turned out what people wanted and needed, and you'd want something to turn them out in increasing quantities for as far as the eye could see. But you would also want a system that while it did that, treated the people that did not win the ovarian lottery in a way that you would that you would want to be treated if you were in their position because a lot of people don't win the lottery. I probably come out with the idea that the capital gains tax is that just today is probably about right. So that's, that's, I see very few people, and I've been around a lot of people with money and talent over time. They don't always go together, but I've been around both classes. And the, I see very few of them that are turned off from using their talents by a 28% capital gains tax. It just doesn't happen.