Others See Buffett BS on Death Tax

[DKW 86 7,426]

http://www.opinionjournal.com/best/?id=110008570

http://www.roadtothemiddleclass.com/index.php

BY JAMES TARANTO

Monday, June 26, 2006 3:25 p.m. EDT

Billionaire Boys Club

"Warren Buffett, the chairman and chief executive officer of Berkshire Hathaway Inc., will give most of his $44 billion in Berkshire stock to the Bill & Melinda Gates Foundation, entrusting his philanthropic legacy to the only person richer than him," Bloomberg reports.

You can see why Buffett would want to give his billions to charity. The federal death tax is currently being phased out, but it will reappear in 2011 unless Congress acts--which means that if Buffett lives that long, the government will confiscate 55% of his assets upon his death.

But wait. Buffett is, as a New York Sun editorial notes, "an avowed supporter of the estate tax." As we noted in 2001, so is Bill Gates Sr., the Microsoft founder's old man, who is an executive of the Bill and Melinda Foundation.

As the Sun notes:

Mr. Buffett could have let the government take its share of his estate after he dies. But just as Mr. Buffett has accumulated his vast wealth without paying much personal income tax, he has found a way to avoid the tax man in this maneuver as well, even writing in his letter to Bill and Melinda Gates that a condition of the gift is that the foundation "must continue to satisfy legal requirements qualifying my gifts as charitable and not subject to gift or other taxes."

On the estate tax, watch what Mr. Buffett does, not what he says. The Gates Foundation isn't the only recipient of his largesse--three foundations headed by Mr. Buffett's three children, Susan, Howard, and Peter, will get hundreds of millions of dollars. Tax documents show that in 2004, Peter Buffett and his wife Jennifer each took a $40,000 a year salary for what they reported was 30 hours a week each of work on the foundation.

When billionaires back the death tax, keep in mind that they have no intention of actually paying it. They are being "generous" with other people's money. This is the way in which the superrich wage class warfare against the merely affluent.

[quietfan 233]

So what's the implication here? Buffet is giving away the money just to avoid his heirs paying taxes on it? How would that make any sense? At least if he left it to them, they would get to keep a share of it. This way they get no part of the billions he gives away.

Rather than question his motives, I say we should be thankful that he is so generous. Which is more noble...giving it away to good causes or letting the heirs and the government divide it? Instead of appreciating that someone wants to give back, his generosity becomes political fodder in the debate over estate taxes?

[And I still think every penny the heirs do get should be taxed as new income to them. However, as income, the top tax rate is what, 28%, these days? ...which would still be lower than the 55% figure quoted in this article for estate taxes. Seems fair to me--I have to pay taxes on every penny I get.]

[TitanTiger 20,498]

I think Buffet's point is that he just wants the money to do more than make his heirs already lavish lifestyles that much more lavish. The estate tax, in his mind is one way to do that, but even better is to be able to direct it to a charity he believes in to do a lot of good in society. I don't see it as hypocrisy.

[DKW 86 7,426]

I think Buffet's point is that he just wants the money to do more than make his heirs already lavish lifestyles that much more lavish.  The estate tax, in his mind is one way to do that, but even better is to be able to direct it to a charity he believes in to do a lot of good in society.  I don't see it as hypocrisy.

243646[/snapback]

Well then, I want to see that check he cuts to Uncle Sam for the estimated $19BN in Death Taxes he avoided by doing it this way. This is simply what the wealthy do everyday to avoid the Death Tax. They set up Trusts etc. happens all the time. Death Tax is just houie.

[Tigermike 3,034]

Lost in all this is the fact that he will be gaining a huge tax deduction for his charitable giving. Not saying his intentions are not altruistic, but he will be getting a very big deduction.

Wish I had a deduction that big.

[Aubie16 1]

I think Buffet's point is that he just wants the money to do more than make his heirs already lavish lifestyles that much more lavish.  The estate tax, in his mind is one way to do that, but even better is to be able to direct it to a charity he believes in to do a lot of good in society.  I don't see it as hypocrisy.

243646[/snapback]

Well then, I want to see that check he cuts to Uncle Sam for the estimated $19BN in Death Taxes he avoided by doing it this way. This is simply what the wealthy do everyday to avoid the Death Tax. They set up Trusts etc. happens all the time. Death Tax is just houie.

243653[/snapback]

Maybe I'm not getting this or something. But I'm with Titan in that I don't think he avoided the death tax in the sense that he gets to keep the money.

