We are developing the social individualist meta-context for the future. From the very serious to the extremely frivolous... lets see what is on the mind of the Samizdata people.
Samizdata, derived from Samizdat /n. - a system of clandestine publication of banned literature in the USSR [Russ.,= self-publishing house]
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Creepy billionaires who want to pay more taxes I have often wondered why it is that so many super-rich – and they do not get a lot richer than Warren Buffett – feel the need to make out that their enormous wealth is something embarrassing or shameful, or that they would rather they did not have it. Our capitalists of today are sometimes a rather glum bunch. Buffett says he wishes he could pay more in taxes. Well, Mr Buffett, I am sure you can look up the address of the IRS from the Internet and send them a big cheque. If he really thinks that Congress can make better use of his wealth than one of the smartest investors of modern times, well, go for it. Get out that pen and sign away. Buffett has already demonstrated, via his contributions to the Bill Gates Foundation, that he knows how to use his wealth for philanthropic purposes.
Of course, if he wants to give it to me, I have certain needs……
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Who Are We? The Samizdata people are a bunch of sinister and heavily armed globalist illuminati who seek to infect the entire world with the values of personal liberty and several property. Amongst our many crimes is a sense of humour and the intermittent use of British spelling.
We are also a varied group made up of social individualists, classical liberals, whigs, libertarians, extropians, futurists, ‘Porcupines’, Karl Popper fetishists, recovering neo-conservatives, crazed Ayn Rand worshipers, over-caffeinated Virginia Postrel devotees, witty Frédéric Bastiat wannabes, cypherpunks, minarchists, kritarchists and wild-eyed anarcho-capitalists from Britain, North America, Australia and Europe.
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Buffett’s father, despite the fact he was a politician, had a sounder mind.
Warren Buffett is only as “creepy” as he is made of straw.
Was he either when he got on the evening news and dared any billionaire in the US to prove he pays a higher tax rate than his secretary does?
Thus far, none of his peers has accepted.
When billionaires pay tax at a lower rate than anybody else does, does that make the billionaire who objects to this situation or the far-from-billionaires who support it “creepy”? Or just lame?
I find it telling that virtually no one paid into Mike Huckabee’s “Tax Me More” fund when he was governor of Arkansas. No doubt Buffet is similarly hypocritical.
Is it because he started off rich? Does he feel guilt that he had a head start and feels he needs to be punished?
I would say it’s that, plus the fairly decoupled nature of effort and profit in his particular field of excellence. I’ve noticed (or at least, I think I have) that people who work in fields where the relationship between effort and profit is, shall we say, less linear/predictable, are more likely to be lefties. This is why, for example, you get leftist Hollywood stars and popstars (because really, there’s no way to know if your next movie or album will be a hit or a flop, and it doesn’t necessarily have to do with how many hard hours you put into it), but comparatively fewer leftist industrialists (where what is “useful” is a bit more predictable, and the more of it you produce, as a general rule, the more $$ you get back in return).
Buffet is in a more Hollywood-type field. There is no meaningful sense in which more hours at the office net him more profits. He can bet on which stocks are going to rise, but only in the vaguest of terms does he know by how much. His wealth from year-to-year is unpredictable – and just like with Hollywood, having established himself cushions him in a way that has little to do with continued quality. That is – in just the same way that people will buy the latest U2 album because it is the latest U2 album, enough people will buy the stocks that Buffet buys at this point that he moves the market himself in an important sense.
So yes, I agree that he probably just feels guilty that his wealth is unearned – but I think there’s more to it than just that he inherited it.
Billionaire guilt is a studied phenomenon. It defies logic of course. Buffet more than anyone should know that he personally could find much better uses for his money than the faceless army of bureaucrats.
Great comment Joshua. Spot on. And, I normally hate the “hallalujeh chorus” school of blog comments.
