Warren Buffet

[Irvine511]

I would suggest that Warren Buffet’s message is quite the opposite regarding the Estate Tax. Rather than having the government bleed Buffett’s lifelong work dry, he is acting on his own and bypassing what the government would do (or not do) with the money. It is a bold statement of self action, instead of government action.

lol -- i'm emotional? well, i supose if you think that the big, nasty government would "bleed" the 2nd wealthiest man on earth, i suppose we know where our sympathies lie -- with the idea that we, too, could one day become that rich and that wealthy, when reality is quite the opposite. but that's what American operates on -- optimism against the odds.

well, i suppose you can take from it whatever you want. his phrase about leaving your kids "enough to do anything, but not enough to do nothing" fits perfectly into the whole point of the estate tax -- that we are not landed gentry. we are not 18th century europe were generations of inept aristocracy were kept in power on the basis of nothing but lineage. thank goodness we're much more of a meritocracy -- in this country, we strive (against the best efforts of the Bushes) to reward work and not pre-existing wealth, and to liberate the talents of the many not protect the wealth of a few.

As for what an individual should pass on to their children, I hope the individual would retain that choice, instead of distant politicians determining how you should love your family.

yes, if i were straight, i'm sure i'd find Paris Hilton really hot too.

it also seems to me that you've made quite a misformulation of what "love" is and/or should be. i know it's natural to want to hand wealth to children, but this also seems to elevate the biological family to supreme status in our society -- it seems quite gauche, and certainly anti-philanthropic (if not totally misanthropic) to indulge this base impulse to benefit one's own genetic material. in other threads, i was told that i should make myself content with philia and agape - implicit in this suggestion was the assumption that these two other forms of love are superior to "family values" and the privilege of biology.

i wonder what Jesus would have left to the children he had with Mary Magdalen?

finally, it's amazing to me that we would ask even less of people to whom society has given so much, nepotism is corrosive to a democratic society, and i'm quite certain Buffet would agree with me:


[q]"Neither [late wife] Susie nor I ever thought we should pass huge amounts of money along to our children," said Warren Buffett, who said he plans to give away his remaining stock holdings after his death but that he has "quite a bit of cash" he still plans to leave to those close to him. "Our children are great," he told Fortune. "But I would argue that when your kids have all the advantages anyway, in terms of how they grow up and the opportunities they have for education, including what they learn at home - I would say it's neither right nor rational to be flooding them with money."

http://www.washingtonpost.com/wp-dyn/content/article/2006/06/25/AR2006062500801_2.html

[/q]

 

[Irvine511]

So a man who busts his hump all his life to provide for his family shouldn't be able to pass that money on to his family without being taxed a second time on it?

Quite frankly, it's none of your's or the government's business what a man should do with his own money when he dies.

do you know what percentage of Americans would ever be affected by the Estate Tax?

do you know how much money has to be in one's estate to be taxed?

it is in the government's interests, and in any democratic society's interests, to at least not facilitate the creation of dynasties. and Buffet apparently understands this very, very well.

 

[80sU2isBest]

do you know what percentage of Americans would ever be affected by the Estate Tax?

do you know how much money has to be in one's estate to be taxed?

So I am to infer that that you see nothing wrong with taxing the same assets twice as long as it's the rich it's being done to?

Sounds like the old "punish the rich for being rich" mentality to me.

 

[Irvine511]

So I am to infer that that you see nothing wrong with taxing the same assets twice as long as it's the rich it's being done to?

Sounds like the old "punish the rich for being rich" mentality to me.

as long as it is above an established level that won't affect 99.5% of the population, then yes.

after all, this is how we do taxes -- those who make more, pay more. those who make less, pay less. those to whom society has benefited the most, the most is expected.

and let's keep in mind, that an estate tax is totally different from an income tax in that an estate is inherited, it is money gained through nothing other than being born to the right people, it is not money earned through work.

and i also don't agree with your formulation of said mentality, and you present it as if it's already been debunked/disproved.

 

[trevster2k]

Complaining about the estate tax is like complaining that your Rolex watch is off by a 10 seconds, awww, poor baby!!!

If someone wants to leave me an estate in excess of $1,000,000 US and I have to pay taxes on it, then by all means, gimme! It ain't lotto but then again, here in Canada, lotto winnings are tax free.

