dire warning to all Warren Buffet admirers!

[ryberg]

Been reading Obama's second book, and while it was slow through the first half, the long middle section chapter entitled "Opportunity" is almost worth the price of admission by itself.

There's lots of good stuff in that chapter, but the high point may be the following regarding a meeting between Obama and Warren Buffet, investment guru and the world's second richest person. Here's an excerpt I for one found surprising (though perhaps this is generally known about him and I'm just out of the loop):

Buffett . . . wanted to know why Washington continued to cut taxes for people in his income bracket . . .

"I did a calculation the other day," he said as we sat down in his office. "Though I've never used tax shelters or had a tax planner, after including the payroll taxes we each pay, I'll pay a lower effective tax rate this year than my receptionist. In fact, I'm pretty sure I pay a lower rate than the average American. And if the President has his way, I'll be paying even less."

Buffett's low rates were a consequence of the fact that, like most wealthy Americans, almost all his income came from dividends and capital gains, investment income that since 2003 has been taxed at only 15%. The receptionist's salary, on the other hand, was taxed at almost twice that rate once FICA was included. From Buffett's perspective, the discrepancy was unconscionable . . .

"Some of that wealth has to be plowed back into education, so that the next generation has a fair chance, and to maintain our infrastructure, and provide some sort of safety net for those who lose out in a market economy. And it just makes sense that those of us who've benefited most from the market should pay a bigger share."

We spent the next hour talking about globalization, executive compensation, the worsening trade deficit, and the national debt. He was especially exercised over Bush's proposed elimination of the estate tax, a step he believed would encourage an aristocracy of wealth rather than merit.

"When you get rid of the estate tax," he said, "you're basically handing over command of the country's resources to people who didn't earn it. It's like choosing the 2020 Olympic team bypicking the children of all the winners at the 2000 games."

"[My fellow billionaires] have this idea that it's 'their money' and they deserve to keep every penny of it. What they don't factor in is all the public investment that lets us live the way we do. Take me as an example. I happen to have a talent for allocating capital. By my ability to use that talent is comletely dependent on the society I was born into . . . I was lucky enough to be born in a time and place where society values my talent, and gave me a good education to develop that talent, and set up the laws and the financial system to let me do what I love doing -- and make a lot of money doing it. The least I can do is help pay for all that."

Wow!

So Warren Buffett, again an incredibly successful capitalist, widely admired investment guru, the second richest person in the world and by all accounts, a remarkably down to earth man, is actually a loud-mouthed, Bush-bashing, tax-and-spend liberal commie pinko Robin Hood! Who knew?!?

Steve

[roni]

Originally Posted by ryberg

Been reading Obama's second book, and while it was slow through the first half, the long middle section chapter entitled "Opportunity" is almost worth the price of admission by itself.

There's lots of good stuff in that chapter, but the high point may be the following regarding a meeting between Obama and Warren Buffet, investment guru and the world's second richest person. Here's an excerpt I for one found surprising (though perhaps this is generally known about him and I'm just out of the loop):

Wow!

So Warren Buffett, again an incredibly successful capitalist, widely admired investment guru, the second richest person in the world and by all accounts, a remarkably down to earth man, is actually a loud-mouthed, Bush-bashing, tax-and-spend liberal commie pinko Robin Hood! Who knew?!?

Steve

He is a liberal and his wife, who is now dead, was a strong abortion rights advocate. Most of her estate went to agencies advocating reproductive education and rights.

[UGAplaya]

Wow, I misread your Title. I thought you said JIMMY BUFFETT... Nevermind.

[DavidB]

Originally Posted by UGAplaya

Wow, I misread your Title. I thought you said JIMMY BUFFETT... Nevermind.

It's ok, they are related.

[DavidB]

From what I understand, most of Buffetts wealth is from his stock in Berkshire Hathaway. This is a holding company that owns all of the stock of his other companys. Berkshire Hathaway doesn't pay any dividends, it just increases in value. So he actually doesn't even get any income from it. This helps keep his tax rate low.

[DavidB]

He doesn't care about the estate tax because he is the third riches man at $56 BILLION. So if estate taxes take 90% of his wealth his kids would only have 5.6 BILLION to split.. And most of his assets are liquid. The people the estate taxes hurt the most are people who have family businesses and farms who have to break up or sell the business or farm to pay the estate taxes.

[ryberg]

Originally Posted by DavidB

He doesn't care about the estate tax because he is the third riches man at $56 BILLION. So if estate taxes take 90% of his wealth his kids would only have 5.6 BILLION to split.. And most of his assets are liquid. The people the estate taxes hurt the most are people who have family businesses and farms who have to break up or sell the business or farm to pay the estate taxes.

Well it's funny, but it turns out that that's exactly wrong, not only because Buffett does care about the estate tax (as shown in the above comment), but also because that doomed outlook is just swallowing hook, line & sinker conservative propaganda on this topic.

To wit:

As currently structured, a husband and wife can pass on $4,000,000 without paying any estate tax; in 2009, under current law, that figure goes up to $7,000,000. For this reason, the tax currently affects only the wealthiest 1/2 of 1% of the population, and will affect only 1/3 of 1% in 2009. And since completely repealing the estate tax would cost the U.S. Treasury around $1,000,000,000,000, it would be hard to find a tax cut that was less responsive to the needs of ordinary Americans or the long-terms interests of the country.

Nevertheless, after some shrewd marketing by the President and his allies, 70% of the country now opposes the "death tax." Farm groups come to visit my office, insisting that the estate tax will mean the end of the family farm, despite the Farm Bureau's inability to point to a single farm in the country lost as a result of the "death tax." Meanwhile, I've had corporate CEOs explain to me that it's easy for Warren Buffett to favor an estate tax . . . but that the tax is grossly unfair to those with estates worth "only" $10-15 million.

Steve

[Juanito]

Raising estate taxes and capital gains taxes in the US is a GREAT idea!!

Signed,


Cayman Islands and Bahamas bank managers and accountants.

[PlayadelSoul]

Soak the rich!! You know, the ones that actually provide the jobs to you and me.

[jtm1631]

How does your head feel Steve?

[ryberg]

Originally Posted by jtm1631

How does your head feel Steve?

Well, like this --

Originally Posted by PlayadelSoul

Soak the rich!! You know, the ones that actually provide the jobs to you and me.

-- is what they really and truly want me to believe.



Steve

[horizon200]

He also walks the walk...his family is not getting all his wealth. He has donated a majority of it to charities. Mind you they will still be wealthy, but a far cry from what they could have been! 15% of his fortune is nothing to sneeze at...but giving away 85% to philanthropic organizations is pretty amazing!

[TnJ]

Originally Posted by ryberg

Well, like this is what they really and truly want me to believe.

Steve

ja, i feel that 'trickle down theory' every time i fillerup @ the pump....

[jtm1631]

Originally Posted by ryberg

Well, like this --

-- is what they really and truly want me to believe.



Steve

As Mr. Banks said in Mary Poppins, "Kindly do not attempt to cloud the issue with facts!"

I use the above emoticons because they seem to make a very frequent and sometimes completely inappropriate appearance in these types of threads.

[ryberg]

Originally Posted by jtm1631

I use the above emoticons because they seem to make a very frequent and sometimes completely inappropriate appearance in these types of threads.

Kinda makes ya wanna just


don't it?



(That last one was for real.)

Originally Posted by jtm1631

As Mr. Banks said in Mary Poppins, "Kindly do not attempt to cloud the issue with facts!"

(Those were also for real.)

Steve