When Warren Buffett tells us, “I don’t have an accountant or use tax shelters. I just follow what the US Congress tells me to do,” is he implying that there isn’t an accountant in the massive Warren Buffett empire? Or at least an office manager who isn’t insane? Or is the implication that if he does employ a herd of accountants, they don’t instinctively structure his investments to take advantage of loopholes and tax shelters? (If they fail to do so, they should be fired.)
This is all such a load.
The only way wealthy business owners pay less tax than their employees is by taking advantage of the loopholes and shelters put in place by lawmakers whoring for the donations of wealthy business owners.
Buffett is fooling himself if he believes that some incredibly talented people didn’t spend a lot of time and effort getting his tax percentage below their own.
I took his comment that he pays a lower % of income in tax than his secretary does as an argument to lower the tax rate on secretaries. I for one couldn’t agree more.
Joshua I’m afraid that you couldn’t be more wrong. Berkshire Hathaway has averaged 25%+ annual return for the last 25 years.
Warren Buffet should be a model for any true capitalist. He amassed a wildly large fortune and is now in the process of using the money that he made on charities that he believes will change the world. Good on him (and Bill Gates too)
“The only way wealthy business owners pay less tax than their employees is by taking advantage of the loopholes and shelters put in place by lawmakers whoring for the donations of wealthy business owners.”
I dunno. Isn’t the capital gains tax quite a bit lower than the combined rate of payroll and income tax for people making under 100 large? It is less of a loophole than that we simply take a lower percentage of a billionaire’s income than we do for his secretary.
Why is it considered a leftist thing to feel guilt or find remarkable the phenomenon Buffett describes? Do you think that lurking in the heart of every wealthy man is a desire to skew income distribution in Middle America to look identical to Latin America? Does that mean that the 99,999 of every 100,000 Americans who aren’t tycoons have a rational reason if they choose to support Hugo Chavez or John Edwards, if not the guillotine?
Maybe the road to serfdom does not just run the course plotted by Austrian economists. Maybe we all start traveling down it the old-fashioned way (you know, they way actual serfs became serfs), by the great oppressing the many, then enshrining it in law.
Also – Berkshire Hathaway’s annual shareholders meeting is known as “Woodstock for capitalists” and Warren Buffet essentially had an open marriage. Whatever the morality of the situation, describing him as glum doesn’t seem like the right word.
James – please point to the place in my post where I denied Berkshire-Hathaway was a remarkable success.
I do find a libertarian blog complaining about how people want to spend their money to be mildly amusing.
I have to share this thread with my friends.
Oh please. There is nothing unlibertarian about complaining about what other people do with their money any more than it is unlibertarian to complain about what color my neighbors paint their house! It’s only unlibertarian when we start actually forcing him to do what we want him to with his money. I think everyone here respects the fact that Mr. Buffet owns all the wealth he has accumulated and has the right to dispose of it as he sees fit – even if that involves, much to our chargrin, that he wants to donate it to Uncle Sam (although, more accurately, what he wants if for Uncle Sam to force him, and all his buddies too, to cough up more than they do – which isn’t the same thing at all as wanting to donate, but never mind).
I wonder if Buffet knows that contributions to the government are fully deductible as charitable contributions under 501(c)(3)? I think he should write a very large check, for at least several hundred million dollars, and send it in. I think it should be sent to the Treasury Dept, at its main headquarters in Washington D.C.
I am confident that they will gladly accept it. I’m not too confident that they will send him a thank you letter or engrave his name on a brick in the foyer of their office building, but who knows. Anyway he no doubt won’t care about that. It’s the opportunity to contribute to a cause that he really cares about, I’m sure.
Daveon, I am not complaining about Buffett’s choice about what to do with his money; but it is his implied support that we be forced to spend it how he wants that I object to.
Hardly a difficult argument to grasp. Share that with your friends.
Well, for a start he could pay my tax bill if he wants.
Successful people like Buffett who feel embarassed by their wealth because they get paid a lot to do something that they love and comes naturally to them.
