Warren Buffet's advice to Congress (1 Viewer)

[igbomb]

And to those criticizing Buffett for not giving away his money fast enough, here are two very clear reasons for Buffett to space it out:

1) Buffett's fortune is in Berkshire Hathaway stock. In order for those receiving his wealth to make use of it, they need to sell the stock. In essence, if Buffett gave away all of his stock tomorrow and those foundations then tried to sell it, the price would bottom out, destroying much of the value in the stock. And if those organizations don't intend on selling it right away, then…

2) If the stock is not to be immediately sold, why not leave it in the hands of the man who has shown the ability to increase it's value more than anyone else? Per Buffett himself:

"And someone who was compounding money at a high rate, I thought, was the better party to be taking care of the philanthropy that was to be done 20 years out, while the people compounding at a lower rate should logically take care of the current philanthropy."

 

[Fennis]

Let's say I opened a restaurant in a city or on a street called Warren. Could I get away with calling it "Warren Buffet"?

What if that same restaurant was on West Jimmy Road?

 

[bostonfred]

If he truly believed everything that he is saying, he would support a 100% tax upon death. Force the heirs to build from scratch. Make them earn it on their own merits.

So we have two ends of a spectrum - the one end where we want to make sure that people are free to do what they want with their money, and the other where we want to avoid the hoarding of resources by the families of the elite. Some kind of compromise is appropriate; the only question is how much.

 

[dparker713]

I'm just pointing out the hypocrisy in his life. Frankly, I don't care what he does with his money. Buffett just happens to have enough money that he can choose to do pretty much whatever he wants without it actually impacting his or his kids' lives. Leaving each of his kids $20M would be a pittance of what he is worth, and yet would still be a ton of money that wouldn't cause any major effect on their lifestyle. That's a luxury that someone that is worth $3M doesn't have.

If he truly believed everything that he is saying, he would support a 100% tax upon death. Force the heirs to build from scratch. Make them earn it on their own merits.

And if he's so upset about his effective tax rate, he is more than welcome to donate any percentage that he desires to the US government. There is no prohibition on donating money to the government. But he doesn't do that, now does he? Why not?

Didnt the exemption just get raised from 2 million to 3.5 million net worth?

 

[Jayrod]

Why is it OK to tax someone's estate as it is passed on?

Why isn't it? Why is it OK to tax anyone?

Good points, actually.We obviously need some taxation for the operation of government. The volume of which is highly debated, but almost everyone will agree that we need something.Income tax is shady as it is very difficult to define "income" for everyone and hence our ridiculous system of deductions and credits and progressive rates (which keep me employed as an accountant) and all of the judgement calls that need to be made about who should pay and what the threshholds are, etc.IMO, the only "fair" way to tax is on consumption of goods, like the sales tax.

 

[CBusAlex]

I am in line to inherit nothing...but correct me if I am wrong. All of the funds that people are in line to inherit have already been taxed as income. So we need to tax it again after a person passes?

The "double taxation" argument has never made sense to me. All funds in existance have already been taxed countless times. I work and earn a paycheck, which is taxed as income. I spend it, it becomes income for someone else and is taxed again. They spend it, it gets taxed again.Why should a transfer of funds in exchange for goods, services, or labor be taxed, but not a transfer of funds as an estate?

 

[igbomb]

It's funny to watch a guy who intentionally circumvents the tax code to save himself millions (nothing wrong with that - it's legal, after all) ##### about taxing the uber-rich. And if he feels that strongly about it, why doesn't he just give tens of millions of his own money directly to the government beyond that which he pays in taxes?

Curious how Buffett circumvents the tax code when he doesn't even hire an accountant?

 

[bostonfred]

And if he's so upset about his effective tax rate, he is more than welcome to donate any percentage that he desires to the US government. There is no prohibition on donating money to the government. But he doesn't do that, now does he? Why not?

Well, he's giving it to charity. And if you had a multimillion dollar estate and wanted to avoid paying the estate tax, you could give your money to charity when you died, too. So it's not an either-or situation. He could do the exact same thing if the estate tax were there. The major difference is that he's arguing against the hoarding of wealth by the elite families of the world. I don't remember the numbers, but we've all heard them before - the top 1% own some ridiculous percentage of the world's wealth. Well, that compounds. With each generation, some small number of new people may enter that top percent, while some small number may drop out, but the percentage of the world's wealth they control will continue to rise. Is that a policy that's good for America or the world? If so, why?

 

[Jackstraw]

I'm just pointing out the hypocrisy in his life. Frankly, I don't care what he does with his money. Buffett just happens to have enough money that he can choose to do pretty much whatever he wants without it actually impacting his or his kids' lives. Leaving each of his kids $20M would be a pittance of what he is worth, and yet would still be a ton of money that wouldn't cause any major effect on their lifestyle. That's a luxury that someone that is worth $3M doesn't have.

If he truly believed everything that he is saying, he would support a 100% tax upon death. Force the heirs to build from scratch. Make them earn it on their own merits.

And if he's so upset about his effective tax rate, he is more than welcome to donate any percentage that he desires to the US government. There is no prohibition on donating money to the government. But he doesn't do that, now does he? Why not?

Didnt the exemption just get raised from 2 million to 3.5 million net worth?

Its also a marginal rate so someone just over the limit pays a very small amount. Only the estate tax on the amount over the limit. It's not like I make 2,999,999 and pay no taxes but If I make 3,000,001 I pay estate taxes on the whole amount.

 

[Mark Wimer]

Seems like Buffet and the current administration have very different opinions about what constitutues a wealthy person.

This. Both parties are always trying to find ways to tax the middle class/lower class. That's where all the REAL money is, in taxation terms.

The super-rich have ample resources to influence politicians, hire lawyers and put competent accountants on retainer to sort through the Byzantine tax laws that Congress promulgates (both GOP and DEM's to blame here).

Think I'm lying or shading the truth regarding tax law?

Click Here for Cornell University's links to the full text of the current Federal Tax Laws

Click Here for Subtitle A, Current Federal Law on just Income Taxes

Click Here for Subtitles A-Y, on the subset of Laws just regarding "Normal Taxes and Surtaxes" regarding Income Taxes

The system is set up to take advantage of the average working man/woman and to benefit those who promulgate/interpret/implement the laws (lawyers, accountants and legislators).

