"A meaningful estate tax is needed to prevent our democracy from becoming a dynastic plutocracy.''
A most pathetic comment from Warren Buffett, who is horrifying when it comes to assesing politics and freedom. Family heirs, he says, have already won an "ovarian lottery," and thus should not be "rewarded" by the tax system. Mr. Buffett, however, doesn't explain why the lack of theft is considered to be a "reward." Perhaps it is because the status quo of rampant theft by the state is accepted as the norm, and any scaling back of such theft therefore is considered to be a "favor." Of course, equating the transfer of private property to one's heirs with "a lottery" denotes a complete lack of critical thinking skills. But then again, it's easy to be in favor of estate redistribution when you've still got billions left over after the theft.
Comments (50)
This has to be the most idiotic statement I've heard in a while. Maybe ONLY Warren Buffett should be taxed more.
Published: November 28, 2007 1:18 PM
I wonder how my fellow readers feel about the estate in general. Doesn't the current system smack of the dead governing the living? "The world belongs to living" and what-not.
Is it unreasonable to expect that homesteaded property would revert to an unowned status upon the death of the homesteader?
Note that this is quite different from "reverting" to the state.
Published: November 28, 2007 1:31 PM
Hmm... another reason to be thankful I'm not an American. in Australia and New Zealand there isn't any Estate Duty, and in Hong Kong it was repealed in 2006 too.
Elsewhere in the world some wonderful statutes can be found such as these ones from New Zealand:
Abolition of the Death Penalty Act 1989
Banking Act Repeal Act 1995
Estate Duty Repeal Act 1993
Payroll Tax Repeal Act 1973
Property Speculation Tax Repeal Act 1973
Shop Trading Hours Act Repeal Act 1990
Stamp Duty Abolition Act 1999
Published: November 28, 2007 1:38 PM
The apple fell far from the tree.
Published: November 28, 2007 1:50 PM
The problem witht the Estate Tax is that it forces smaller businesses and not as wealthy people to sell their property (since they can't afford it with the extra tax) to...suprise surprise...the even richer folks like Warren Buffett, who also happens just buy up a lot of property from those forced to sell thanks to things like the Estate Tax.
Published: November 28, 2007 1:56 PM
Warren Buffet is heavily invested in a company named RiverSource, which sells life insurance plans specifically tailored to help older wealthy folks avoid the full brunt of the estate tax. The estate tax, in other words, makes Buffet money. If it were to go away, his investments would depreciate.
Published: November 28, 2007 2:16 PM
Buffett and his fellow collectivists want to make sure no little guys every get up to the level where they can challange them. The estate tax institutionalizes the current plutocracy of Buffett et al. We currently have a corporate plutocracy, which only the wealthiest individuals can challenge, and that is why Buffett, Soros, Gates, etc. who benefit from the corporate welfare system, want to eviscerate any individual power that might challenge it. And the moral damage it does to youth when they see a "hero of capitalism" propose and defend such an immoral law which violates the Rights of Man guaranteed in the Declaration and Constitution, this damage cannot be measured. The estate tax also kills individual initiative and punishes frugality. We would have a much larger GDP, and thus much more tax revenue, without it than we gain from having this travesty of the Rule of Law.
Published: November 28, 2007 2:27 PM
David, while those acts repealed were great they were replaced with other acts -
Resource Management Act
Reserve Bank Act
and a lot of others which I had strong opinions about when living there but had forgotten about.
cheers
Published: November 28, 2007 2:36 PM
Glad to see this brought up here. Interesting comments so far.
I recently covered this in a blog post, entitled "Buffett: don't repeal estate tax".
http://financetrends.blogspot.com/2007/11/buffett-dont-repeal-estate-tax.html
As one commenter already mentioned, there is quite a difference in the attitudes/personal philosophies of Warren Buffett and his father, Howard Buffett.
There's also a follow up post to this topic, entitled "Government and Big Business" that borrows heavily from some of the ideas expressed by Mises contributors.
http://financetrends.blogspot.com/2007/11/government-and-big-business.html
For anyone who's interested.