Buffett could certainly pay more tax without it affecting his life. It certainly has nothing to do with him being able to be more productive with his wealth than the state. The additional utility he gets from his marginal wealth itself must have diminished. However, wealth is a way to keep score. Just ask a poker player whether it is worth playing “just for kicks” rather than for real cash.
What Buffett is forgetting that for the rest of us mere mortals, the state has to force us to pay tax, it is not just an arbitrary cost of living. For Buffett, his tax bill means he can’t invest in a new start up, for most it represents not being able to send their kids to the school they would like to, or living in better housing, or saving for their retirement. His income is so big, his world so expansive, he just doesn’t get that sick feeling most people do when they look at their payslips and see the big chunk taken by the thieving bastards to pay for stuff we disagree with.
he could just take a proper income and pay the appropriate tax, but instead his walkin’ around money is all dividend and capital gains with the lower associated rates. all fine, but he should STF up about it and leave everyone else alone.
@#*%-ing punk
*Ahem*
Old but on subject I think?
http://www.tcsdaily.com/article.aspx?id=082306D
The same applies in the UK.
http://www.timesonline.co.uk/tol/comment/thunderer/article650265.ece
Those pieces have the actual numbers for the extra money donated and the number of people who do.
Joshua – You said it here – “His wealth from year-to-year is unpredictable”.
It’s not unpredictable the success of BH is based on very predictable returns….
Kit, Buffett started out as a man of modest means, not born rich. He had to struggle to get started but he had superb financial analytical skills and an intense diligence in using them.
His comment that his secretary pays a higher rate of tax than he does is based entirely on the payroll tax. Most Americans pay more in payroll tax than they do in income tax. That is especially true when you consider that they do not receive an income tax deduction for the employee’s share of payroll tax.
To Mr. Buffett and likeminded people-
U.S. Debt to the penny here.
History of “gifts” given here.
Address to send a check to here.
A review of the gifts already given doesn’t look like Mr. Buffett has taken advantage of this oppurtunity, to any significant degree anyway. Let’s see him put his money where his mouth is. If he doesn’t, or doesn’t advocate vociferously for a Warren Buffett Surcharge, then we can rest assured that he really means “I wish taxes could go up for everybody”.
As for his mindset, it’s not too surprising in that the wealthy’s interest in the matter is control. Their “help” always has an element that everyone else is inferior. The use of the State ultimately is to control inferiors no matter how else it is gussied up.
I do find a libertarian blog complaining about how people want to spend their money to be mildly amusing.
Except nobody is really doing that. What we are complaining about is someone who (a) is advocating for higher taxes while (b) not volunteering to pay more himself.
Not to mention (c) I understand Warren Buffet is in the process of setting up a series of trusts which will have the effect of sheltering his estate from the estate tax.
I don’t really know or care what motivates him. I do know that I disagree with his policy prescription. I also know a hypocrite (that is, one who advocates other doing what one will not do oneself) when I see one.
Daveon
“I will have to share this with my friends”.
Have fun in North Korea – or in the nearest university or media outlet.
Michiganny makes a more serious point – in its consequences.
In complaining that the Capital Gains Tax is too low Warren Buffet does the United States great harm – as the Capital Gains Tax does great damage to investment.
There should not be a Capital Gains Tax – as for making it ever higher…..
On the general point of billionare leftists:
I have written about this often before – so there is the danger of boring people (the stuff, musings about why certain people do certain things, is there in posts and endless comments).
Of course they have the right to spend their money arguing for their opinions.
But it must be pointed out that when these opinions call for higher taxes, more government spending or more regulations they both attack liberty and damage the economy (i.e. the prospects of the general population).
“But they know more about the economics than a poor sap like you”.
NO – rich people know more about MAKING MONEY than I do, they do not more about economics than I do.
The two things are very different – although the using the Greek name for household management confuses the two.