Both major political parties in the US are shameless in the ways in which they abuse the tax code in order to benefit their particular party bases.

My .

 

[GroveDiesel]

And to those criticizing Buffett for not giving away his money fast enough, here are two very clear reasons for Buffett to space it out:1) Buffett's fortune is in Berkshire Hathaway stock. In order for those receiving his wealth to make use of it, they need to sell the stock. In essence, if Buffett gave away all of his stock tomorrow and those foundations then tried to sell it, the price would bottom out, destroying much of the value in the stock. And if those organizations don't intend on selling it right away, then…2) If the stock is not to be immediately sold, why not leave it in the hands of the man who has shown the ability to increase it's value more than anyone else? Per Buffett himself:"And someone who was compounding money at a high rate, I thought, was the better party to be taking care of the philanthropy that was to be done 20 years out, while the people compounding at a lower rate should logically take care of the current philanthropy."

Buffett's plan is to donate his fortune to the Bill & Melinda Gates Foundation. What do you think will happen when he dies? What's the difference between doing it then and doing it now? The Gates Foundation wouldn't need to sell the stock immediately since it's already the most wealthy charity in the world. So that's a moot point.What does Buffett owning the stock have to do with the success of the company? Berkshire Hathaway could keep Buffett on as President and CEO even if he owned zero stock. And I would imagine that with his previous success, they would do exactly that. That would be even more the case if the Gates Foundation was the majority owner of Berkshire Hathaway stock.Lastly, what if Buffett's son was the 2nd most capable investor in the world. Wouldn't it actually be a BETTER move to transfer that control over to his son rather than giving it to the inefficient government to use? If Buffett is going to argue that putting the money into the most capable hands is the best use, then allowing the government to determine that seems a poor choice given the government's tremendous waste and mismanagement.

 

[Bronco Billy]

It's funny to watch a guy who intentionally circumvents the tax code to save himself millions (nothing wrong with that - it's legal, after all) ##### about taxing the uber-rich. And if he feels that strongly about it, why doesn't he just give tens of millions of his own money directly to the government beyond that which he pays in taxes?

Curious how Buffett circumvents the tax code when he doesn't even hire an accountant?

Pretty easy to do. It's why he can pompously make the disingenuous claim that he pays a lower tax rate than his secretary.

 

[Man in the yellow hat]

The argument about the rich 'earning' it is disingenuous at best. I'm pretty sure I've earned every dime I've made as well. Just because I'm not a multi-millionaire that can afford to find tax loopholes doesn't mean I should pay more tax as a percentage of my income. That's absurd.

 

[GroveDiesel]

The system is set up to take advantage of the average working man/woman and to benefit those who promulgate/interpret/implement the laws (lawyers, accountants and legislators).Both major political parties in the US are shameless in the ways in which they abuse the tax code in order to benefit their particular party bases.My .

Well, seeing as how over 50% of Americans don't pay any income taxes, I'll disagree somewhat with your assertion that both parties are trying to figure out how to tax the lower and middle classes. In fact, I'd argue just the opposite. I'd say that the Republicans are generally trying to not tax anyone very much and the Democrats are trying just to tax the rich a WHOLE lot.

 

[Bronco Billy]

I don't think the Buffet defenders get it. Those detractors of Buffet are calling him out for his hypocrisy - trying to force other people to give the government more of their money when he refuses to do the same of his own free will and instead reaches into the tax code to reduce what he has to pay.

The monster is bloated enough. Instead of finding more and different ways to feed it, why not try to wean it off some of its gorging?

 

[Bronco Billy]

The argument about the rich 'earning' it is disingenuous at best. I'm pretty sure I've earned every dime I've made as well. Just because I'm not a multi-millionaire that can afford to find tax loopholes doesn't mean I should pay more tax as a percentage of my income. That's absurd.

Now you've got a different argument - which I support. Let's simplify the tax code and make it equitable. I'd even surrender equitable for a slightly incrementally progressive tax rate.

 

[igbomb]

And to those criticizing Buffett for not giving away his money fast enough, here are two very clear reasons for Buffett to space it out:1) Buffett's fortune is in Berkshire Hathaway stock. In order for those receiving his wealth to make use of it, they need to sell the stock. In essence, if Buffett gave away all of his stock tomorrow and those foundations then tried to sell it, the price would bottom out, destroying much of the value in the stock. And if those organizations don't intend on selling it right away, then…2) If the stock is not to be immediately sold, why not leave it in the hands of the man who has shown the ability to increase it's value more than anyone else? Per Buffett himself:"And someone who was compounding money at a high rate, I thought, was the better party to be taking care of the philanthropy that was to be done 20 years out, while the people compounding at a lower rate should logically take care of the current philanthropy."

Buffett's plan is to donate his fortune to the Bill & Melinda Gates Foundation. What do you think will happen when he dies? What's the difference between doing it then and doing it now? The Gates Foundation wouldn't need to sell the stock immediately since it's already the most wealthy charity in the world. So that's a moot point.What does Buffett owning the stock have to do with the success of the company? Berkshire Hathaway could keep Buffett on as President and CEO even if he owned zero stock. And I would imagine that with his previous success, they would do exactly that. That would be even more the case if the Gates Foundation was the majority owner of Berkshire Hathaway stock.Lastly, what if Buffett's son was the 2nd most capable investor in the world. Wouldn't it actually be a BETTER move to transfer that control over to his son rather than giving it to the inefficient government to use? If Buffett is going to argue that putting the money into the most capable hands is the best use, then allowing the government to determine that seems a poor choice given the government's tremendous waste and mismanagement.

So, are you criticizing the guy for not distributing his money to people who need charity now or for not distributing it to the Bill and Melinda Gates Foundation? Because if you’re fine with him just sending it to the BMGF which would avoid him having to sell it right now, then you have no point since it is still not going to those who need the charity until further down the road. And if that's the case, does it matter if he holds it until the day he dies or if he hands it off right now?But if you have a problem with him not disseminating his fortune to those in need right this minute, then my earlier points hold.I just find it baffling that anyone would level the accusation that he's a hypocrite when he is donating such a massive amount to charity. Meanwhile, you're arguing that someone like the Walton kids, who were just handed billions from their dad, shouldn't have to pay any taxes on the money that they in no way earned and are certainly putting to less philanthropic use than Buffett is.

