THE TOP REPUBLICAN PRIORITY: TAX CUTS FOR THE RICH
It sounds wildly partisan, but a review of the past five years suggests – to me at least – that it is true. For those making millions of dollars a year, this has been a grand time indeed to have the Republican Party controlling everything.
ANOTHER WAY TO MEASURE PROGRESS
‘The test of our progress is not whether we add more to the abundance of those who have much, it is whether we provide enough for those who have too little.’ – Franklin D. Roosevelt
So why do the Republicans fight so hard to get rid of the estate tax, which impacts only the rich (instead of, say, the sales taxes that also ‘double tax’ the money you’ve earned)?
ONE WISE BILLIONAIRE’S VIEW
Jeff Bauer: ‘Warren Buffett meets with many student groups each year. Here’s one of the responses from a University of Kansas MBA student last December.’
Question: Could you discuss your views on [the estate tax] and how you will allocate your wealth to your children?
Buffett: It really reflects my views on how a rich society should behave. If it weren’t for this society, I wouldn’t be rich. It wasn’t all me. Imagine if you were one of a pair of identical twins and a genie came along and allowed you to bid on where you could be born. The money that you bid is how much you had to agree to give back to society, and the one who bids the most gets to be born in the US and the other in Bangladesh. You would bid a lot. It is a huge advantage to be born here.
There should be no divine right of the womb. My kids wouldn’t go off and do nothing if I give them a lot of money, but if they did, that would be a tragedy. $30 billion will be generated from estate taxes, which will go to help pay for the war in Iraq and other things. If you take away the estate tax, that money will have to come from somewhere else. If not from estate taxes then you inherently get it from poorer citizens.
Less than 2% of estates will pay the estate tax. They would still have $50 million left over on average. I think those that get the lucky tickets should pay the most to the common causes of society. I believe in a big redistribution. Wealth is a bunch of claim checks that I can turn in for houses, etc. To pass those claim checks down to the next generation is the wrong approach.
But for those that think I am perpetuating the welfare state, consider if you are born to a rich parent. You get a whole bunch of stocks right at the beginning of your life, and thus you are sort of on a welfare state of support from your rich parents from the beginning. What’s the difference?
The idea of bidding on where you are born becomes even more compelling to me if the genie allows you to bid based not in absolute dollars, which would be hard, but in percentages. Would you offer up 39.6% of all your ordinary income beyond the first $250,000 or so . . . and 20% of all your long-term capital gains . . . and half the estate you eventually amassed (above the first $5 million, say) to be born in the U.S. instead of Bangladash or Botswana? If so, consider that this is in effect all your country was asking of you under the Clinton/Gore tax regime — money you would willingly have offered to be born here instead of there. (So stop griping?)
ARE YOU YOUR OWN WORST ENEMY?
But let’s get back to self-interest – I’m all for it, in moderation. Here is the transcript of a wise and engaging lecture by UC Berkeley Professor Terrance Odean that – if you pick stocks yourself – should be well worth your time. Men, particularly, need to read this (because men, the data show, suffer more than women from overconfidence).
Quote of the Day
What's so fair about eliminating the interest deduction on your first car but not on your second home?~Murray Weidenbaum
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