People like Warren Buffet know fuck all (no apology for the curse words) about economics. This is not to claim that I am better than them – after all I know fuck all about making money.
Again, business and economics are two quite different subjects (although they often confused).
If a man who has no money talked crap I would say so, and if a man who has billions of Dollars talks crap I see no reason not to point it out.
After all Warren Buffet, Bill Gates, Marc Cuban, Peter Lewis, George Soros (and so on) are not going to give me any money – I am not planning any operations against the United States for a start.
Er… Jonathon, RC Dean et al. I’ve read the original post, I’ve read the interview. He doesn’t actually really say what you claim he does, and it’s not all that creepy.
I can afford to pay more tax myself. I’ve not found too many charities I like or see doing any actual good, and I’m not particuarly alturistic when it comes to physically giving away what is mine. If I’m going to give it away, I’m honest enough to admit that somebody has to force me to do it. I like money too much and I like the things it lets me do and I’m not a hypocrite about these things.
RC Dean: I understand Warren Buffet is in the process of setting up a series of trusts which will have the effect of sheltering his estate from the estate tax. It depends if the trusts are actually for him or charitable for third parties. If his goal is to shelter his wealth and derive deferred income later, then the charge of hypocracy would be bang on. As I understand the money is effectively being given away, so he’s protecting the value of the trust for the people he’s giving it to – which is a perfectly sensible thing to do.
*** If I’m going to give it away, I’m honest enough to admit that somebody has to force me to do it.***
Then is it really giving? If you’re so easy going about “giving” your equity away, then you can let me know where you live so you can “give away” a lot of your stuff, and I won’t use altogether that much force.
Semantics? If you’re forced to, it’s called “taking”. And it’s alright for you if you can reconcile the process as somewhat benign. To get a true flavor of the process might I suggest “giving” less than is asked for, do it long enough, and we’ll see how benign the whole process is. The underlying (yet unstated) discussion is that taxation is thuggery. If you aren’t pulling your hair out at the amount you pay then you don’t have a grasp of the situation.
As for what the article says, he says he should pay more in taxes, perhaps of the payroll form. To do what? The payroll taxes are the taxes that go toward paying for the ill conceived defined benefit plans the US Government has concocted. He pays less due to the Social Security portion capping out at ~$97,000. If he makes millions and millions, he’s still capped on that portion. That’s what’s causing it to be lower. If he’s so damned concerned there’s nothing preventing him from working out the pay necessary to equalize their two rates to 17% (for example if his secretary makes $40,000 per year, give her a raise to $49,000 and she’ll net the same as if she only paid what he pays as a percentage). We don’t see him doing that either.
So all in all it sounds like he’s a blowhard. He wants to control his own money by sheltering it, great. If he feels his employees are paid adequately, fine. If he doesn’t feel like cutting a check to pay down the national debt, more power to him. But the response to him is “don’t go on about how you should pay more taxes, but perhaps your employees should pay less”. And we should do away with non-sensical unfunded defined benefit plans that need force to exist. His initial sentiments are accurate to some degree, his “solution” is fucked up. Some people are raped much more often than he is. The answer to that problem is not he be raped more.
Brad: Fair points, can’t deny them. I don’t neccessarily agree with your conclusions about the results of taxation. To whit: I was wondering on the drive home – if we did live in the world that is wished for here by most, but not all, Samizdataristas, would I be better or worse off and would they be better or worse off.
I know that I’d be a lot better off, would the people here? I can’t say. I accept that a lot of the decisions I make about the form of government I pick and vote for would leave me worse off (although, I’m pretty sure nobody here would be able to guess who has got my vote in the past). The question then becomes do I think that the people I live and work with would be better or worse off as part of my decisions. I think that by living in a more economically libertarian laissez-faire economic model they’d probably do worse. As I’ve earned more and more money I’ve started to worry about that…
It might just be a mixture of traditional Catholic and Middle Class guilt though.