 

[80sU2isBest]

after all, this is how we do taxes -- those who make more, pay more. those who make less, pay less. those to whom society has benefited the most, the most is expected.

and let's keep in mind, that an estate tax is totally different from an income tax in that an estate is inherited, it is money gained through nothing other than being born to the right people, it is not money earned through work.

It is indeed money earned through work. That money was earned by the person who initially passed it down. It's his own money, and he should have the right to pass it down to whomever he wants, without it being taxed twice. Do you think it is ethical to tax money twice?

 

[80sU2isBest]

Complaining about the estate tax is like complaining that your Rolex watch is off by a 10 seconds, awww, poor baby!!!

If someone wants to leave me an estate in excess of $1,000,000 US and I have to pay taxes on it, then by all means, gimme! It ain't lotto but then again, here in Canada, lotto winnings are tax free.

Here in the states, all income is taxed. Why should that income also be taxed when passed down to a family member? That's double taxation. Are you seriously okay with that?

 

[martha]

If someone wants to leave me an estate in excess of $1,000,000 US and I have to pay taxes on it, then by all means, gimme!

Let's take a middle road supported by experience, which can be sorely lacking in a thread like this. 13 years ago, people in my husband's family were accidentally killed. We, along with other familiy members, inherited his dad's house. Fortunately, the entire estate was under the then-limit of $500,000. Most of the estate's value was in real property; it was a very cash-poor estate. If the estate had been over the Estate Tax threshold of a half-million dollars, we would have been SOL. The only was to have possibly paid any inheritance tax would have been to sell the property. We still live in the house, and without the inheritance, and the increasing value of the property, neither of us would have been able to pursue our schooling, and I would most likely not be a teacher.

A million dollars sounds like a wind-fall, but in many, many cases, these estates are property, not cash. Houses on my block frequently sell for over $600,000. I would hate to think that a family that worked hard for the property would have to sell a house simply to pay the taxes.

 

[trevster2k]

I can appreciate situations where the taxes become a burden and happy to hear that your experience worked out financially. Assets are taxed over and over again all over the place. Estates are no exception.

A similar event happened to the "winners" of Oprah's car giveaway a couple years ago. They were stuck with a tax bill for winning a car which some could not afford.

So maybe they should raise the estate tax amount to match the ridiculous increase in property values but there has to be a threshold applied somewhere. When my parents die, they will leave me with nothing, they have nothing, no bonds,stocks, cash, maybe property worth $250,000. So I have no stakes in this issue so I can say whatever I feel like plus being Canadian none of this affects me. I just don't see the big deal for the rich to pay on tax on having fortunes being passed around, it's more like a transfer fee in my view.

 

[financeguy]

I would suggest that Warren Buffet’s message is quite the opposite regarding the Estate Tax. Rather than having the government bleed Buffett’s lifelong work dry, he is acting on his own and bypassing what the government would do (or not do) with the money. It is a bold statement of self action, instead of government action.

Warren Buffet has actually been quoted as being in favour of estate taxes.

 

[yolland]

^^ financeguy is correct.

The New York Times, June 26, 2006

Warren Buffett, the billionaire investor and executive, said today that he never seriously considered doing anything with his $44 billion fortune except giving it all away. "I'm not an enthusiast for dynastic wealth, particularly when 6 billion others have much poorer hands than we do in life," Mr. Buffett said at the New York Public Library, where he was appearing with Bill and Melinda Gates, the only Americans richer than he is.

Known as the Oracle of Omaha as much for his outspoken detachment from the usual habits and pretensions of the super-rich as for his spectacular financial success and folksy, astute investing advice, Mr. Buffett joked today about the attitudes he hears expressed by some others in his income bracket. "I love it when I'm around the country club, and I hear people talking about the debilitating effects of a welfare society," he said. "At the same time, they leave their kids a lifetime and beyond of food stamps. Instead of having a welfare officer, they have a trust officer. And instead of food stamps, they have stocks and bonds."

