I would never have imagined that my new hero would be a mega-rich American investor. But when Warren Buffett called for rich Americans like himself to pay higher taxes, I started to think that perhaps we are entering a new phase in humanity – where greed is not necessarily seen as good, where some of the wealthy are prepared to share and where the contributions of the not so well off are considered as important as those who have “made it”. Warren Buffet says :
“While the poor and middle class fight for us in Afghanistan, and while most Americans struggle to make ends meet, we mega-rich continue to get our extraordinary tax breaks. These and other blessings are showered upon us by legislators in Washington who feel compelled to protect us, much as if we were spotted owls or some other endangered species. It’s nice to have friends in high places……….
If you make money with money, as some of my super-rich friends do, your percentage may be a bit lower than mine. But if you earn money from a job, your percentage will surely exceed mine — most likely by a lot.”
It reminds me of Sam Morgan who said last year
“The amount of tax people pay in different areas is not fair. The people that pay the most tax are working people.”
Back in the US of A Manhatten Millionaire Lawrence Benenson has joined the call saying :
“How much money do you really need? Give it back to the government, pave some roads.”
Scores of New York’s millionaires have signed on to campaigns encouraging “tax equality,”such as the group Responsible Wealth, that includes Edith Everett, a retired Wall Street stockbroker who says :
“People who are just scrimping and saving to pay their rent, they shouldn’t pay one penny more. Rich people make their money on the backs of the workers.”
This is refreshing. May we hear more like it in New Zealand.
No problem with people doing well. Big problem with not paying fair share.
And the US has a CGT and estate tax and even then the wealthy need to pay more.
I dont know why the Democrats dont just dig their heels in and let Bushs tax cuts for the rich expire ( as Bush intended). They are not increasing taxes they are just following George Bushs tax laws
errrr…… Sam Morgan has the right to pontificate all he likes. If he really believes that:
a) the government is best placed to spend his money, and
b) he really should be paying more in tax
then he should feel free to send a check for $100 million to:
The Treasury
1 The Terrace
Wellington
Otherwise he just has an opinion we can feel free to ignore. Piss or get off the pot. At least Warren Buffett has donated pretty much all of his fortune to a good philanthropic cause.
I agree with the writer here that Buffet probably genuinely believes in the need for higher taxes, but they do point to Tim Carney’s skeptical take Stop coddling Warren Buffett
Of course Buffett can always donate to the Bureau of the Public Debt without forcing others to go along with him. Judging by the pitiful amount of money they get not many people take it up.
Myself I think Buffett does far more good giving to the Gates foundation which provides vaccines and immunisations to children in developing countries and provides funding for medical research amongst other worthwhile efforts and unlike the US Government doesn’t also spend billions and billions on bombs and munitions, or to lock thousands upon thousands of people in prison for victimless crimes, or to spy on its own citizens, and so on and so forth.
In the US there is a special tax code for rich people who want to donate more than the taxes that are due for them.
http://www.moneymorning.com.au/20110816/watch-what-the-rich-do-not-what-they-say.html
“According to the U.S. Treasury, during the 2010 financial year $2.8 million was donated as “Gifts to reduce debt held by the public.”
That’s right. Americans who choose to can make voluntary contributions to the U.S. Treasury to cut the national debt.”
So Warren Buffet is simply a blowhard. He is perfectly able to make additional tax payments, and yet he doesn’t.
“Certainly Mr. Buffett and his rich pals see little point. With all their wealth, they’d surely donate more than USD$2.8 million.
After all, Mr. Buffett could double the amount donated to the U.S. Treasury each year by handing over just 0.007% of his personal wealth.
Or, if he’d prefer, he could get his listed firm, Berkshire Hathaway [NYSE: BRK-A] to make the donation. It’s not as though his firm is short of a few bob. According to Bloomberg News, Berkshire Hathaway has “$47.9 billion of cash”.
Or, he could have donated to the Treasury rather than buying 1.5 million shares of U.S. listed firm, Dollar General [NYSE: DG]. A stake that would have cost his firm over USD$40 million – 14-times the sum donated each year to the U.S. Treasury.”
If Sam Morgan, his Dad and Selwyn Pellett were anything more than blowhards themselves they would write donation cheques too.
The problem with mega-taxing the mega-rich is it makes them move to another country and take their money with them – eg U2, Rolling Stones, Coca Cola…
I’d like Sam Morgan to stay in New Zealand and feel free to (say for example) build a university in Northland. Eh Sam, how about it?
Google Buffett on Wikipedia
A notable philanthropist, having pledged to give away 99 percent of his fortune to philanthropic causes, primarily via the Gates Foundation.
Taxing him would just leave less for philanthropy. Yeah good plan that.
He wants to pay more tax off the income flow (including the CG over there) – the wealth going to charity (by gift and or when he retires).
Whaleoil when even Quantitative easing was at $600 billion each time, Buffet giving all his money away ( say $10 billion) to the Treasury would be a ‘crusher collins’ type exercise in futility.
Maybe the sound of the tumbrel wheels would get many more begging for a tax increase
Wonder if Buffett would be saying this if he was just seeking to make his fortune, not at the end of doing so?
In the US 10% of the population pay 70% of the tax, and 2% of the population pay 30% of the tax. If Warren Buffet was serious about paying more tax, he wouldn’t be writing puff pieces, he would be writing out a cheque.
Bill.