 

[dparker713]

I don't think the Buffet defenders get it. Those detractors of Buffet are calling him out for his hypocrisy - trying to force other people to give the government more of their money when he refuses to do the same of his own free will and instead reaches into the tax code to reduce what he has to pay.The monster is bloated enough. Instead of finding more and different ways to feed it, why not try to wean it off some of its gorging?

Umm, we need to both raise taxes and cut spending to get the budget under control. We're not going to be able to just cut our way out of these problems.

 

[GroveDiesel]

And if he's so upset about his effective tax rate, he is more than welcome to donate any percentage that he desires to the US government. There is no prohibition on donating money to the government. But he doesn't do that, now does he? Why not?

Well, he's giving it to charity. And if you had a multimillion dollar estate and wanted to avoid paying the estate tax, you could give your money to charity when you died, too. So it's not an either-or situation. He could do the exact same thing if the estate tax were there. The major difference is that he's arguing against the hoarding of wealth by the elite families of the world. I don't remember the numbers, but we've all heard them before - the top 1% own some ridiculous percentage of the world's wealth. Well, that compounds. With each generation, some small number of new people may enter that top percent, while some small number may drop out, but the percentage of the world's wealth they control will continue to rise. Is that a policy that's good for America or the world? If so, why?

That's only true if they're actually using their money to benefit people and seeing profits from their investments. If they're seeing profits from their investments, then that means that they're helping the world become a better place in general. So yeah, that would be good for the world. What's more likely to happen is succeeding generations of wealthy families will dilute the wealth and own a lesser and lesser percentage of total wealth. Except for those that continue to work and benefit humanity. Those people will see their wealth increase as they provide goods and services that are beneficial to mankind. And mankind will be better for it.

 

[Bronco Billy]

I don't think the Buffet defenders get it. Those detractors of Buffet are calling him out for his hypocrisy - trying to force other people to give the government more of their money when he refuses to do the same of his own free will and instead reaches into the tax code to reduce what he has to pay.The monster is bloated enough. Instead of finding more and different ways to feed it, why not try to wean it off some of its gorging?

Umm, we need to both raise taxes and cut spending to get the budget under control. We're not going to be able to just cut our way out of these problems.

I'd disagree. Reducing expendible capital in the private sector isn't going to stimulate production, enhance sales, or promote job growth. Why would you think that it would?

 

[Man in the yellow hat]

The argument about the rich 'earning' it is disingenuous at best. I'm pretty sure I've earned every dime I've made as well. Just because I'm not a multi-millionaire that can afford to find tax loopholes doesn't mean I should pay more tax as a percentage of my income. That's absurd.

Now you've got a different argument - which I support. Let's simplify the tax code and make it equitable. I'd even surrender equitable for a slightly incrementally progressive tax rate.

Bronco Billy for President.

 

[GroveDiesel]

And to those criticizing Buffett for not giving away his money fast enough, here are two very clear reasons for Buffett to space it out:1) Buffett's fortune is in Berkshire Hathaway stock. In order for those receiving his wealth to make use of it, they need to sell the stock. In essence, if Buffett gave away all of his stock tomorrow and those foundations then tried to sell it, the price would bottom out, destroying much of the value in the stock. And if those organizations don't intend on selling it right away, then…2) If the stock is not to be immediately sold, why not leave it in the hands of the man who has shown the ability to increase it's value more than anyone else? Per Buffett himself:"And someone who was compounding money at a high rate, I thought, was the better party to be taking care of the philanthropy that was to be done 20 years out, while the people compounding at a lower rate should logically take care of the current philanthropy."

Buffett's plan is to donate his fortune to the Bill & Melinda Gates Foundation. What do you think will happen when he dies? What's the difference between doing it then and doing it now? The Gates Foundation wouldn't need to sell the stock immediately since it's already the most wealthy charity in the world. So that's a moot point.What does Buffett owning the stock have to do with the success of the company? Berkshire Hathaway could keep Buffett on as President and CEO even if he owned zero stock. And I would imagine that with his previous success, they would do exactly that. That would be even more the case if the Gates Foundation was the majority owner of Berkshire Hathaway stock.Lastly, what if Buffett's son was the 2nd most capable investor in the world. Wouldn't it actually be a BETTER move to transfer that control over to his son rather than giving it to the inefficient government to use? If Buffett is going to argue that putting the money into the most capable hands is the best use, then allowing the government to determine that seems a poor choice given the government's tremendous waste and mismanagement.

So, are you criticizing the guy for not distributing his money to people who need charity now or for not distributing it to the Bill and Melinda Gates Foundation? Because if you’re fine with him just sending it to the BMGF which would avoid him having to sell it right now, then you have no point since it is still not going to those who need the charity until further down the road. And if that's the case, does it matter if he holds it until the day he dies or if he hands it off right now?But if you have a problem with him not disseminating his fortune to those in need right this minute, then my earlier points hold.I just find it baffling that anyone would level the accusation that he's a hypocrite when he is donating such a massive amount to charity. Meanwhile, you're arguing that someone like the Walton kids, who were just handed billions from their dad, shouldn't have to pay any taxes on the money that they in no way earned and are certainly putting to less philanthropic use than Buffett is.

Buffett clearly believes that the stock is better off under his control right now than anyone else's. Why is it better under his control than selling it all off currently (let's say he does it slowly over the next 2 years) and giving the cash to the Gates Foundation? Since everyone knows that this is what he is going to do anyway, it shouldn't have a negative impact on the stock price.

 

[rascal]

 

[Jackstraw]

I don't think the Buffet defenders get it. Those detractors of Buffet are calling him out for his hypocrisy - trying to force other people to give the government more of their money when he refuses to do the same of his own free will and instead reaches into the tax code to reduce what he has to pay.The monster is bloated enough. Instead of finding more and different ways to feed it, why not try to wean it off some of its gorging?

You right it's hard to keep track of the twisted logic here. Step 1. Buffer knows he pays lower tax rates than the average american. Step 2. Some where along the way he becomes one of the worlds leading philanthropists, lives a realtively spartan lifestyle.Step 3. Pays every penny he owes under the existing tax code.Step 4. Buffet points out how he believes the tax code is unfair and how ending the state tax essentially exacerbates the problem. Step 5. He is somehow a hypocrit because he doesn;t give all his money to the goverment. Am I on track?