Mr. Buffett, the grandson of a grocer and the son of a stockbroker, has never made any secret of his distaste for inherited wealth, and has often said that he had no intention of making mega-heirs and heiresses of his children. So it was not surprising that he said on Sunday that he would give away more than $37 billion of his fortune. What was surprising, however, was that he outlined specifically what he would do with the bulk of his wealth while he was still very much alive. He had said previously that he would wait to do so in his will. Apparently mindful of the place in history held by philanthropists like Andrew Carnegie and J. Paul Getty, Mr. Buffett, 75, said today that he hoped his giving would inspire other wealthy people to give generously as well, and referred several times to John D. Rockefeller Sr. "I would hope that a few of them would pick up on this model; I think it's a sensible model," he said.

Not that his children will be left empty-handed. Mr. Buffett said that the assets he is not giving to charity today will be divided up later between other philanthropic causes and his family. His children, he said, were not at all disappointed not to be receiving the lion's share of his fortune. "They've known all along my views on inherited wealth, and share them," he said in a news conference this afternoon. "They have money that most people would dream of. They're lucky, in that respect, when they selected their parents."

The New York Times, February 14, 2001

Some 120 wealthy Americans, including Warren E. Buffett, George Soros and the father of William H. Gates, are urging Congress not to repeal taxes on estates and gifts. President Bush has proposed phasing out those taxes by 2009. But a petition drive being organized here by Mr. Gates's father, William H. Gates Sr., argues that "repealing the estate tax would enrich the heirs of America's millionaires and billionaires while hurting families who struggle to make ends meet." The billions of dollars in government revenue lost "will inevitably be made up either by increasing taxes on those less able to pay or by cutting Social Security, Medicare, environmental protection and many other government programs so important to our nation's continued well-being," the petition says.

In addition to the loss of government revenue, the petition says, repeal would harm charities, to which many of the affluent make contributions as a way of reducing the size of their estates. "The estate tax," it says, "exerts a powerful and positive effect on charitable giving. Repeal would have a devastating impact on public charities."

Mr. Buffett, the Omaha investor who ranks fourth on the Forbes magazine list of the richest Americans, said in an interview that he had not signed the petition itself because he thought it did not go far enough in defending "the critical role" that he said the estate tax played in promoting economic growth, by helping create a society in which success is based on merit rather than inheritance.

Mr. Buffett said repealing the estate tax "would be a terrible mistake," the equivalent of "choosing the 2020 Olympic team by picking the eldest sons of the gold-medal winners in the 2000 Olympics...We would regard that as absolute folly in terms of athletic competition," he said. "We have come closer to a true meritocracy than anywhere else around the world. You have mobility so people with talents can be put to the best use. Without the estate tax, you in effect will have an aristocracy of wealth, which means you pass down the ability to command the resources of the nation based on heredity rather than merit."

 

[trevster2k]

^you don't earn $37,000,000,000 by being a stupid man. Buffett sees the big picture which is perhaps why he was so successful as an investor.

 

[80sU2isBest]

I just don't see the big deal for the rich to pay on tax on having fortunes being passed around, it's more like a transfer fee in my view.

If you see nothing wrong with a "transfer fee", as you call it, then you would see nothing wrong with the following scenario.

For her birthday, you give your sister a gift of $40. The government steps in and says "oh wait, there's a transfer fee that applies", and takes $10 away from your sister.

Since you are in favor of "transfer fees", you should take no issue with the scenario I just described.

 

[maycocksean]

The two most interesting posts on this subject so far are Martha's personal experience with the estate tax, and the article that indicates that Warren Buffet actually supports the estate tax.

Both imply that this subject is a little more complicated then perhaps we'd like to admitt.

 

[Irvine511]

It is indeed money earned through work. That money was earned by the person who initially passed it down. It's his own money, and he should have the right to pass it down to whomever he wants, without it being taxed twice. Do you think it is ethical to tax money twice?

he can pass on whatever money he wants when he's alive, it's that when he's dead, and children inherity the money through no work of their own that it gets taxed.

and he's perfectly allowed to pass it on. it's just going to be taxed because it is inherited money not earned income.

and it is 100% ethical.

 

[Irvine511]

If you see nothing wrong with a "transfer fee", as you call it, then you would see nothing wrong with the following scenario.

For her birthday, you give your sister a gift of $40. The government steps in and says "oh wait, there's a transfer fee that applies", and takes $10 away from your sister.

