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Is Warren Buffett the New Andrew Mellon? Not Quite

Author: Amity Shlaes, Former Hayek Senior Fellow for Political Economy
September 26, 2011
Bloomberg.com

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Andrew Mellon would back it. That's the recent analysis of the "Buffett Rule," a plan to reform the tax law that would require top earners, including those who make much of their money from investments, to pay the same percentage of their earnings as those in the middle class do.

The rule was suggested by Warren E. Buffett, the chief executive officer of Berkshire Hathaway Inc., this summer in an op-ed in the New York Times. "My friends and I have been coddled long enough by a billionaire-friendly Congress," the so-called Oracle of Omaha wrote. "It's time for our government to get serious about shared sacrifice." President Barack Obama has since endorsed the idea.

Many heard echoes of Mellon in Buffett's statement. While serving as Treasury secretary in the 1920s, Mellon led a campaign to end tax breaks for the rich. And if Buffett merely reprises Mellon, then his case, and the president's, starts to look politically feasible -- after all, Mellon is a Republican idol.

But a close read of both Buffett and Mellon makes clear that the two men differ in a subtle but key way: Buffett puts fairness of the tax code first. From fairness, he believes, follow other benefits. Mellon puts access to capital for business as the top priority. Call it the Mellon Rule.

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