 

[dparker713]

I don't think the Buffet defenders get it. Those detractors of Buffet are calling him out for his hypocrisy - trying to force other people to give the government more of their money when he refuses to do the same of his own free will and instead reaches into the tax code to reduce what he has to pay.The monster is bloated enough. Instead of finding more and different ways to feed it, why not try to wean it off some of its gorging?

Umm, we need to both raise taxes and cut spending to get the budget under control. We're not going to be able to just cut our way out of these problems.

I'd disagree. Reducing expendible capital in the private sector isn't going to stimulate production, enhance sales, or promote job growth. Why would you think that it would?

There's been an excess of capital for decades. Hence the successive bubbles. And as nice as it is to promote growth, its more important for the dollar to retain its status as the premier reserve currency, lest our entire economy collapse.

 

[Bronco Billy]

You right it's hard to keep track of the twisted logic here.

Step 1. Buffer knows he pays lower tax rates than the average american.

Step 2. Some where along the way he becomes one of the worlds leading philanthropists, lives a realtively spartan lifestyle.

Step 3. Pays every penny he owes under the existing tax code.

Step 4. Buffet points out how he believes the tax code is unfair and how ending the state tax essentially exacerbates the problem.

Step 5. He is somehow a hypocrit because he doesn;t give all his money to the goverment.

Am I on track?

Nope. You missed the point entirely again. Please reread what I posted rather than me simply posting it again.

 

[Homer J Simpson]

I don't think the Buffet defenders get it. Those detractors of Buffet are calling him out for his hypocrisy - trying to force other people to give the government more of their money when he refuses to do the same of his own free will and instead reaches into the tax code to reduce what he has to pay.The monster is bloated enough. Instead of finding more and different ways to feed it, why not try to wean it off some of its gorging?

You right it's hard to keep track of the twisted logic here. Step 1. Buffer knows he pays lower tax rates than the average american. Step 2. Some where along the way he becomes one of the worlds leading philanthropists, lives a realtively spartan lifestyle.Step 3. Pays every penny he owes under the existing tax code.Step 4. Buffet points out how he believes the tax code is unfair and how ending the state tax essentially exacerbates the problem. Step 5. He is somehow a hypocrit because he doesn;t give all his money to the goverment. Am I on track?

Yes, GroveDiesel's argument is actually quite brilliant. Brilliant in the fact that it is so mind-numbingly idiotic that I can't think of a way to logically counter it.

 

[igbomb]

And to those criticizing Buffett for not giving away his money fast enough, here are two very clear reasons for Buffett to space it out:1) Buffett's fortune is in Berkshire Hathaway stock. In order for those receiving his wealth to make use of it, they need to sell the stock. In essence, if Buffett gave away all of his stock tomorrow and those foundations then tried to sell it, the price would bottom out, destroying much of the value in the stock. And if those organizations don't intend on selling it right away, then…2) If the stock is not to be immediately sold, why not leave it in the hands of the man who has shown the ability to increase it's value more than anyone else? Per Buffett himself:"And someone who was compounding money at a high rate, I thought, was the better party to be taking care of the philanthropy that was to be done 20 years out, while the people compounding at a lower rate should logically take care of the current philanthropy."

Buffett's plan is to donate his fortune to the Bill & Melinda Gates Foundation. What do you think will happen when he dies? What's the difference between doing it then and doing it now? The Gates Foundation wouldn't need to sell the stock immediately since it's already the most wealthy charity in the world. So that's a moot point.What does Buffett owning the stock have to do with the success of the company? Berkshire Hathaway could keep Buffett on as President and CEO even if he owned zero stock. And I would imagine that with his previous success, they would do exactly that. That would be even more the case if the Gates Foundation was the majority owner of Berkshire Hathaway stock.Lastly, what if Buffett's son was the 2nd most capable investor in the world. Wouldn't it actually be a BETTER move to transfer that control over to his son rather than giving it to the inefficient government to use? If Buffett is going to argue that putting the money into the most capable hands is the best use, then allowing the government to determine that seems a poor choice given the government's tremendous waste and mismanagement.

So, are you criticizing the guy for not distributing his money to people who need charity now or for not distributing it to the Bill and Melinda Gates Foundation? Because if you’re fine with him just sending it to the BMGF which would avoid him having to sell it right now, then you have no point since it is still not going to those who need the charity until further down the road. And if that's the case, does it matter if he holds it until the day he dies or if he hands it off right now?But if you have a problem with him not disseminating his fortune to those in need right this minute, then my earlier points hold.I just find it baffling that anyone would level the accusation that he's a hypocrite when he is donating such a massive amount to charity. Meanwhile, you're arguing that someone like the Walton kids, who were just handed billions from their dad, shouldn't have to pay any taxes on the money that they in no way earned and are certainly putting to less philanthropic use than Buffett is.

Buffett clearly believes that the stock is better off under his control right now than anyone else's. Why is it better under his control than selling it all off currently (let's say he does it slowly over the next 2 years) and giving the cash to the Gates Foundation? Since everyone knows that this is what he is going to do anyway, it shouldn't have a negative impact on the stock price.

Why is it better under his control? Because Buffett earns a higher rate of return than just about anyone else in the world. And he has chosen to delay the distribution of his wealth now in favor of distributing more later. Disagree with him if you will, but there's certainly nothing hypocritical or morally wrong in that.And yes, selling all of his stock over two years would likely bring the price down. Investors aren't stupid, and there is a certain aspect to Berkshire's price driven by the highly illiquid nature of the stock (high share prices and low turnover). If there is suddenly a glut of shares up for sale, the price would likely drop. That's why Bill Gates is selling his Microsoft stock off over a long span of time.

 

[Drunken Cowboy]

What are the uber rich doing to not be the highest taxed? I don't get it.

As a percentage of earnings, not total dollars in tax.

Yeah, I get that, but how are these earnings not being taxed, specifically?I know about the lower capital gains rates but that can't be the whole story, right?

FICA caps.

 

[Bronco Billy]

There's been an excess of capital for decades. Hence the successive bubbles. And as nice as it is to promote growth, its more important for the dollar to retain its status as the premier reserve currency, lest our entire economy collapse.