Since you are in favor of "transfer fees", you should take no issue with the scenario I just described.

ever used an ATM?

 

[Irvine511]

The two most interesting posts on this subject so far are Martha's personal experience with the estate tax, and the article that indicates that Warren Buffet actually supports the estate tax.

Both imply that this subject is a little more complicated then perhaps we'd like to admitt.

this is a very fair post, and Martha's situation is interesting, though i had thought that the tax didn't apply unless it was worth over $1.5m, and wikipedia says this:

[q]For a person dying during 2005, an estate with a value less than $1,500,000 would not pay a federal estate tax and most likely would not have to file a federal estate tax return. The applicable exclusion amount increases to $2,000,000 for decedents dying in the years 2006, 2007 and 2008. The amount increases to $3,500,000 for 2009.[/q]

 

[80sU2isBest]

ever used an ATM?

I wasn't aware that the governement gets the fees that a bank charges for ATM withdrawal...

Hmmm...learn something new every day...

 

[80sU2isBest]

he can pass on whatever money he wants when he's alive, it's that when he's dead, and children inherity the money through no work of their own that it gets taxed.

and he's perfectly allowed to pass it on. it's just going to be taxed because it is inherited money not earned income.

and it is 100% ethical.

So, you'd be okay with the following scenario, I guess:

Joe Blow earns 19,000 a year. When he dies, he leaves his entire savings account - all $10,000 of it - to his children. The government then takes $2500 of that, leaving his children with $7500.

I know that wouldn't happen under the current guidelines of the estate tax, but if you agree with it in principal, you should be consistent and agree that it applies to everyone. Otherwise, you are discriminating.

 

[Liesje]

so.....about Warren Buffet......

 

[Irvine511]

I wasn't aware that the governement gets the fees that a bank charges for ATM withdrawal...

Hmmm...learn something new every day...

so it's okay when a bank does it, but not the government.

 

[Irvine511]

So, you'd be okay with the following scenario, I guess:

Joe Blow earns 19,000 a year. When he dies, he leaves his entire savings account - all $10,000 of it - to his children. The government then takes $2500 of that, leaving his children with $7500.

I know that wouldn't happen under the current guidelines of the estate tax, but if you agree with it in principal, you should be consistent and agree that it applies to everyone. Otherwise, you are discriminating.

so do you think that people who make over $100,000 a year should pay a higher percentage of their income in taxes than someone who makes $25,000 a year?

because that's discrimination, too, isn't it?

 

[martha]

this is a very fair post, and Martha's situation is interesting, though i had thought that the tax didn't apply unless it was worth over $1.5m, and wikipedia says this:

[q]For a person dying during 2005, an estate with a value less than $1,500,000 would not pay a federal estate tax and most likely would not have to file a federal estate tax return. The applicable exclusion amount increases to $2,000,000 for decedents dying in the years 2006, 2007 and 2008. The amount increases to $3,500,000 for 2009.[/q]

My situation occurred in 1993.

And again, we all know what the average family home is worth right now.

 

[80sU2isBest]

so do you think that people who make over $100,000 a year should pay a higher percentage of their income in taxes than someone who makes $25,000 a year?

because that's discrimination, too, isn't it?

No, I sure don't. I think there ought to be a flat 12% rate.

 

[Irvine511]

No, I sure don't. I think there ought to be a flat 12% rate.

at least you're consistent.

do you see any difference between earned wealth and inherited wealth?

(keep in mind, the earner in this situation is dead)

 

[80sU2isBest]

so it's okay when a bank does it, but not the government.

My bank doesn't charge me one red cent if I withdraw money from an ATM owned by my bank. I have the choice to accept that free withdrawal or pay a withdrawal fee by using other bank's ATMs. In fact, my friend's bank doesn't even charge him for using other ATMs. So, added to my choice of which ATM to use, I even have the choice of switching banks.

With banks, you have many choices. Nothing is forced upon you.

What choice do you have regarding the government assessing an estate tax? Only one: you have the choice to limit your income to an amount below the "taxable" amount.

 

[80sU2isBest]

at least you're consistent.

do you see any difference between earned wealth and inherited wealth?