Published: November 28, 2007 2:40 PM
Frongle (1:31 PM), I think you are the right track. But if the deceased person wrote a will, then he is giving away his property at the moment of death (or you can think of it as one millisecond before he dies). If he doesn't leave a will, then I think there is a presumption that he would have wanted to give his relatives his property. If he has no relatives (but only in that case), then I think you're right, his property is open to homesteading.
Most people who favor inheritance taxes (not Frongle) say that the recipients of inheritance don't deserve the property, because they didn't earn it. But one thing they never explain is why those in the government (or those they transfer the property to) deserve it -- they didn't do anything to earn it either! Neither would anyone who homesteads it. To be consistent to their principle, they should advocate destroying the property. But for some reason, they never do.
Published: November 28, 2007 3:26 PM
Frongle: "Is it unreasonable to expect that homesteaded property would revert to an unowned status upon the death of the homesteader?"
The homestead property only applies to property that has never had an owner. Homesteading is part of the argument for the beginnings of property in prehistory. Once property becomes owned by someone, the homestead principle never again applies to that property unless the owner dies without any heirs or a will.
Published: November 28, 2007 3:44 PM
Buffet may be suffering from the guilt that a lot of wealthy people have. But death taxes force everyone to give their money to the government as if the government is the only legit charity in existence. Any wealthy person can give their wealth away to anyone; it doesn't have to go to their children. Look at what Bill Gates has done.
Buffet may not want to give his money to his children (does he have any?) but he has no right demanding that no one be allowed to do so. Property isn't property if one can't dispose of it as one desires. This just reveals Buffet's socialist leanings, like his buddy Soros.
Published: November 28, 2007 3:49 PM
Children of wealthy people have no right to their parents' wealth. However, they "deserve" it if the parents choose to leave it to them, just like any person is deserving of a gift that someone else chooses to give them. Parents can also choose not to give their wealth to their children, as well, because it is their right to do with their wealth as they choose. Buffet's wrong to consider gift-giving as a lottery.
Published: November 28, 2007 3:58 PM
Buffett was spewing this same bile in an interview in Maclean's (a Canadian news magazine) not too long ago. I had the same reaction then, why does the state have better claim to private property than one's heirs? But hey, if you're already rich you may as well push for huge estate taxes, it will discourage future competition.
How about this gem? Pure statism to the core! - "I've used this illustration that, if we were to pick our United States Olympic team based on the eldest son and the eldest daughter of those who represented us in all the events 24 years ago, we would think that was asinine, but to hand the resources of society, and the resources to command the labour of society and the materials of society, to a bunch of people simply because they happen to have the right last name strikes me as just as foolish in terms of how you manage a society as it would be to pick an Olympic team."
http://www.macleans.ca/article.jsp?content=20071015_110163_110163&source=srch
Published: November 28, 2007 5:47 PM
I think Michael A. Clem comes close to the nub in the above comment. "Children of wealthy people have no right to their parent's wealth. However, they "deserve" it if the parents choose to leave it to them ..."he says.
I'd say the only issue is, that the parents deserve to have their values-decision respected. Their property rights are violated by estate tax. The child "should" have the wealth because it fulfils the property desires of the parents. Whether they deserve it or not doesn't really come into the moral question at all.
I believe Buffett has several children to whom he is leaving comparatively minor amounts. I recall hearing something in the range of 2-5 million.
Maybe having over a billion dollars in cash causes brain damage or moral decay, and we should ban having such amounts under the controlled-substance laws?
And if Buffett, Soros and Gates really believed all this, why not simply make a law that no one could accumulate more than a billion dollars, and anyone currently having more than that in wealth would immediately have any excess excised by the state. Seem like that would be more consistent with their alleged concern for American society.
Published: November 28, 2007 6:43 PM
It's amazing to hear anyone invite the government take their money. Maybe Buffet hates his heirs so much he would rather give it to the government. Socialists come up with the most idiotic ideas. What an ego this guy has!