I think he feels that the Gates Foundation will do more good with the money than the Federal Government will. I tend to agree with him because a much smaller amount would be wasted.

He is actually losing more money in this, as quietfan pointed out, because his family doens't even get to keep the other 45%. All of it is gone this way.

[DKW 86 7,426]

Uhh, then why doesnt he wait until AFTER his death to make the endowments? You are trying to make him specifically HOLD onto the cash. He cant. He is or will be dead.

You want to define this as HE doesnt get to keep the money. Well he never was going to get to keep the money. His heirs still get plenty, etc etc. But, the govt doesnt get the cash. That was the general beef with the Death Tax anyway.

[CCTAU 3,327]

[And I still think every penny the heirs do get should be taxed as new income to them.  However, as income, the top tax rate is what, 28%, these days? ...which would still be lower than the 55% figure quoted in this article for estate taxes.  Seems fair to me--I have to pay taxes on every penny I get.]

Yes. Tax the tax. That makes for wonderful incentive for folks to want to accumulate any kind of wealth.

Double and triple taxing of money is unfair. Just because you think it's new money to somebody! It has already been taxed.

But we've had this discussion before. Anybody for the death tax is usually living with the hope that one day the socialist party called demoncrats will save us all.

Just one more reason to support a fair tax bill.

[TexasTiger 12,947]

[And I still think every penny the heirs do get should be taxed as new income to them.  However, as income, the top tax rate is what, 28%, these days? ...which would still be lower than the 55% figure quoted in this article for estate taxes.  Seems fair to me--I have to pay taxes on every penny I get.]

Yes. Tax the tax. That makes for wonderful incentive for folks to want to accumulate any kind of wealth.

Double and triple taxing of money is unfair. Just because you think it's new money to somebody! It has already been taxed.

But we've had this discussion before. Anybody for the death tax is usually living with the hope that one day the socialist party called demoncrats will save us all.

Just one more reason to support a fair tax bill.

243718[/snapback]

And anybody who calls it the "death tax" is dumber than a box of rocks and soooo susceptible to deceptive marketing.

[DKW 86 7,426]

[And I still think every penny the heirs do get should be taxed as new income to them.  However, as income, the top tax rate is what, 28%, these days? ...which would still be lower than the 55% figure quoted in this article for estate taxes.  Seems fair to me--I have to pay taxes on every penny I get.]

Yes. Tax the tax. That makes for wonderful incentive for folks to want to accumulate any kind of wealth.

Double and triple taxing of money is unfair. Just because you think it's new money to somebody! It has already been taxed.

But we've had this discussion before. Anybody for the death tax is usually living with the hope that one day the socialist party called demoncrats will save us all.

Just one more reason to support a fair tax bill.

243718[/snapback]

And anybody who calls it the "death tax" is dumber than a box of rocks and soooo susceptible to deceptive marketing.

243727[/snapback]

And that would be Tex taking a backhanded slap at me....

[TexasTiger 12,947]

[And I still think every penny the heirs do get should be taxed as new income to them.  However, as income, the top tax rate is what, 28%, these days? ...which would still be lower than the 55% figure quoted in this article for estate taxes.  Seems fair to me--I have to pay taxes on every penny I get.]

Yes. Tax the tax. That makes for wonderful incentive for folks to want to accumulate any kind of wealth.

Double and triple taxing of money is unfair. Just because you think it's new money to somebody! It has already been taxed.

But we've had this discussion before. Anybody for the death tax is usually living with the hope that one day the socialist party called demoncrats will save us all.

Just one more reason to support a fair tax bill.

243718[/snapback]

And anybody who calls it the "death tax" is dumber than a box of rocks and soooo susceptible to deceptive marketing.

243727[/snapback]

And that would be Tex taking a backhanded slap at me....

243730[/snapback]

Oh, it's not personal...you got lotsa company.

[TexasTiger 12,947]

Will the real David please stand up:

http://www.aunation.net/forums/index.php?s...ndpost&p=243245

[DKW 86 7,426]

Will the real David please stand up:

http://www.aunation.net/forums/index.php?s...ndpost&p=243245

243748[/snapback]

I claim setup Tex.

