Warren Buffet Wants Less Coddling

[doodle]

Warren Buffet is a really decent man. I think Congress would be wise to consider his latest opinion piece in NYtimes: http://www.nytimes.com/2011/08/15/opini ... -rich.html

[moda0306]

Though I can understand why people would disagree with him, I don't understand the right's hatred (in some cases) of him.

I find him to be a pretty honoroable guy, who puts billions of dollars of his own money behind his lip-service of helping the middle class.

[Reub]

Could it be because he tries to add validity to Obama's woeful economic record???

[stone]

Reub, please could you give an example of how Warren Buffet supports bad policies of Obama's.

[moda0306]

He's basically pointing out that our long-term deficit problem (as he sees it) and problems around distribution of wealth and middle-class prosperity could be aided by taxing the super-wealthy more.

Some democrats and himself have said that for years now, and if it echoes some of what Obama says I think it's irrelevant and expected.

Reub, if there are things that Obama could have done to make our current economic situation better (lower unemployment, higher GDP, etc) please let us know.  These problems were decades in the making, and probably will be at least years in the unraveling.

[craigr]

Buffet, Soros and Bill Gates are more than welcome to write a check for what they feel is appropriate in taxes. Yet they never do.

These people all have duplicitous motives in their public statements. I would simply ignore them.

[stone]

craigr, I thought that Buffet and Gates are giving all of their money to the Gates Foundation. I know the crucial difference is that they control the Gates Foundation whilst they are preaching that taxes should be higher ie that control should be wrested away from people. Are you saying that the Gates foundation should just ask to use their funds to write down $100B of the national debt (ie 0.7% of the national debt or whatever). I guess that would be the most consistent act.

[moda0306]

craigr,

Are you sure Buffett doesn't want higher taxes not for the reasons you claim but because he actually cares about the middle class?

Implying he doesn't put his money where his mouth is seems to be a bit much, as he's given billions to charity.... if one has selfish motives outside of what they claim to society, and are simply seeking personal riches, one would think that giving 50% of your net worth to charity is going a bit to far to disguise your true, selfish goals.

I think we can have differences of opinion on how society should be organized and what the proper role of government is without being accused of having ulterior motives or stating that we should "ignore them" simply because we think they will benefit in some completely unintuitive way through policies that would appear to be very harmful to them.  Should we also ignore Steve Forbes or even Ayn Rand?  I think everyone has a right to be heard based on the substance of their arguments, and judged based on their apparent selflessness.

He MAY have other motives outside his wishes to se the United States' middle-class prosper, but I would hesitate to accuse him of that outright if he's giving up billions of his personal wealth to help people, as well as arguing for policies that would appear, on the surface, to be very harmful to his own net worth.  If he's devising a strategy to look benevolent but benefit greatly on a personal-wealth level, he's doing a great job of fooling us.

I will take Buffet's observations and comments as the view of one wealthy individual who seems to be honest but may have other motives.  His observations are still pertinent, and I think he brings a lot of weight to the debate of tax policy.

It's people like Forbes that I'd find it much more convincing that they have ulterior motives and personal gains to be made by their policy arguments, not to mention his ridiculous prediction that we'll go back to the gold standard soon.

[Jan Van]

It probably would be in his interests to pay more taxes. Rich people must have been looking at what's going on with the Arab Spring, and in Greece, Spain, London...

[MediumTex]

Most of Buffett's wealth has NEVER been taxed at ANY rate EVER.

He owns shares of Berkshire Hathaway that he has held for decades as it has risen exponentially.  None of those gains have ever been taxed.

I believe that Buffett takes a salary of $100,000 per year, so he pays income tax on that, plus whatever capital gains he experiences trading his own account.

One way he could help things would be to simply sell some of his Berkshire stock and then buy it back.  That would create a taxable event that would allow him to contribute a little to the federal government.

I guess what I am saying is that if taxes were raised on the rich, it wouldn't affect Warren Buffett much because his income doesn't really suggest that he is rich.  His ASSETS suggest that he is rich, but an income tax increase on the wealthy wouldn't affect these assets unless he were to sell them, which he doesn't appear to have any intention of doing.

[stone]

Medium Tex, that is why I think the entire tax burden would best be in the form of a flat percentage asset tax (but I haven't persuaded Lone Wolf or probably anyone else for that matter ).

[Coffee]

My understanding is that: Before Gates started busting his balls about contributing to the Gates Foundation -- he gave hardly nothing, percentage-wise, with the exception of what his wife Suzie could pry from him... throughout most of his career. 

I have no idea why this guy is trying to position himself as the champion of the underclass ... but I highly doubt it's because he's a kind hearted, caring guy.