Published: November 28, 2007 6:49 PM
Personally, I think there should be a 1% tax on estates. That way, wealthy parents can still leave the lion's share of their wealth to their children, the government can make millions from a billion-dollar inheritance (to fund roads and schools and such), and everybody wins. Isn't compromise neat?
Some people say that large inheritances leads to the concentration of wealth in the hands of a few. In reality, the wealthy typically leave their wealth to more than one person, causing their money to be less concentrated, not more.
What I don't understand is why Warren Buffet thinks he isn't taxed enough. Nothing is stopping him from donating billions to the government if he really wants to!
Published: November 28, 2007 6:55 PM
The only voting one should be entitled to is as a shareholder on a corporate board.
Published: November 28, 2007 7:48 PM
Actually, this idiot should surrender all his wealth immediately. After all, we don't want a small minority controlling our society's productive resources...
However rich and brilliant he may be in certain respects, he will remain an idiot it seems. With exemplars such as Buffet, the free market needs no enemies.
Published: November 28, 2007 7:55 PM
"Personally, I think there should be a 1% theft on everyone. That way, wealthy people can still keep the lion's share of their wealth, the thieves can make millions on billion-dollar robberies (to fund their lifestyle), and everybody wins. Isn't compromise neat?"
Published: November 28, 2007 7:59 PM
Let's think about this rationally and proportionally for a moment. Let's ask ourselves which is the greater theft -- the income tax or the estate / inheritance tax, and whether it wouldn't be better, so long as we have taxes, if as much as possible of the income tax was replaced by inheritance taxes (and of course the "single tax" on the unimproved value of land and other natural resources, since to deny a propertyless person a free and equal share of the earth is itself robbery).
Published: November 28, 2007 8:59 PM
Buffet is right. Tax the rich. Let the children of the wealthy prove their worth in the free market.
Published: November 28, 2007 9:50 PM
Hey, why not just tax all gifts and donations to be consistent?
Socialists in sheep's skin...
Published: November 28, 2007 10:25 PM
Yeah, you caught me. This echo chamber isn't my normal hunting grounds. I find my inspiration not so much from Murray Rothbard but from John Woolman, Lysander Spooner, Thomas Paine, and Henry George. My recent post at leftlibertarianquaker.blogspot.com, "Anarchism without Anarchy," reveals my true colors.
Published: November 28, 2007 10:40 PM
The Estate Tax is an abomination and discriminates against the smallest, most oppressed minority in America: the wealthiest .05%. While it is true that no one supporting repeal has ever been able to find a family farm or small business that has actually had to close to pay the estate tax, it is a very sympathetic talking point that must be preserved.
That's why we here at The Institute for the Preservation of Dynastic Wealth (http://ipdw.org), who represent wealthy heirs like the Walton Family of Wal-Mart and others who support full repeal, have launched a national farmer search to highlight our desperate need for a flesh and blood example who can front for our interests.
Check it out at http://ipdw.org/farmersearch
The winning candidate, if any is found (fingers crossed), will serve as the repeal movement's new spokesperson. Winners will be featured in brochures, TV ads, and other campaign materials to abolish the Estate Tax. In addition, qualifying candidates will receive a gift bag filled with items from the 18 wealthy families funding the "movement" to repeal the Estate Tax, including a jug of wine from the Gallo Estates, a candy bar from the Mars family, and something kind of nice, but plastic, from the Wal-Mart heirs.
Published: November 29, 2007 9:31 AM
The Vanderbilt family is a great example of why inheriting money doesn't matter much in the long run. Come to think of it, the Hilton family illustrates the issue pretty well, too.
The way to avoid inheritance tax is to give the money to whoever you want before you die. That could be your kids, your favorite charity, or a friend's multi-billion dollar charity. Only fools and ordinary folks pay inheritance taxes.
Published: November 29, 2007 9:50 AM
Wasn't Paris Hilton disowned, incidentally?