This is also a good read if you really think Buffett is such an uninterested benevolent party.
http://www.ritholtz.com/blog/2010/11/dear-uncle-sucker/
I am sure if I looked hard enough I could find a lot to criticise Buffet about. I just thought his message was a nice change from the usual me, me, me we often hear. And if you want to have a go at Sam Morgan – good luck. I note that the NACTs are only too keen to associate themselves with his initiative in San Francisco. Quite a lot of grovelling going on I hear.
http://www.nbr.co.nz/article/28-million-programme-and-tech-hub-san-fran-boost-nz-entrepreneurs-aw-99077
I bet if you had a look at Buffet, Pellett and Morgan they would have had some quite aggressive accounting advice in their early years to minimize their tax obligations. All very well when you have more money that you will ever need to advocate higher taxes on the next generation of entrepreneurs.
Buffett was lobbying two weeks ago to keep the tax breaks for private jets, no doubt because of his jet leasing business. Sic
X months ago he was lobbying to keep the tax breaks for mortgages and home buyers, no doubt because he owns a house builder, brick maker, paint supplier.
I have always been a huge fan of Buffet but let’s face it he made a billion out of the government support for Goldman Sachs during the GFC and his skin was saved by the taxpayer bailing out IAG where he was on the wrong end of some exotic derivatives.
David , you seem confused . Do you know the difference between taxation of individuals and companies. The activities you refer to are not Buffets, but those of Berkshire Hathaway a public listed company. The better BH does it increases the value of the shares Buffet owns and the higher dividends he gets the more tax he should pay on his income.
“It reminds me of Sam Morgan who said last year
“The amount of tax people pay in different areas is not fair. The people that pay the most tax are working people.” ”
He’s right, working people are paying the most tax. So why do we have a regressive tax system that is predicated on the income you earn, mainly through PAYE which allows bugger all deductions.
So instead of crying that tax cuts are for the rich, why can’t you make the mental leap that those earning more than $70k a year are working too and reduce their taxes. Instead of just imposing an extra tax, capital gains, why didn’t you use the opportunity to move to a broader, flatter tax system? Oh that’s right, people should just pay more tax.
Darien, Warren Buffett has been saying this ‘tax me more’ thing for years. He has a genuine heart-felt belief that those who do well from the society have a responsibility to contribute to society through taxation, according to their means. It’s an old fashioned notion, the idea that everyone in the society benefits from the society, and the debt owed to society from success should be proportionate to that success. I wonder if such an organising principle could ever catch on?
jennifer – The state is not society. The state is an organisation in society (an organisation which IMO does more harm than good to society). Warren Buffett paying more in taxes does not simply equal him “contributing to society”.
@ Quoth, sorry, I may be misrepresenting Warren Buffett, but what I took from what he said to us at the time was that the more money you make the more tax you should pay because your success is down to more than your own efforts. It sounded to me to be a version of Hillary’s ‘it takes a village’ thing and reminded me of the quaint old views that FDR used to roll out when he saved capitalism from itself.
jennifer – Going from “because your success is down to more than your own efforts” to “pay more taxes” to me is a non-sequitor.
Regarding FDR many would argue his New Deal only prolonged the depression. For instance, unemployment stayed in the double digits for the entire decade of the 30s. Many recognise the New Deal as corporatist including those on the left, e.g., Gabriel Kolko in The Triumph of Conservatism.
More often than not we see problems created by state intervention in the market that are later blamed on rapacious capitalism. Hence Robert Lefevre’s “government is a disease masquerading as its own cure”.
The current government changed the rules around donation rebates. Does anyone know if the total donations made has increased since that change?
Interesting that Buffett’s comments get turned back on him as a kind of personal attack when he is actually commenting about the fairness of the tax system. I wonder how much of his fortune he would have to give to the National Treasury for some of the posters in this thread to accept his basic premise that the tax system is inherently unfair?
Interestingly some of the commenters here have praised our PM for donating his salary when he “doesn’t have to”, no one said, when you have $50m working away for you what’s the big deal about $250k a year, and yet that seems to be the attitude toward mr Buffett.
Yale Brozen
Professor Emeritus, Graduate School of Business
Yale Brozen (B.A.’39, Ph.D.’42), Professor Emeritus in the Graduate School of Business and a strong champion of free market economies, died March 4 at his home in San Diego. He was 80.
Along with such pioneering colleagues as Ronald Coase, Milton Friedman and George Stigler, Brozen was an important architect of the Chicago School of Economics, which began to develop in the 1960s and is characterized by a devotion to free markets. Brozen’s support of free markets was driven by a conviction that they would create prosperity for all, especially the poor.
Throughout his academic career, Brozen positioned himself at the interface of economics and public policy, promoting economics as a powerful tool to analyze and shape public and private economic decisions. A scholar of applied economics, microeconomics, industrial organization and technology, Brozen joined the Chicago faculty in 1957 and remained actively involved in teaching and research activities until he retired in 1987.
Sounds like a learned man Tracey. Maybe you should ask yourself why such a man would think that the emergent order of a free society and free markets, why voluntary human interaction and cooperation are better organising principles and will lead to greater prosperity, human happiness and well-being than that imposed upon people top-down through mass coercion.
Look him up and check out this video: The Sunset of the State.
I’ve thought of it often QTR. I’ve lived long enough to know that Economics is not a science, it’s a hollow practice, the alter at which many worship yet it (whatever theory an economist is espousing) is more like the Emperor’s New Clothes than, say physics. much like the stock markets which are not nearly as real as its proponents suggest, although its impact can be, like economic theory.
Can you post any links to those who oppose such theory?