(And I've got nothing against people who are selfish.)

[AdamA]

These people all have duplicitous motives in their public statements. I would simply ignore them.

You've alluded to this a few times.  What exactly do you think those motives are?

[stone]

Let's face it, Warren Buffet is 80 years old and has $50B or whatever. Why is it so inconceivable that he genuinely doesn't care about his personal wealth but does relish the challenge of investing? My guess is that he loves being a masterful financier just as a golf player wants to be the best of the best. I don't see why that is incompatible with him having a view about taxation that would lose him tens of billions of dollars. I could imagine that if a top golf player could see that the holes had increased in diameter from one inch to ten yards over the course of the golf player's career, then the golf player might complain. They aim to get the golf ball in the hole but can see that it is all becoming a farce. I guess Warren Buffet also showed the power of fundamental based investing rooted in the real economy. It would make sense if he is now disgusted at a system where, increasingly, the most profitable strategy is to game the monetary distortions.

[Lone Wolf]

Buffet, Soros and Bill Gates are more than welcome to write a check for what they feel is appropriate in taxes. Yet they never do.

Certainly if they believed that the Federal government would make the best possible use of their money, they'd simply send it in.  Yet they do not do that.  Instead, they either invest their money, spend it on themselves, or they spend it on humanitarian projects of their own choosing.

All are much more efficient uses of that capital than sending it to politicians so that they can direct it to rot in some bureaucracy somewhere.

Most of Buffett's wealth has NEVER been taxed at ANY rate EVER.

Exactly right.

Also, there's a big difference between a guy like Warren Buffett and someone who owns a small business that pulls down low seven figures.  (Sadly, that definitely ain't me in case you're wondering.)  It would be a very bad thing to significantly raise taxes on our small business owner.  You want to be very careful about doing that.

Figuring out how to assess taxes fairly is always going to be a difficult question.  The more money the government consumes, the tougher this becomes.

Maybe we can compromise.  Let's shrink government down to the size where Warren and his super-rich buddies can cover the whole thing under his proposed new tax scheme.

Medium Tex, that is why I think the entire tax burden would best be in the form of a flat percentage asset tax (but I haven't persuaded Lone Wolf or probably anyone else for that matter ).

You'll find no better argument for some kind of asset tax than someone like Warren Buffett and his very low tax burden!  I still see no way you get there from here without massive intrusiveness and giving any kind of saver a severe shellacking.

It's really your fault for displaying too much intellectual integrity when you correctly calculated the necessary asset tax rate as 7%.    If you had lied to me and said 0.025% and simply passed a giant debt burden to my children, I'd have totally gone for it.  (I'm afraid you have no future in politics.)

[stone]

Lone Wolf, an asset tax would presumably maintain lower asset prices (and lower asset price volatility) and so increase yields. Perhaps in a hypothetical asset tax world, savers could prudently afford to have a larger stock allocation that would pay dividends many times higher than now. After all, the government would not be taking any more out of the system. Corporation tax, income tax, sales tax etc would all be flowing through the asset tax route.

[craigr]

craigr,

Are you sure Buffett doesn't want higher taxes not for the reasons you claim but because he actually cares about the middle class?

Implying he doesn't put his money where his mouth is seems to be a bit much, as he's given billions to charity.... if one has selfish motives outside of what they claim to society, and are simply seeking personal riches, one would think that giving 50% of your net worth to charity is going a bit to far to disguise your true, selfish goals.

Buffet publicly advocates for higher taxes, but obviously structures his finances to pay as little as possible. Then he uses the remainder for a private charity which has significant tax advantages to it as well. These are not the actions of someone that believes his tax money is going to be used wisely. And for good reason because it probably won't be.

Why would Buffet paying more in taxes help the middle class anyway? Buffet helped the middle class far more by his good management of his companies than giving money to Uncle Sam ever did. That's because those businesses create jobs and growth with that investment capital in a way that taxes simply cannot.

As for these charities. I think that many of them (especially those that operate in third world regions) cause a lot of damage by propping up dictators through their food imports, putting local companies out of business by dumping in cheap clothing, food, etc. and building up a dependence culture where the local populations have come to rely so much on NGO contributions that it has gutted the ability and desire for them to fix their own problems. Besides Jim Roger's Investment books that discuss this impact, there is a great interview from an African economist that states the same thing:

http://www.spiegel.de/international/spi ... 63,00.html

But by all means Buffet can donate his lifetime work to the US Govt. Current US debt is increasing almost $4Billion per day. So I figure that if Buffet gave all his money in taxes we'd have round 10 days of operating expenses covered. Not much to show for a lifetime worth of work on Buffet's part.