Published: November 29, 2007 11:29 AM
David Spellman seems to think the issue can be avoided by giving the money away to ones children or charity, but you can only give 11k to children tax free per year, and you might feel all charities are fraudulent. You also might fear that giving any money at all to children would kill their resolve and independence and not want to.
I believe there are also IRS rules against intentionally "spending down" to avoid inheritence tax.
The estate tax discriminates against all capitalists, not just the 0.5% as someone said, because it kills all men's initiative and says to them, stay small. No wonder Buffett loves it.
"Some persons consider that plunder is perfectly justifiable, if only sanctioned by law." --- Bastiat.
Published: November 29, 2007 1:00 PM
Buffet is simply wrong on both the ethical and practical accounts. Preventing someone from disposing of their property as they wish is a violation of property and unethical. Practically, it's virtually impossible to establish a dynastic plutocracy. As someone wrote recently, the Chinese have a proverb that wealth lasts only for 3 generations. Dr. Thomas Stanley's research (The Millionaire Next Door) bears this out. Even in pre-modern Europe, the nobility had a devil of a time hanging on to their titles because their conspicuous consumption caused many to go broke and lose their titles. At the same time, non-nobility were gaining wealth through commerce and buying titles. Buffet has an unrealistic static view of society in the same way that Keynesian and neo-Classical econ hold to a static view of econ and get everything about it wrong.
Published: November 29, 2007 1:03 PM
I believe this Buffett statement coming at this time is a psychological preparation for the acceptance of the estate tax by the public. This will follow a call for it from whichever collectivist wins the next presidential election (unless Dr. Paul wins) in the name of a national fiscal emergency or crisis. We can see from this column how readily willing many are to break the moral code.
Published: November 29, 2007 1:19 PM
"While it is true that no one supporting repeal has ever been able to find a family farm or small business that has actually had to close to pay the estate tax,"
B.S. Dairy Queen is a company that was forced to sell off their business to Warren Buffett because of the Estate Tax
Published: November 29, 2007 1:42 PM
I recently read Schumpeter's book Socialism, Capitalism and Democracy and in it he has arguments why capitalism cannot continue. One of his arguments is the decline of the family. He believed that capitalists were motivated by the desire to provide for their families even after the capitalist's death. The decline of marriage, and of married couples having children, even the 1940's when he wrote the book caused him to despair for capitalism's survival. The death tax just speeds up the process of decline. That's why socialists like Buffet love it.
Published: November 29, 2007 1:53 PM
"While it is true that no one supporting repeal has ever been able to find a family farm or small business that has actually had to close to pay the estate tax,..."
Mr. Formee needs to talk to someone - anyone - in the life insurance industry. It happens all the time to small businesses and, where I live, to farmers. Inheritance reduces the concentration of real wealth from one individual to many heirs - so the government, of course, taxes it and so the heirs have to sell the real wealth for dollars. The buyer is a guy named Warren Buffet. Now the government and Mr. Buffet own even more. And socialists, with their preoccupation with doing SOMEthing to try to make everyone equally poor, call this a successful policy.
Published: November 29, 2007 2:30 PM
The problem is the wealthy use their money to devise systemic changes that favor their continued accumulation of wealth at the expense of others. (My position would be immorally and illegally to boot.) Without the money to form non-for-profits and bribe politicians the Rockefellers' and others would not have been able to usher in the Federal Reserve System, the income tax, federally directed education, oil legislation, etc. It is nice when you have enough money to make the rules.
That is why there must be a check and balance against multigenerational wealth accumulation. Especially when the goal of the wealthy does not have goal congruence with the health of a free society. Greece, Rome, and other civilizations have moved from republic to empire and then to elimination for that same reason.
Published: November 29, 2007 2:42 PM
mam: "The problem is the wealthy use their money to devise systemic changes that favor their continued accumulation of wealth at the expense of others."