I think they would do much better. Capitalism may benefit the ultra-wealthy proportionally more than it benefits the little guy, but it benefits the little guy too.
Socialism, by contrast, can boast a great deal of success at keeping people poor.
What Socialism is good at doing is making everyone equal. It is not good at making them wealthy. Unfortunately, most people think about wealth in comparative, rather than objective, terms, so there is a lot of confusion on this point. Equalizing wealth is NOT the same thing as increasing it (usually, in fact, it is the opposite) – especially not in the long term.
This is the passage from the interview. Judge for yourselves Daveon’s take:
In other words, tax rates on the rich should be increased, dramatically.
Like I said, if he wants to pay more taxes than he does, there is nothing stopping him from doing so. Hence my comment.
In other words, tax rates on the rich should be increased, dramatically.
He doesn’t say that.
He says that the middle class are shouldering more of the tax burden than the rich.
I’m pretty sure he’s right.
On the other hand, I completely agree with you, if people think they don’t pay enough tax they ought to pay more to the government. They can write a cheque.
So, here’s the thing, I could afford to. So why don’t I? And why should I be different from anybody else?
Actually, Daveon, he does say that elsewhere. Have a look at this bit from CNN, which contains this segment:
Jonathan’s quote doesn’t make it clear, right – but from this bit it’s undeniable that his preferred method of dealing with the inequality in question is raising taxes on those he thinks aren’t paying enough.
Errrr Daveon
I have seen (via television) Mr Warren Buffet asking for higher taxes – including before the Senate.
On the matter of us being surprised about how you really vote.
You may well be correct on that.
I am bigot (I have never pretended not to be) I have no tolerance in my sorry excuse for a soul – and I often judge people more harshly than they deserve (it would be really bad idea to have me on a jury – I would have decided that the accused was guilty in the first couple of seconds).
So you voted for George Bush in 2004.
Well he did introduce the Medicare extention and No-Child-Left-Behind.
However, I will not pretend that I am not surprised.
I am surprised – my sterotype of you was wrong, and I must admit that.
So he must logically infer that the taxes paid by the latter should rise. QED.
Hence my comment.
(sighs, glares at screen)
I think Daveon’s point was that he could also have meant that the middle class tax burden needs to shrink, which could be accomplished by lowering their rates to 17% (or whatever would bring them in line with what he pays). Nothing in the statement you quoted technically rules out that interpretation.
However, we know from other of Mr. Buffet’s statements that that’s not what he means. He’s quite clear that he prefers to raise the taxes of the wealthy to come in line with those of the middle class.
***The question then becomes do I think that the people I live and work with would be better or worse off as part of my decisions. I think that by living in a more economically libertarian laissez-faire economic model they’d probably do worse. As I’ve earned more and more money I’ve started to worry about that…***
Daveon,
I’m going to risk posting this angle again (I’ve done so many times before and so may be a little stale to some).
The U.S. has a $50 TRILLION accrual basis debt. A link in my first comment shows the “hard” debt to be $9,137,339,617,420.28, the rest is the present value of the expected out flow over the expected inflow (over the actuarial period commonly used to estimate all defined benefit programs, public and private) of the unfunded defined benefit programs, mostly Social Security and Medicare. The total estimated personal wealth of every american is about $49 TRILLION (and that includes every last penny our Mr Buffett has). So we would have to sink every last bit of equity we now have to make good on the defined benefits DEFINED THUS FAR, not even all the other good works currently being dreamed up like universal health care etc etc. And it is conjectured that the Western European Socialist Paradises face an even steeper hill as the US still has a better immigrant class coming in (assuming they are naturalized) and a better birthrate. Many European countries have negative birthrates, so will have less productivity to transfer when it is needed most.
