Tuesday, November 13, 2007

Warren Buffett is not a convincing advocate for increased taxes

Actions speak louder than words, and while the “Sage of Omaha” bemoans the unfairness of current tax laws and that he pays relatively less than his office staff, including his secretary, in terms of taxes and calls for a greater burden be placed on “the rich,” his actions are specifically oriented to limit his tax liability, both corporately through Berkshire Hathaway and personally. J-Dub writes about it recently here although he and I come to opposite conclusions. There are at least a couple of explanations for Buffett’s low tax burden (as a percentage of his wealth). He pays himself a relatively modest salary. He earns the lion’s share of his personal wealth through capital gains and dividends on stock owned…which is taxed at a lower rate than income tax rates.
He also says that estate taxes are necessary and a way for the government to prevent dynastic transfer of wealth from one generation to the next, to prevent a rising aristocracy, but again his actions speak louder than his words. He is planning to give away 85% of his wealth, over $40 billion dollars to the philanthropies of his choice, most notably the charitable trust that Bill Gates and his wife have established, prior to his death--- thereby avoiding any estate tax penalties. If he really believed that the estate tax is good, he would hold his wealth until his death, let the government confiscate 49% at his death and then distribute the rest to the charities of his choice.
And of course, if he really feels bad about his meager contribution to the federal government, he could just write a check, gifts can be made directly to the gov’t:
Gifts to the United States U.S.
Department of the Treasury
Credit Accounting Branch 3700 East-West Highway, Room 6D17
Hyattsville, MD 20782
Buffett doesn’t want to pay more in taxes; he wants you to pay more in taxes…


Anonymous JW said...

And yet he is calling for higher taxes on his big money buddies. His point is that he simply follows the policies in place for him to enjoy and pays a lower rate than his secretary. The system is rigged in favor of the priveleged.
And shouldn't we applaud him for donating his fortune to charity? Better than the government getting their hands on it right?

9:45 PM  
Blogger djobe said...

That's the point, while he advocates for higher taxes--he does everything within his power to avoid them...that would be like a fast food junky advocating for MANDATORY healthier eating while heading to the drive through for a BIG MAC and then claiming he HAD to eat a BIG MAC because the government didn't make it illegal.
Buffett doesn't HAVE to setup his estate in a way to avoid as much tax as possible, he CHOOSES to, while simultaneously arguing that there should be a heavier tax burden on "the rich."

2:20 PM  

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