From the “Everything You Learned in Business School is Wrong” file …
Anybody who has taken a b-school finance course has learned to evaluate investments on an after-tax basis.
Right?
Well, apparently Warren Buffett thinks finance profs are spewing garbage.
In his recent “coddled” op-ed, Buffett said:
… the notion that high taxes discourage hiring and investment is false.
I have yet to see anyone … shy away from a sensible investment because of the tax rate on the potential gain.
People invest to make money, and potential taxes have never scared them off.
So, the Oracle of Omaha thinks pre-tax is the way to evaluate investments.
Really?
The Homa Files 
August 25, 2011 at 11:43 am |
Compared to the true “unknowns” of starting a business, I would agree with Buffett that taxes are relatively inconsequential.
Warren should have specified that a high enough shift upward would stifle business, but that no such increase is being suggested.
August 25, 2011 at 5:13 pm |
Agreed with TK. As a business owner, I base hiring off of need. Of course, we only have 15 people, and on a larger scale, I understand how it could be influential. With that said, however, I agree with Buffet in that a profitably investment is still a profitable investment. Wall St brokers may use tax rates to compare one investment to another (one state tax rate vs another, for example), but for the most part, 95% of all businesses use common sense. If we can make a buck on a product/service/investment, then we’re not going to pass it up.
Regardless, difficult to dismiss the wisdom of one of the richest men in the world! :)