If that's true, then why is society so fluid and wealth so fleeting? As I posted above, the facts don't support the fear that wealth will persist for more than three or four generations. Also, why do the top 1% in income pay about 50% of the taxes?
mam: "Greece, Rome, and other civilizations have moved from republic to empire and then to elimination for that same reason."
That's not the history I read in school, although I have to admit it was a public school. But the way I remember it is that generals used the military to take over and establish empires. They didn't buy their way into power.
We have a lot more to fear from government than we do from the wealthy.
Published: November 29, 2007 4:18 PM
Tax the rich 'til they be rich no more!
Published: November 29, 2007 6:48 PM
Rome: The senators eventually privatised the military and then personally kept the spoils of war. They became exceedingly wealthy by using the conquered territories to feed Rome. Eventually they turned Italy from an agricultural center (because the Roman farmers could no longer compete) to a financial center and then into an empire builder. It gives a real incentive to empire building. Sounds like the fate of the U.S.
Marxist Materialism and Capitalism are not mutually exclusive. In fact the Marxist have figured it out. Take a close look at the "Dee-Lighted" cartoon by Robert Minor at this link:
en.wikipedia.org/wiki/Robert_Minor
The Rockefeller's are now in the fifth geneartion and the Rothschild's more than that. Gee, the Bush family is in the fifth generation.
Just because the names are not in the news every day doesn't mean they don't exist.
I too was educated in public schools. I just don't accept the party line.
Published: November 29, 2007 11:06 PM
The "Dee-lighted" cartoon is an OLD cartoon that makes an old mistake that many leftists continue to make: they assume that the intentions of a "capitalist" are fundamental to the economic system of capitalism. This is simply wrong. While we can certainly make judgements of an individual based on his intentions, capitalism as a system is not dependent upon those intentions, and in fact tends to work against those intentions.
Published: November 30, 2007 1:07 PM
To me the cartoon illistrates that the capitalist will become socialist when socialism helps them achieve their goal. They can then play the dialectic. Also, that the government will be there to help.
Just carefully look at the history.
Published: November 30, 2007 3:11 PM
Okay, so you want government to take money from the wealthy (inheritance tax), but you admit that government would prefer to help the wealthy? Is this a contradiction, or do you have something specific in mind to prevent governments from helping the wealthy?
Published: November 30, 2007 4:39 PM
No, what the cartoon shows is that the statist will avail themselves of statist means when it suits them.
Published: November 30, 2007 6:30 PM
Warren Buffet never produced anything in his life.
He made good bets on people who did produce something. He has no understanding of how real wealth is created. Buffet proves that in a division of labor economy, even a fool can prosper.
Published: December 1, 2007 4:06 AM
Actually, while I am not a regular contributor to this site, I did have some thoughts I thought appropriate.
I have no particular like nor dislike for Warren Buffet. I think, though, that he has a point here. The dead have no rights. Being that they're dead. Thus, they have no right to determine where the wealth they owned while living goes.
I find the argument that the idea that the will goes into effect in the moment BEFORE death to be ridiculous. Clearly, a will says what happens to your wealth after your death, not the moment before. You have no right to say this, as the moment you die, you no longer own your wealth. Being dead.
Of course, if your property is in joint ownership, it will transfer to the full ownership of the other partner. Thus, you can give your children rights to your wealth by giving them those rights before death. Unfortunately, this does place you at some risk, but the point remains that no living person's rights are violated when the wealth one had is seized upon one's death.
As a minarchist thinking about just taxes, I have tried to come up with a few. These, it seems to me, are taxes on estates, land, and natural resources. I reject the principle of homesteading. Land preexists people. We have no right to an exclusive claim, nor does any other have a right to give it to us. However, recognizing the many needs that we have for exclusive land usage, individuals do not have their rights violated by being obligated to pay rent to the general populace, in the form of taxes, which can then be used to fund the defense of liberty and life that are the legitimate functions (if you believe in any such) of government.
Published: December 3, 2007 5:28 PM
Jesse: "The dead have no rights."