I think you'd have a difficult time making that argument to people whose houses are 30% underwater; owe $15,000 in credit cards beyond what they had made; and now find themselves with reduced wages, forced to take inferior employment, or are out of work entirely.The path to this economy going into entire collapse is devaluing the dollar because the government continues to spend excessively - hence being forced to print more money to cover its debts, while simultaneoulsy reducing the amount of devalued capital in every person's pocket. Now you're begging for a widescale panic as well as hyperinflation. Again, how does that stimulate production, enhance sales, and promote job growth?

 

[bostonfred]

The major difference is that he's arguing against the hoarding of wealth by the elite families of the world. I don't remember the numbers, but we've all heard them before - the top 1% own some ridiculous percentage of the world's wealth. Well, that compounds. With each generation, some small number of new people may enter that top percent, while some small number may drop out, but the percentage of the world's wealth they control will continue to rise. Is that a policy that's good for America or the world? If so, why?

That's only true if they're actually using their money to benefit people and seeing profits from their investments. If they're seeing profits from their investments, then that means that they're helping the world become a better place in general. So yeah, that would be good for the world.

I would agree with this argument if it were true. First of all, not all investments "help the world". For example, if they bought real estate low and sold it high, they haven't increased the amount of real estate. They haven't improved the world in any meaningful way. If they're speculating on oil, and driving up the prices, they're not helping American interests. So it's not necessarily true that all investments that make money are good for the world or good for America.

But more importantly, let's assume that Buffett passed on his entire net worth to his kids, and his kids did nothing with the money but spend it and pass it on to his grandkids, great grandkids, and so on. And assume the same thing happens with every single estate out there. A massive percentage of the world's resources are just sitting there in an eddy pool of the aristocratic rich. And sure, they would eventually spend themselves out of the aristocracy, while others would earn their way in. But over time, more and more of the world's resources would be owned by that aristocracy.

But wait, you say. They wouldn't all just idly sit there with their wealth and do nothing with it. Many of them would invest it. But the problem with that is that a great percentage of the world's wealth would be owned by people who did nothing to earn it. Much like Buffett can be assumed to do a better job with his money than the Bill and Melinda Gates foundation, the hard workers in a meritocracy can be assumed to do a better job with their money than the inheritors in the aristocracy. So a massive amount of resources are controlled by an inefficient group. And while you might argue that they'd be able to hire someone to invest for them, the hard workers in the meritocracy would be more likely, on average, to pick the best person to invest.

Now on the far opposite end of the spectrum, just because the end result of eliminating the estate tax is bad for the country, doesn't mean that we should just take all the money away from people when they die. Because people absolutely should have a right to do with their money what they please, and if that means that they don't spend their money so their kids can have it, then they should be allowed to use their money in that way. So there's a necessary compromise - because neither a 0%, nor a 100%, estate tax would be correct.

 

[GroveDiesel]

Why is it better under his control? Because Buffett earns a higher rate of return than just about anyone else in the world. And he has chosen to delay the distribution of his wealth now in favor of distributing more later. Disagree with him if you will, but there's certainly nothing hypocritical or morally wrong in that.And yes, selling all of his stock over two years would likely bring the price down. Investors aren't stupid, and there is a certain aspect to Berkshire's price driven by the highly illiquid nature of the stock (high share prices and low turnover). If there is suddenly a glut of shares up for sale, the price would likely drop. That's why Bill Gates is selling his Microsoft stock off over a long span of time.

1) And yet you're hammering the Waltons despite Walmart stock's successes? Clearly it is doing quite well under their control. And again, Buffett doesn't have to own a penny in BH stock to have control over the company. I have no doubts that he would be hired by whomever the stockholders were to continue to be the President and CEO no matter how much stock he owned.2) Look, you're the one arguing about the immediacy of the donated money getting to those that it would help. I could care less about that aspect. I'm only concerned about Buffett's motivations for not selling it now. Clearly, transferring all of the stock to the Gates Foundation now and letting them start to sell it off slowly would benefit them more than Buffett holding it and giving it to them 5-10 years from now. Holding it until his death only delays the timeframe that they can start selling the stock in.

 

[The Commish]

It's funny to watch a guy who intentionally circumvents the tax code to save himself millions (nothing wrong with that - it's legal, after all) ##### about taxing the uber-rich. And if he feels that strongly about it, why doesn't he just give tens of millions of his own money directly to the government beyond that which he pays in taxes?

Curious how Buffett circumvents the tax code when he doesn't even hire an accountant?

Pretty easy to do. It's why he can pompously make the disingenuous claim that he pays a lower tax rate than his secretary.

So you think he pays a higher rate than his secretary and he's just blowing smoke? I do everything in my power to lower my tax rate and do a decent job. It's simple to do if you take the time to read the code and structure your portfolio accordingly. I assume these uber rich do an even better job than me and know the system even better than I do.

 

[dparker713]

There's been an excess of capital for decades. Hence the successive bubbles. And as nice as it is to promote growth, its more important for the dollar to retain its status as the premier reserve currency, lest our entire economy collapse.

I think you'd have a difficult time making that argument to people whose houses are 30% underwater; owe $15,000 in credit cards beyond what they had made; and now find themselves with reduced wages, forced to take inferior employment, or are out of work entirely.The path to this economy going into entire collapse is devaluing the dollar because the government continues to spend excessively - hence being forced to print more money to cover its debts, while simultaneoulsy reducing the amount of devalued capital in every person's pocket. Now you're begging for a widescale panic as well as hyperinflation.

Again, how does that stimulate production, enhance sales, and promote job growth?

The estate tax takes money out of no one's pockets. It removes money from estates, hence the name. And it only effects a small percentage of estates at that. And the dollar isnt devalued because of the amount of spending, its devalued due to the net income of the federal government. Income minus spending. Two independent variables, both of which can be adjusted to prevent hyperinflation.

 

[igbomb]

Why is it better under his control? Because Buffett earns a higher rate of return than just about anyone else in the world. And he has chosen to delay the distribution of his wealth now in favor of distributing more later. Disagree with him if you will, but there's certainly nothing hypocritical or morally wrong in that.And yes, selling all of his stock over two years would likely bring the price down. Investors aren't stupid, and there is a certain aspect to Berkshire's price driven by the highly illiquid nature of the stock (high share prices and low turnover). If there is suddenly a glut of shares up for sale, the price would likely drop. That's why Bill Gates is selling his Microsoft stock off over a long span of time.