[moda0306]

Craig,

Whatever your views on public policy towards taxes and redistribution, I think your efforts to make the greedy or opportunistic look benevolent and philanthropists look like profiteers or two sided is way off.

Warren could have tried to support small businesses, but he would have done so as probably the person that benefitted most from these transactions.  He thinks part of the problem is the concentration of wealth and education... government taxation and proper spending can aid in those things.  Further, a dollar of tax taken from a welder is a dollar of tax that COULD have been taken from a billionaire instead.  I'm not saying this is a great excuse, but when you look at decision-trees on who to tax and if you have the middle-class at heart, you're not going to be afrait to tax the ultra-wealthy.

Let's quit pretending greed is good and charity is bad.  To care about other people (and if you give half your wealth to charity, I can hardly see how one could say otherwise), especially those with much less opportunity than yourself, is a GOOD thing.  

To profit from good investments is hardly a bad thing, but it's simply a natural part of human nature to engage in free enterprise to your benefit... there's nothing particularly moral or immoral about it.

[craigr]

Let's quit pretending greed is good and charity is bad.  To care about other people (and if you give half your wealth to charity, I can hardly see how one could say otherwise), especially those with much less opportunity than yourself, is a GOOD thing.

Moda we're just not going to agree on this. Buffet has done a lot of good by running businesses that provide tens of thousands of jobs. His money invested in those companies and working, even if very lightly taxed, still did much more for the economy than handing over to the pols to waste on whatever social engineering/welfare/warfare program that tickles their fancy. I trust Buffet to know how to spend his money more wisely than Pelosi/Obama/McCain/Bush/etc. Even Bill Gates has created tens of thousands of jobs and perhaps millions of jobs outside of Microsoft. There is no question in my mind that he has done more for the US economy and middle class than some do-gooder govt. handout scheme ever will.

[moda0306]

Buffett can only find so many businesses that need rescuing... he can invest in those with his first half of his wealth and create numersous jobs, but there's diminishing returns at some point.

Some people choose to spend thier money on material posessions after they've run out of steam for their entreprenurial ventures.

Others give to charity.

The people more likely to do the latter are for the most part better people than the former, though there's nothing wrong with the former.

That's all I'm saying.  He's most likely an extremely solid human being outside of being an amazing investor.  You don't give half your wealth to charity if you are greedy or shallow.  He's helped people through his investing, yes, but the same could be said of monopolists of centuries past (or future, I fear).

Let's argue tax policy, the role of government, and economics in a more antiseptic tone instead of trying to undermine exceptionally selfless and righteous behavior and insististing that liberal policies eventually lead to mass-murder.

[craigr]

Some people choose to spend thier money on material posessions after they've run out of steam for their entreprenurial ventures.

I met a man a couple years ago that was a master boat maker. He made luxury yachts, etc. for the wealthy. Your magnanimous attitude is that the rich should not spend on things that make them happy because somehow that money goes down a big black hole. Yet if you talked to this gentleman you'd realize that it goes to his shop where he employed dozens of people who were master craftsmen. They made a good product and earned money from the greedy rich people who bought their boats. They used that money to support their middle class lifestyle without any need for charity.

But then some politician decided to keep increasing the "luxury tax" on such things. The result was it drastically curtailed his business and he had to lay off large parts of his staff. Ostensibly this tax went to help "the poor" or "the middle class" or some other such nonsense. But more likely than not half of it went to pay govt. salaries. The other half was frittered away on people that wouldn't help themselves. And this boat maker, who spent years building his business, took a beating.

Yet according to you this spending on "material possessions" had no affect on the economy whatsoever.

The people more likely to do the latter are for the most part better people than the former, though there's nothing wrong with the former.

Your attitude is very condescending. I don't have more to add. To paraphrase Harry Browne: "I'd rather take my chances with Warren Buffet than Nancy Pelosi."

[l82start]

Let's quit pretending greed is good and charity is bad.  To care about other people (and if you give half your wealth to charity, I can hardly see how one could say otherwise), especially those with much less opportunity than yourself, is a GOOD thing.