See Tex, the estate tax is being avoided with little effort by Buffett. It is just a scam to ripoff middle class successful folks. The death tax is so much Liberal

Tex, I guess I wasnt clear. This entire thread was a setup by me to get people talking and then let them see he was avoinding the Death Tax that he claims to think is so righteous. Look, no one is going to give away his own money for nothing. We could talk about this stuff ad nauseum. I think it is just funny that those that claim to support these noble liberal causes and then their actions tell you the exact opposite over and over again. Even Warren Buffett and Ted Turner still didnt pay the Death Tax, why the hell not if they support it for you and me so much?

[TexasTiger 12,947]

Will the real David please stand up:

http://www.aunation.net/forums/index.php?s...ndpost&p=243245

243748[/snapback]

I claim setup Tex.

See Tex, the estate tax is being avoided with little effort by Buffett. It is just a scam to ripoff middle class successful folks. The death tax is so much Liberal

Tex, I guess I wasnt clear. This entire thread was a setup by me to get people talking and then let them see he was avoinding the Death Tax that he claims to think is so righteous. Look, no one is going to give away his own money for nothing. We could talk about this stuff ad nauseum. I think it is just funny that those that claim to support these noble liberal causes and then their actions tell you the exact opposite over and over again. Even Warren Buffett and Ted Turner still didnt pay the Death Tax, why the hell not if they support it for you and me so much?

243752[/snapback]

Congratulations. I had no idea you were worth more than 2 million dollars. Unfortunately, I'm not, so I'll be avoiding it, too, without even trying.

[DKW 86 7,426]

If ANYONE has $2M it is because they earned it. What they do with it is their business. It is none of yours or mine or the Fed Govt's.

[TexasTiger 12,947]

If ANYONE has $2M it is because they earned it. What they do with it is their business. It is none of yours or mine or the Fed Govt's.

243774[/snapback]

That's a valid view. But do understand that 2 million passes tax free, so unless you have more than two million, this isn't applicable:

why the hell not if they support it for you and me so much?

Buffet states he doesn't think dynastic wealth is healthy. History tends to lend credence to such a view. He supports the estate tax for that and perhaps other reasons, not just for the purpose of giving to the federal government, to which he will likely still be taxed millions of dollars on what he does pass.

Over the years, though, the estate tax has probably encouraged philanthropic giving. Not a bad thing. I support it primarily because we have huge budget deficits. I would like a balanced budget amendment and then I could live with whatever means they got there that was political palatable to most Americans. I suspect the estate tax would stay in such a scenario. But I do think the amount that is free-and-clear should be indexed to inflation or some similar measure.

[TitanTiger 20,498]

I find it hard to fault someone who is avoiding estate tax by giving 85% away to charity. The percentage he's giving away far exceeds anything the estate tax would have taken. I guess I'm just not understanding the point. The principle at work here isn't whether it's better for the gov't or a charity to get the money. The principle is whether it's better to sow that money back into society at large or to pass as many billions as possible to your heirs so they never have to work again and you keep the money in the family.

Whether you agree with his position on it or not, that is his point, not whether he should let it be taxed or instead give it away through other means.

[DKW 86 7,426]

Okay Titan, here is the point. ***Examples only***

Scenario 1: He dies without all this. $44bn gets taxed with the Death Tax. The estate pays something like $23B in taxes to the Fed Govt who wastes most of the money in administrative costs. Kids and the original charities get the rest. Lets say the kids get the same amounts both times, about $4B total. The original charities get only $17BN.

So: ***Examples and estimates only***

$44B

Feds: $23B

Kids: $4B

Cha: $17B

Scenario 2: He dies with all this. $40B to charity. $4B gets taxed with the Death Tax. The estate supposed to pay something like $4B in taxes. Kids actually pay about $2b in taxes as per Death Tax. Lets say the kids get the same amounts both times, about $4B total. The new charities get $40B, tax free.

Feds: $2B

Kids: $2B after Death Tax

Cha: $40B

The whole point here and everywhere is that it is his money. The Fed govt should not be involved in any way in this. He paid income taxes. He paid taxes on his investments, etc. he played by the rules. It is his money. Why should the Feds be involved at all after they have already collected taxes off this money 2-3 times already. In Scenario 2, the only real loser is the Feds. They lose $21B in taxes. Why did he have to do all this razmataz? THe Death Tax is unfair and unjust and EASILY skirted anyway. I bet Death Tax revenues go way down because everyone in America will see this as how to skirt the system.

[quietfan 233]

Double and triple taxing of money is unfair. Just because you think it's new money to somebody! It has already been taxed.