Simply put, and not be offensive, the money you have earned and will potentially earn is, in the grand scheme, nothing. Even Warren Buffets Billions don’t scratch the surface of the Transfer Leviathan that has been created. Considering that, collectively, most Western Socialist models are taxing as much (or more) than is sensible, without contracting the economy due to disincentives, where is the money going to come from? If Warren Buffett turned over even half of his $30 Billion dollars, that’s pocket change relatively speaking. We have an economic crisis on our hands, and if we even subjected the Super Rich to an uncapped Social Security portion of the FICA tax (and so his percentage would equal his employees) it would make little difference to the overall picture. Again, it stands that Buffet shouldn’t pay more, everyone else should pay less. And entitlements by Force should be ended. The likes of Mr. Buffett should realize that there is only one economic pie, and you slice it only so many times. Simply installing the smoke and mirrors of socialism doesn’t alter economic scarcity. The fact that this little reality escapes him shows that he isn’t all that bright or attentive.
Perhaps a less theoretical way to look at it is this, if Buffett paid more payroll related taxes, right now it would flow into the SSA, who as of now cash flows positively. So they would buy intragovernmental instruments (part of that hard debt in the link in my first comment) and the money he paid would simply go into the general fund and (perhaps) keep regular income tax rates infinitesimally lower, but only for a short period of time. It would perhaps lower other public treasury issuances for a little while too.
But, again, the big picture shows that transfers are unsustainable at even this rate, mush less in the future. Warren Buffett paying 10% more in taxes is nothing in the grand scheme. If he was so brilliant he would easily see the crisis and lobby to have it defused before it is too late versus saying he should pay X more in taxes to keep it limping along until it explodes. If we take action TODAY, we might avoid a major crisis. If the Buffets of the world paid a few tens of millions more, it will simply add perhaps a few months more until the melt down.
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As for your own worries about the people at large, the last time I checked you are able to give away as much of your equity as will balm your conscience, freely and voluntarily. I am a bit perplexed about how much guilt is weighing you down, but thuggery is the only way you’ll spare any of your equity. Not to be insulting, but it’s this exact conflict resolved in such an asinine way as Socialism that has created the very crisis we are now trying to avoid. Perhaps viewing the creation and disposition of your equity by your own moral code, without the necessity of Force, in a much more linear fashion should be the order of the day versus hiring “agents” empowered to come in the back door and haul off a third of your stuff while you’re not home. You have no idea what other works these “agents” will put themselves to. Perhaps you’d have a lot less guilt if you went about your productive works and built equity and made whatever transfers you cared to do using the same system of rationality. You might feel a whole lot more secure in general. In other words, keep it simple, stupid. Double blind systems of transfers is anything but simple. And you’re not going to gain any sense of security from it.
Why does everyone assume that Buffet is acting against his own interests when he pays taxes. Sure, for you and I, taxes are a losing investment — we will never get as much return for our taxes as we pay in.
Ultra-billionaires, on the other hand, tend to get a lot for their taxes. They get the government to create new artificial barriers to entry for competitors, they get local governments to subsidize their businesses (far in excess of the taxes they pay), they get them to condemn and transfer property at values far below fair market value, and so on and so on.
Government works for well-connected, wealthy people like Bennett. This has been known since The Wealth of Nations. Why are we surprised that Buffet would be willing to pay more in taxes, when he gets such a good bang for his buck?
By asking for tax rates to be put up for the rich, he’s saying he’ll put in more if other billionaires do the same. It’s not so hard to understand the difference between doing that and making a donation.
The question of “why not just write a huge cheque to the IRS?” Was just put to Buffett on CNBC. Buffett answered that he thinks his foundations would spend the money better and he was only advocating higher taxes for the super-rich. He thinks “even” the “upper middle class” should be paying less tax.
He ended with his worst remark – that he’d rather give the money to the government that to a dynasty of Buffetts. I’ve a hard time believing that Buffett’s children and grandchildren would spend money worse than the government given that almost every individual knows how to spend money better than the state.