1) And yet you're hammering the Waltons despite Walmart stock's successes? Clearly it is doing quite well under their control. And again, Buffett doesn't have to own a penny in BH stock to have control over the company. I have no doubts that he would be hired by whomever the stockholders were to continue to be the President and CEO no matter how much stock he owned.2) Look, you're the one arguing about the immediacy of the donated money getting to those that it would help. I could care less about that aspect. I'm only concerned about Buffett's motivations for not selling it now. Clearly, transferring all of the stock to the Gates Foundation now and letting them start to sell it off slowly would benefit them more than Buffett holding it and giving it to them 5-10 years from now. Holding it until his death only delays the timeframe that they can start selling the stock in.

1) Not hammering the Walton's at all. They are absurdly rich and would continue to be so under any imaginable tax structure. I don't begrudge them their money. But I find it amusing that Buffett is being hammered for his delayed philanthropy.2) You are unequivocally wrong here. If Buffett is earning a higher rate of return with his wealth in his hands than the Gates Foundation would if he donated it now, they will not benefit more. The difference in present value, assuming his investments perform better than the Gates Foundation's, will be higher the longer he delays.

 

[GroveDiesel]

The major difference is that he's arguing against the hoarding of wealth by the elite families of the world. I don't remember the numbers, but we've all heard them before - the top 1% own some ridiculous percentage of the world's wealth. Well, that compounds. With each generation, some small number of new people may enter that top percent, while some small number may drop out, but the percentage of the world's wealth they control will continue to rise. Is that a policy that's good for America or the world? If so, why?

That's only true if they're actually using their money to benefit people and seeing profits from their investments. If they're seeing profits from their investments, then that means that they're helping the world become a better place in general. So yeah, that would be good for the world.

I would agree with this argument if it were true. First of all, not all investments "help the world". For example, if they bought real estate low and sold it high, they haven't increased the amount of real estate. They haven't improved the world in any meaningful way. If they're speculating on oil, and driving up the prices, they're not helping American interests. So it's not necessarily true that all investments that make money are good for the world or good for America.

But more importantly, let's assume that Buffett passed on his entire net worth to his kids, and his kids did nothing with the money but spend it and pass it on to his grandkids, great grandkids, and so on. And assume the same thing happens with every single estate out there. A massive percentage of the world's resources are just sitting there in an eddy pool of the aristocratic rich. And sure, they would eventually spend themselves out of the aristocracy, while others would earn their way in. But over time, more and more of the world's resources would be owned by that aristocracy.

But wait, you say. They wouldn't all just idly sit there with their wealth and do nothing with it. Many of them would invest it. But the problem with that is that a great percentage of the world's wealth would be owned by people who did nothing to earn it. Much like Buffett can be assumed to do a better job with his money than the Bill and Melinda Gates foundation, the hard workers in a meritocracy can be assumed to do a better job with their money than the inheritors in the aristocracy. So a massive amount of resources are controlled by an inefficient group. And while you might argue that they'd be able to hire someone to invest for them, the hard workers in the meritocracy would be more likely, on average, to pick the best person to invest.

Now on the far opposite end of the spectrum, just because the end result of eliminating the estate tax is bad for the country, doesn't mean that we should just take all the money away from people when they die. Because people absolutely should have a right to do with their money what they please, and if that means that they don't spend their money so their kids can have it, then they should be allowed to use their money in that way. So there's a necessary compromise - because neither a 0%, nor a 100%, estate tax would be correct.

I think that you're confusing a few terms here. Hard working doesn't really mean a whole lot in my book. Lots of people work very hard doing menial work that brings a small benefit to society and in return receive a small compensation. What's important on a larger scale is the total contribution to humanity that someone makes. I could work 80 hours a week flipping burgers and I'm bringing a small measure of benefit to a lot of people who are hungry in my area, but that's a pretty small contribution to humanity as a whole.Someone else could work 15 hours a week and stumble upon the cure for cancer. That would benefit humanity tremendously. And that person should be compensated much more than the 80 hour a week burger flipper.

I do agree that rich folks who just sit on their money and spend it are not contributing all that much to humanity. Although, even their spending on high end items creates a market for technological growth. 12 years ago you could get a plasma tv for $20,000. Only the rich could afford them. But because the rich bought them, manufacturers could continue to develop those technologies, which drove down the cost for the rest of us. Now you can get a 42" screen for $500.

And if all they do is spend their money, then like we've discussed, their wealth will eventually dissipate and flow to people who are providing more value to humanity.

Are there going to be inefficiencies and wastes of resources at times? Sure. Could the resources be better used by someone else? Probably. But the argument for an inheritance tax says that the US government will better and more efficiently use those resources than those chosen by the wealthy. I'm not so sure that's the case. You'd have to make a pretty strong argument to convince me that the government is better at using resources than the heirs of the rich.

 

[JJP]

Buffett obviously has little faith that the wealthy will be charitable with their wealth on their own. He seems to firmly believe they will hoard it all. I have to assume he has a lot of faith that government will distribute it to the poor if they confiscate it and not figure out a way to turn it into pork or funnel it into accounts over time. So this is really about what you believe about human nature, and what you have faith in, and not Warren Buffett's economic expertise.

Or he could belive that not only is cutting tax revenues a pretty bad idea right now, but cutting tax revenues from the people who least need the cut is a really bad idea.Let's reign in the spending before we start talking about tax cuts.

Ask any economist and they will tell you the dumbest thing to do is to RAISE taxes in the middle of a recession. Even a liberal Keynesian like Robert Reich will tell you that.

 

[GroveDiesel]

1) Not hammering the Walton's at all. They are absurdly rich and would continue to be so under any imaginable tax structure. I don't begrudge them their money. But I find it amusing that Buffett is being hammered for his delayed philanthropy.2) You are unequivocally wrong here. If Buffett is earning a higher rate of return with his wealth in his hands than the Gates Foundation would if he donated it now, they will not benefit more. The difference in present value, assuming his investments perform better than the Gates Foundation's, will be higher the longer he delays.

I'm not sure how many times I have to point out that Buffett doesn't have to own any stock for him to still control the company. So no, it is not earning a higher rate of return in his hands than it would in the Gates Foundation. It would earn exactly the same since he would still be on as President and CEO.

 

[Bronco Billy]

So you think he pays a higher rate than his secretary and he's just blowing smoke? I do everything in my power to lower my tax rate and do a decent job. It's simple to do if you take the time to read the code and structure your portfolio accordingly. I assume these uber rich do an even better job than me and know the system even better than I do.