243718[/snapback]

I never understood the logic that there is anything unfair about double taxing the same money...it happens all the time. If I work for someone else and they pay me from their pocket, that money was taxed as income when they got it and now it's taxed as income when I get it. I take that money and buy something, it's taxed again for sales tax. If I bought gasoline along with other items at a convenience store, I may end up paying sales tax and fuel tax on money that I've already paid income tax on. Who says money cannot be taxed more than once? ...why not?

The whole point here and everywhere is that it is his money.

243848[/snapback]

No, once he dies its his heirs' money, and they have never paid taxes on it before.

I think this whole argument boils down to nothing more than just wishing the government didn't take as much in taxes, period (and there is nothing wrong with feeling that way). I'd rather someone just be up front about it and say "I don't think the government needs/deserves so much revenue and I'd rather keep it myself". I can accept that as an honest opinion whether I agree with it or not. But specious arguments like "money can't be taxed twice" or "it's a tax on death" or "it's his estate, he should be able to do as he wishes with it" are, IMO, just red herrings to disguise the real point: "I don't like the government taking my money".

[DKW 86 7,426]

Double and triple taxing of money is unfair. Just because you think it's new money to somebody! It has already been taxed.

243718[/snapback]

I never understood the logic that there is anything unfair about double taxing the same money...it happens all the time. If I work for someone else and they pay me from their pocket, that money was taxed as income when they got it and now it's taxed as income when I get it. I take that money and buy something, it's taxed again for sales tax. If I bought gasoline along with other items at a convenience store, I may end up paying sales tax and fuel tax on money that I've already paid income tax on. Who says money cannot be taxed more than once? ...why not?

The whole point here and everywhere is that it is his money.

243848[/snapback]

No, once he dies its his heirs' money, and they have never paid taxes on it before.

I think this whole argument boils down to nothing more than just wishing the government didn't take as much in taxes, period (and there is nothing wrong with feeling that way). I'd rather someone just be up front about it and say "I don't think the government needs/deserves so much revenue and I'd rather keep it myself". I can accept that as an honest opinion whether I agree with it or not. But specious arguments like "money can't be taxed twice" or "it's a tax on death" or "it's his estate, he should be able to do as he wishes with it" are, IMO, just red herrings to disguise the real point: "I don't like the government taking my money".

243855[/snapback]

I dont know about red herrings but It is my money, I dont need to pay more than an acceptable level in taxes. All the federal govt is going to do is waste then money anyway.

[BamaGrad03 0]

I never understood the logic that there is anything unfair about double taxing the same money...it happens all the time. If I work for someone else and they pay me from their pocket, that money was taxed as income when they got it and now it's taxed as income when I get it. I take that money and buy something, it's taxed again for sales tax. If I bought gasoline along with other items at a convenience store, I may end up paying sales tax and fuel tax on money that I've already paid income tax on. Who says money cannot be taxed more than once? ...why not?

Actually, they dont pay taxes on the salary they pay you.

Example: I just finished a website for which i had to contract out a designer. Half of the money I make goes to the designer. But when it comes tax time, ill 1099 the designer and HE pays the taxes on the half he got...i pay on the half i got.

But per your argument...if its ok to tax it twice, why not tax it 5 times? Or 10?

Why not let the government have ALL your money and let them decide how much you deserve to keep?

[DKW 86 7,426]

Hey BG, if QF doesnt want his money he can send t to you and me. We will find something to do with it.

[BamaGrad03 0]

Hey BG, if QF doesnt want his money he can send t to you and me. We will find something to do with it.

243864[/snapback]

Yeah ill pay taxes on it... put the rest in an interest bearing account, 40 years from now it will be worth 20 million dollars...ill take it out and get hit with a 50% tax from the gvmt. Then ill give it to my kids when I die and theyll get 5 million bucks.

But hey, the government EARNED that money.

[quietfan 233]

I dont need to pay more than an acceptable level in taxes.

243860[/snapback]

Finally! This is exactly the point I was making. Your statement here is straight forward, honest, and not couched in any mumbo-jumbo about "double taxation", "special cases", "taxing the dead", ifs, ands or buts, etc. The bottom line is you don't want the government taking any more of your money than you think is appropriate. I respect that as an honest, heartfelt opinion.

I never understood the logic that there is anything unfair about double taxing the same money...it happens all the time. If I work for someone else and they pay me from their pocket, that money was taxed as income when they got it and now it's taxed as income when I get it. I take that money and buy something, it's taxed again for sales tax. If I bought gasoline along with other items at a convenience store, I may end up paying sales tax and fuel tax on money that I've already paid income tax on. Who says money cannot be taxed more than once? ...why not?