Moda we're just not going to agree on this. Buffet has done a lot of good by running businesses that provide tens of thousands of jobs. His money invested in those companies and working, even if very lightly taxed, still did much more for the economy than handing over to the pols to waste on whatever social engineering/welfare/warfare program that tickles their fancy. I trust Buffet to know how to spend his money more wisely than Pelosi/Obama/McCain/Bush/etc. Even Bill Gates has created tens of thousands of jobs and perhaps millions of jobs outside of Microsoft. There is no question in my mind that he has done more for the US economy and middle class than some do-gooder govt. handout scheme ever will.

 not to mention the incidental increases to quality of life for everyone rich, poor, or middle-class, every product that bill gates  (or other successful businessmen) develop or invest in, have a continuing (reverberating?) benefit to society as they are used, from a product used in fortune five hundred offices or classrooms for education, they all have potential to make the peoples lives better and work load less, they don't have to give their money to the poor to help improve billions of peoples quality of life they already did that through products they made ( i should mention i cheer them for trying to do so by way of voluntary charity as well )  

[moda0306]

Craig,

You are taking what I'm saying completely out of context if you think I'm condescending and think rich people are bad and not helping the economy by enjoying their hard-earned cash... not to mention that assuming a liberal political liberal philosophy always leads to mass-murder implies a huge amount of stupidity and ill-will upon the people you disagree with, so pardon me if I've gotten a bit blunt on this board.

I, for one, don't give much to charity... probably about $500 per year... maybe a bit more.  I also don't donate my time very often.  I am not speaking from some shining hill looking down upon anyone... I even SAID that there's "nothing wrong" with seeking material posessions with your wealth... do I have to say more?  You repeatedly put extremely ridiculous words in my mouth:

Your magnanimous attitude is that the rich should not spend on things that make them happy because somehow that money goes down a big black hole.

Like I said, that is not my attitude in the least, nor do I think the money goes down a "black hole"... I understand economics... I understand the yachtmaker and his employees and their families and home-town shops will see some benefit.  If anything, that quote alone is extremely condescending... I simply said that somebody willing to skip the yacht purchase and donate is, by most people's and philosopher's definitions, a better person, than someone who spends it (all things being equal).  I consider people with my means that do more for charity or give more than me as better people than myself.

Yet according to you this spending on "material possessions" had no affect on the economy whatsoever.

Wow.  Once again, not even close to what I said.  Way to knock down that straw-man.

You, sir, are being condescending and, frankly, ridiculous in your posing of my side of the debate.  I'm surprised to be seeing this Glen Beckery from the creator of such a great place for discussion.  We've been having complex discussions on currency and macroeconomics for months now, getting into some pretty complex debates while often respecting each others' intelligence, without so much as any insight from yourself, and now I'm to be lectured about the simple microeconomics of luxury taxes and business revenues because I think people willing to give are better people than those who aren't?

I understand the economics of taxes, at least for the most part, and try to continue to hone my intelligence in that area.  I was discussing the morality of giving vs consuming (not that either is immoral) and somehow there's still a debate on this... I guess I didn't see that coming.

[moda0306]

l82start,

I guess I'm really not trying to say that anyone with the creative or value-adding capacity of Warren Buffett and Bill Gates have should give up on their jobs and that they should instead skip out for a day building a house for a refugee or give what could have been invested productively to a so-so charity.

I'm saying that eventually these guys run out of creative ideas and businesses to save, and their capacities will change.  Eventually, they might see their organizational skills and money best being used for others benefit, without anything expected in return.  Others might buy an island and retire.

Unless you see everyone as having more than enough opportunity to succeed in this world, there is good that can be done above and beyond consumer purchases to hopefully give someone a job, and at the very least we shouldn't deride people that try to do just that.

[l82start]

l82start,

I guess I'm really not trying to say that anyone with the creative or value-adding capacity of Warren Buffett and Bill Gates have should give up on their jobs and that they should instead skip out for a day building a house for a refugee or give what could have been invested productively to a so-so charity.

I'm saying that eventually these guys run out of creative ideas and businesses to save, and their capacities will change.  Eventually, they might see their organizational skills and money best being used for others benefit, without anything expected in return.  Others might buy an island and retire.

Unless you see everyone as having more than enough opportunity to succeed in this world, there is good that can be done outside of hedonistic purchases to hopefully give someone a job.

i somewhat disagree, i suspect that they are quite unlikely to run out of creative people with new creative ideas to invest in, much of what makes these people great is not there own creativity but a combination of  there own creativity and the ability to spot talent in others, i also suspect that for many of them the idea of return is secondary, the thrill of the job/hunt is what drives these people that ultra succeed, if it didn't they would quit after the first 100 million and retire...   but i even with that, i have no problem with them being giving outside of hedonistic purchases or creative investing either, so long as it is voluntary. What i don't get about warren buffet (who is a great at both management and spotting talent) is that he thinks the government can do a better job of spending wealthy peoples money (involuntary often mismanaged charity/spending) than the wealthy people that earned it in the first place??