No, he pays a lower rate because of his position in the company and his ability to remove capital in a manner that precludes high tax rates (capital gains). It's also why he pays himself a salary so relatively low considering his position - it falls just under a threshold for higher taxation on wages. His secretary does not have that option, and is forced to pay on her wages solely.Pretty simple, like I said. And disingenuous of him to make the comparison knowing full well that he is using the tax code to his advantage given his position while his secretary has no such option.

 

[GroveDiesel]

Yes, GroveDiesel's argument is actually quite brilliant. Brilliant in the fact that it is so mind-numbingly idiotic that I can't think of a way to logically counter it.

Aw yes, the feeble minded attempt at a slam. Feel free to continue contributing your stunning insight and escalating the discourse here. This is the type of post that makes the FFA so much fun.

 

[The Commish]

So you think he pays a higher rate than his secretary and he's just blowing smoke? I do everything in my power to lower my tax rate and do a decent job. It's simple to do if you take the time to read the code and structure your portfolio accordingly. I assume these uber rich do an even better job than me and know the system even better than I do.

No, he pays a lower rate because of his position in the company and his ability to remove capital in a manner that precludes high tax rates (capital gains). It's also why he pays himself a salary so relatively low considering his position - it falls just under a threshold for higher taxation on wages. His secretary does not have that option, and is forced to pay on her wages solely.Pretty simple, like I said. And disingenuous of him to make the comparison knowing full well that he is using the tax code to his advantage given his position while his secretary has no such option.

I don't understand why you think she can't do this. She's allowed. She can negotiate the method she's paid. I've done it. I've taken jobs before where part of my salary comes in capital rather than wages. I am no millionaire, but this is a pretty common practice I would think. Even in her position there are plenty of things she can do to reduce her gross income and get into a lower tax bracket. We can all use the tax code to our advantage it's just that most people are too lazy to do the leg work.

 

[igbomb]

1) Not hammering the Walton's at all. They are absurdly rich and would continue to be so under any imaginable tax structure. I don't begrudge them their money. But I find it amusing that Buffett is being hammered for his delayed philanthropy.2) You are unequivocally wrong here. If Buffett is earning a higher rate of return with his wealth in his hands than the Gates Foundation would if he donated it now, they will not benefit more. The difference in present value, assuming his investments perform better than the Gates Foundation's, will be higher the longer he delays.

I'm not sure how many times I have to point out that Buffett doesn't have to own any stock for him to still control the company. So no, it is not earning a higher rate of return in his hands than it would in the Gates Foundation. It would earn exactly the same since he would still be on as President and CEO.

You continue to point it out, but I still don't see why it matters? If the Gates Foundation isn't going to sell the stock and is just going to hold it, then who cares whether Buffett keeps it until he dies? Maybe he has a legitimate reason that I'm not aware of, or maybe it's just the hubris of enjoying his wealth. But if the plan is to just leave it untouched and let it continue to appreciate while the company is under his leadership, the person holding it is inconsequential and in no way suggests that Buffett is a hypocrite.If he was a Republican lapdog, you'd be in here praising how wonderful he is. But since he doesn't agree with your world-view, you are pathetically attempting to find fault in how he distributes his wealth.

 

[jonessed]

If we are going to raise taxes on Buffett's wealthy it will have to come via estate tax. Playing with the capital gains tax rate in a global economy is tricky. Our rate is already higher than quite a few other markets competing for investment money (Canada, Italy, Germany, Japan, India, etc). Even the more socialist European countries have figured out that they can adjust capital gains to be more competitive with investment money.

The truth of the matter is Buffett will never pay more taxes than his secretary. And that has more to do with the gross mismanagement of our finances by the US government than tax rates that are too low.

 

[Bronco Billy]

The estate tax takes money out of no one's pockets. It removes money from estates, hence the name. And it only effects a small percentage of estates at that.

Really? So why does the government deserve another share of that money when it was already taxed when it was earned? Why would the earners of the money not have the ultimate say in the disposing of the post-taxed capital that they earned, regardless of whether they are alive or dead? How does the government justify taking another slice of that already taxed capital other than base greed?Imagine if this were done at the corporate level - as soon as a company changes CEOs, the company has to pay 40% of its value to the government. What do you think that would do to private enterprise?

 

[jonessed]

1) Not hammering the Walton's at all. They are absurdly rich and would continue to be so under any imaginable tax structure. I don't begrudge them their money. But I find it amusing that Buffett is being hammered for his delayed philanthropy.

2) You are unequivocally wrong here. If Buffett is earning a higher rate of return with his wealth in his hands than the Gates Foundation would if he donated it now, they will not benefit more. The difference in present value, assuming his investments perform better than the Gates Foundation's, will be higher the longer he delays.

I'm not sure how many times I have to point out that Buffett doesn't have to own any stock for him to still control the company. So no, it is not earning a higher rate of return in his hands than it would in the Gates Foundation. It would earn exactly the same since he would still be on as President and CEO.

You continue to point it out, but I still don't see why it matters? If the Gates Foundation isn't going to sell the stock and is just going to hold it, then who cares whether Buffett keeps it until he dies? Maybe he has a legitimate reason that I'm not aware of, or maybe it's just the hubris of enjoying his wealth. But if the plan is to just leave it untouched and let it continue to appreciate while the company is under his leadership, the person holding it is inconsequential and in no way suggests that Buffett is a hypocrite.If he was a Republican lapdog, you'd be in here praising how wonderful he is. But since he doesn't agree with your world-view, you are pathetically attempting to find fault in how he distributes his wealth.

Oh, the irony.

 

[GroveDiesel]

So you think he pays a higher rate than his secretary and he's just blowing smoke? I do everything in my power to lower my tax rate and do a decent job. It's simple to do if you take the time to read the code and structure your portfolio accordingly. I assume these uber rich do an even better job than me and know the system even better than I do.

No, he pays a lower rate because of his position in the company and his ability to remove capital in a manner that precludes high tax rates (capital gains). It's also why he pays himself a salary so relatively low considering his position - it falls just under a threshold for higher taxation on wages. His secretary does not have that option, and is forced to pay on her wages solely.Pretty simple, like I said. And disingenuous of him to make the comparison knowing full well that he is using the tax code to his advantage given his position while his secretary has no such option.