Actually, they dont pay taxes on the salary they pay you.

Example: I just finished a website for which i had to contract out a designer. Half of the money I make goes to the designer. But when it comes tax time, ill 1099 the designer and HE pays the taxes on the half he got...i pay on the half i got.

But per your argument...if its ok to tax it twice, why not tax it 5 times? Or 10?

Why not let the government have ALL your money and let them decide how much you deserve to keep?

243861[/snapback]

Re: Employer/employee taxes, I was thinking of a more basic level in which I take my paycheck home and pay my income tax on it. After that I hire someone, to cut my grass, say. He then owes income taxes on the money I give him for the job--meaning that money was taxed once as my income, then taxed again as his income. I see no difference between this and money being taxed once as a parent's income, then taxed again as a child's income when he/she inherits it. (In fact, at least the lawn mower worked for the money, the child may have not done a single constructive thing to acquire or deserve his.)

I'm not arguing that there is no such thing as excessive taxation. Of course government can tax a nation's economy into the ground, or even drive its citizens into bankruptcy or revolt, and that's is certainly not wise or fair. However, if we agree that a government has the right to tax once, I see no difference between that and taxing twice, thrice, or however many times. The argument, to me, is over the amount of money taken from the citizens, not how it's labeled or collected.

Hey BG, if QF doesnt want his money he can send t to you and me. We will find something to do with it.

243864[/snapback]

Yeah ill pay taxes on it... put the rest in an interest bearing account, 40 years from now it will be worth 20 million dollars...ill take it out and get hit with a 50% tax from the gvmt. Then ill give it to my kids when I die and theyll get 5 million bucks.

243872[/snapback]

...afraid you may be sadly disappointed if you have aspirations of getting yourself or your kids rich on what I make!

[TexasTiger 12,947]

I dont need to pay more than an acceptable level in taxes.

243860[/snapback]

Finally! This is exactly the point I was making. Your statement here is straight forward, honest, and not couched in any mumbo-jumbo about "double taxation", "special cases", "taxing the dead", ifs, ands or buts, etc. The bottom line is you don't want the government taking any more of your money than you think is appropriate. I respect that as an honest, heartfelt opinion.

I never understood the logic that there is anything unfair about double taxing the same money...it happens all the time. If I work for someone else and they pay me from their pocket, that money was taxed as income when they got it and now it's taxed as income when I get it. I take that money and buy something, it's taxed again for sales tax. If I bought gasoline along with other items at a convenience store, I may end up paying sales tax and fuel tax on money that I've already paid income tax on. Who says money cannot be taxed more than once? ...why not?

Actually, they dont pay taxes on the salary they pay you.

Example: I just finished a website for which i had to contract out a designer. Half of the money I make goes to the designer. But when it comes tax time, ill 1099 the designer and HE pays the taxes on the half he got...i pay on the half i got.

But per your argument...if its ok to tax it twice, why not tax it 5 times? Or 10?

Why not let the government have ALL your money and let them decide how much you deserve to keep?

243861[/snapback]

Re: Employer/employee taxes, I was thinking of a more basic level in which I take my paycheck home and pay my income tax on it. After that I hire someone, to cut my grass, say. He then owes income taxes on the money I give him for the job--meaning that money was taxed once as my income, then taxed again as his income. I see no difference between this and money being taxed once as a parent's income, then taxed again as a child's income when he/she inherits it. (In fact, at least the lawn mower worked for the money, the child may have not done a single constructive thing to acquire or deserve his.)

I'm not arguing that there is no such thing as excessive taxation. Of course government can tax a nation's economy into the ground, or even drive its citizens into bankruptcy or revolt, and that's is certainly not wise or fair. However, if we agree that a government has the right to tax once, I see no difference between that and taxing twice, thrice, or however many times. The argument, to me, is over the amount of money taken from the citizens, not how it's labeled or collected.

Hey BG, if QF doesnt want his money he can send t to you and me. We will find something to do with it.

243864[/snapback]

Yeah ill pay taxes on it... put the rest in an interest bearing account, 40 years from now it will be worth 20 million dollars...ill take it out and get hit with a 50% tax from the gvmt. Then ill give it to my kids when I die and theyll get 5 million bucks.

243872[/snapback]

...afraid you may be sadly disappointed if you have aspirations of getting yourself or your kids rich on what I make!

243958[/snapback]

BG doesn't understand tax rates, or interest rates.