(keep in mind, the earner in this situation is dead)

I am editing this from my original post, because I thought of something. I do think there is a difference between earned wealth and inherited wealth. Earned wealth is income, and is taxed. Inherited wealth is a gift from someone who earned the money and has already paid taxes on it.

If my father worked his butt off his entire life to provide for his family, his family shouldn't be punished when he actually decides to leave them the money he was already taxed on.

And you know what, it doesn't even matter to me if it's family. If you walked some sweet old woman across the street every day for 15 years and she decided to leave you $50 million, I think you should get every cent of that $50 million she left you, because she had already paid taxes on it once.

 

[nbcrusader]

The idea that “Warren Buffet supports the estate tax” is somewhat misleading. First, as someone who can take care of multiple generations of his family with or without an estate tax, I’m not sure his support is meaningful to the average American who is forced through difficult financial times due to the estate tax (Martha’s example is not unusual at all). Second, he trumpets the estate tax as a “motivating” factor for charitable work – the taking of money out of the government’s hands and putting it into the hands of private aid groups. Essentially, give it away or we will take it away from you. This is “American”?

I can fully understand if someone wants to adopt Buffet’s personal goal to “give them enough to do anything, but not enough to do nothing." I would applaud them. I am interested, however, to see how some would feel free to impose this personal mantra on others, when the complaints of government intrusion on the individual are so often heard as well.

 

[maycocksean]

I think the undercurrent to this whole discussion is pretty clear.

There are those that believe that government is something that should be limited, that feeding the beast via tax money is a bad idea, and so no matter how rich or poor you are the less money that goes to the government the better. Those less fortunate are better served when those more fortunate are allowed to keep more of their wealth. We must trust in the goodwill of the well-off, and the efforts of privately funded charities to meet the needs of the needy.

This is the Standard Conservative Stance. You'd be hard pressed to find a conseravative anywhere these days who'd support any kind of tax.


Then there are those that believe that government is a great good, that should be empowered to provide for those who can't provide for themselves. Taxes should be high enough to enable the government to fund whatever the needs of the nation might be, and naturally that burden should be shouldered by those more able to afford it. Those less fortunate are better served by a government which can be relied upon, rather than the whims of the well-off and good intentions of private charities.

This is the Standard Liberal Stance. You'd be hard pressed to find a liberal anywhere these days who would oppose a tax that they believe would contribute to the common good.

The problem with both of these views, which, thanks to folks like Ann Coulter and Michael Moore, are becoming more and more entrenched and knee-jerk is that they are too simplistic. Both views ignore that elements of truth in the opposing view. Both views, in my opinion, ignore the complicated issues involved in running a nation.

I'm just amazed that we still have people trying to argue that Warren Buffet does not oppose the estate tax when he said he did!! I know it must be frustrating as a conservative to have this master of free enterprise and free market capitalism not toe the "party line." Doesn't he understand he wouldn't be rich as freakin' Croesus if the "evil government" was able to tax his ass into poverty like the liberals want it to? Doesn't he understand that he and his family have to singluar control over every single dime of his multiple billions? How frustrating.

Likewise, it would seem we must acknowledge in light of Martha's story, that the estate tax as it stands now is making life very difficult for some people who might not be so rich as they seem. Maybe the estate tax should, at the very least be reformedso that it doesn't end up harming those who are theoretically rich. I kind of have a hard time with the idea of taxing non-liquid assets. I'm not a rich man, and I know that if I say, won a car in a contest, I'd probably have to sell it because I wouldn't be able to afford the taxes on it (never mind, that I need a car). For those of us who are living paycheck to paycheck, having a car, a house, or property the value of which can be taxed is a very real burden, because having such assests does not give us anymore cash in our pockets to pay additional taxes.

We could make real progress if we quit the knee-jerk "conservative/liberal" responses and looked at the issue with the objectivity that it deserves.

 

[80sU2isBest]

We could make real progress if we quit the knee-jerk "conservative/liberal" responses and looked at the issue with the objectivity that it deserves.

Personally, I think it's a little insulting that you reduce all of our opinions to "knee-jerk" reactions. Maybe we've actually all thought about this and similar subjects for a while and have formed our opinions not based on party lines or impulse, but on our own thought processes and value systems.