I don't understand why you think she can't do this. She's allowed. She can negotiate the method she's paid. I've done it. I've taken jobs before where part of my salary comes in capital rather than wages. I am no millionaire, but this is a pretty common practice I would think. Even in her position there are plenty of things she can do to reduce her gross income and get into a lower tax bracket. We can all use the tax code to our advantage it's just that most people are too lazy to do the leg work.

Well, there you go. There's part of the problem then. Buffett's secretary is too lazy to figure out how to reduce her tax burden.And let's not feel TOO sorry for her. According to a post by someone in here, Buffett is lamenting that his secretary and others are paying 33% in taxes. That means she's making between $171,000 and $373,000 a year in adjusted income. She's not exactly living in the poor house.

 

[igbomb]

The estate tax takes money out of no one's pockets. It removes money from estates, hence the name. And it only effects a small percentage of estates at that.

Imagine if this were done at the corporate level - as soon as a company changes CEOs, the company has to pay 40% of its value to the government. What do you think that would do to private enterprise?

Newsflash, CEOs generally don't own the company, they just work for it. Poor analogy.

 

[Bronco Billy]

So you think he pays a higher rate than his secretary and he's just blowing smoke? I do everything in my power to lower my tax rate and do a decent job. It's simple to do if you take the time to read the code and structure your portfolio accordingly. I assume these uber rich do an even better job than me and know the system even better than I do.

No, he pays a lower rate because of his position in the company and his ability to remove capital in a manner that precludes high tax rates (capital gains). It's also why he pays himself a salary so relatively low considering his position - it falls just under a threshold for higher taxation on wages. His secretary does not have that option, and is forced to pay on her wages solely.Pretty simple, like I said. And disingenuous of him to make the comparison knowing full well that he is using the tax code to his advantage given his position while his secretary has no such option.

I don't understand why you think she can't do this. She's allowed. She can negotiate the method she's paid. I've done it. I've taken jobs before where part of my salary comes in capital rather than wages. I am no millionaire, but this is a pretty common practice I would think. Even in her position there are plenty of things she can do to reduce her gross income and get into a lower tax bracket. We can all use the tax code to our advantage it's just that most people are too lazy to do the leg work.

She's not allowed - it's not her company. Let's make this perfectly clear: Buffet does not allow for her to be compensated in that manner, even though it would reduce her tax liability, because HE chooses not to compensate her that way. But he does it for himself in the most advantageous manner. Then he chooses to use that to make some kind of tortured point of comparison between the two.Now are you beginning to see more of his hypocrisy?

 

[igbomb]

1) Not hammering the Walton's at all. They are absurdly rich and would continue to be so under any imaginable tax structure. I don't begrudge them their money. But I find it amusing that Buffett is being hammered for his delayed philanthropy.

2) You are unequivocally wrong here. If Buffett is earning a higher rate of return with his wealth in his hands than the Gates Foundation would if he donated it now, they will not benefit more. The difference in present value, assuming his investments perform better than the Gates Foundation's, will be higher the longer he delays.

I'm not sure how many times I have to point out that Buffett doesn't have to own any stock for him to still control the company. So no, it is not earning a higher rate of return in his hands than it would in the Gates Foundation. It would earn exactly the same since he would still be on as President and CEO.

You continue to point it out, but I still don't see why it matters? If the Gates Foundation isn't going to sell the stock and is just going to hold it, then who cares whether Buffett keeps it until he dies? Maybe he has a legitimate reason that I'm not aware of, or maybe it's just the hubris of enjoying his wealth. But if the plan is to just leave it untouched and let it continue to appreciate while the company is under his leadership, the person holding it is inconsequential and in no way suggests that Buffett is a hypocrite.If he was a Republican lapdog, you'd be in here praising how wonderful he is. But since he doesn't agree with your world-view, you are pathetically attempting to find fault in how he distributes his wealth.

Oh, the irony.

Really? Good luck finding a backlog of posts that I've written that in any way suggests I am some hardcore Democrat. I'm quite sure I could fairly easily put together a similar one for the Republicans for yourself, Grove, and BB.

 

[GroveDiesel]

1) Not hammering the Walton's at all. They are absurdly rich and would continue to be so under any imaginable tax structure. I don't begrudge them their money. But I find it amusing that Buffett is being hammered for his delayed philanthropy.2) You are unequivocally wrong here. If Buffett is earning a higher rate of return with his wealth in his hands than the Gates Foundation would if he donated it now, they will not benefit more. The difference in present value, assuming his investments perform better than the Gates Foundation's, will be higher the longer he delays.

I'm not sure how many times I have to point out that Buffett doesn't have to own any stock for him to still control the company. So no, it is not earning a higher rate of return in his hands than it would in the Gates Foundation. It would earn exactly the same since he would still be on as President and CEO.

You continue to point it out, but I still don't see why it matters? If the Gates Foundation isn't going to sell the stock and is just going to hold it, then who cares whether Buffett keeps it until he dies? Maybe he has a legitimate reason that I'm not aware of, or maybe it's just the hubris of enjoying his wealth. But if the plan is to just leave it untouched and let it continue to appreciate while the company is under his leadership, the person holding it is inconsequential and in no way suggests that Buffett is a hypocrite.If he was a Republican lapdog, you'd be in here praising how wonderful he is. But since he doesn't agree with your world-view, you are pathetically attempting to find fault in how he distributes his wealth.

If he transfers it now, then the Gates Foundation can start selling it off slowly right now. If he waits, then they don't even have the option to start selling it and helping people now. And it's kind of my point that he's holding onto the money strictly because he sees it as a benefit to himself to hold the money. It's not because it actually benefits anyone else that he is holding the stock, it's because it's benefiting HIM. Which is kind of what this whole thing is about. Giving my money to my kids not only benefits them, it benefits me because I have the pleasure of knowing that I provided them with that money. I derive a direct benefit from giving that money to my kids, just like Buffett derives some sort of personal pleasure from holding onto his current money.I've already said that I don't care how he distributes his wealth. I think it's actually very noble of him to donate his money to the Gates Foundation. However, I think that his actions still show hypocrisy compared to what comes out of his mouth and I'm merely pointing that out. Just because he is giving his money away (eventually), doesn't mean that he gets some free pass on his political statements.