While that is true, don't you think a will is no different from a contract, except the execution date? A will is a legal document recognized by courts for millenia as part of natural law, not positive law. The person making the will does so while alive and disposes of his property while he is alive and still owns the property. The only difference between a will and a contract is that the wishes of the owner don't take place until his death.
Published: December 3, 2007 5:39 PM
"Land preexists people."
So what?
Published: December 3, 2007 6:17 PM
The only way to know if Mr. Warren Buffett is speaking genuinely from concern for his society or for lining up his own pockets is to ask this question.
Will he agree that since inheritances are fairly large stocks of wealth and the cash flow of dividends from business may not be sufficient to cover for them, will he endorse the amortization of inheritance tax over 30 years? The tax will still be paid. It will only take a little while longer and small businesses won't be forced to sellout.
Published: December 4, 2007 6:55 AM
I would like to point out that the above commenter is not the same Jesse as has posted here in the past. I do not reject the concept of private property or the homesteading principle which is essential to it. In fact, I disagree strongly with every point the above commenter made.
Perhaps this sort of identity confusion will finally inspire the site admins to institute properly authenticated user accounts.
Published: December 4, 2007 1:16 PM
I think you've all missed the point- meaningFUL estate taxes, not meaningLESS! These taxes should add meaning to our lives, giving us reasons to live, not ones that take away meanings. Personally, I have long favoured Poor taxes, where the bottom ten percent is taxed at a higher rate, to give them an incentive to work more, and stop being poor! Poor that strive will keep the economy going!
Published: December 5, 2007 12:29 AM
I tend to think of the estate tax as a tax on the currently living person's wealth. If that person intends to pass on that wealth to his children or someone else, then that person is receiving economic benefit by passing it on. To have the knowledge that his or her wealth is going to be heavily taxed upon death reduces their current economic benefit. Therefore, the estate tax acts as not only a tax on material wealth but economic wealth as well.
Published: December 7, 2007 3:15 PM
Timothy P. Carney at The Examiner explains:
Democrats eager to preserve the federal estate tax — the fate of which is currently being debated by the Senate Finance Committee — portray the levy as a grand equalizer and argue that killing the tax would help only the ultra rich.
The real beneficiaries of repealing the tax, however, would not be Paris Hilton and her ilk, but the countless small businessmen, family farmers, and retired parents and grandparents who now have to spend billions to avoid paying it...
Investment mogul and estate tax defender Warren Buffett testified before Congress Wednesday that only 0.5 percent of the Americans who die this year will pay the estate tax, or, as he put it, “You would have to attend 200 funerals to be at one at which the decedent’s estate owed a tax.”
What Buffett ignores is that you’d probably only have to attend a handful of funerals before you attended one where the family spent countless hours and sunk thousands or millions of dollars into avoiding the estate tax.
Enter the multibillion-dollar estate planning industry. If you invest your money in certain ways, give small annual gifts, or buy annuities or life insurance, you can eliminate or reduce your estate tax liability. All of these activities are less efficient, more costly and more time-consuming than what you would do absent the threat of a death tax — but they all make money for somebody.
The American Council of Life Insurers (ACLI) spent $9.6 million on lobbying last year and is on pace to spend more than $10 million this year — and that’s on top of the lobbying efforts by its individual members, the life insurance companies. Why? One life insurance industry lobbyist estimated last year that the industry gets about 10 percent of its business through estate planning...
And old Warren Buffett, whose intentions in all likelihood are pure, also owns insurance companies. He bought the life insurance business of Safeco, whose 2002 annual report worried about the risks posed by “changes in tax laws ... that decrease the usefulness of life insurance products for estate-planning purposes.”
Warren Buffet, Kimberly Dorgan and Frank Keating are helping end the threat to their industry and in the process assuring that future generations of insurance salesmen and estate planners will thrive because the death tax lives.
Carney is a bit generous, we believe, when he suggests Buffett's intentions are pure. We would be more impressed if Buffett disclosed upfront the conflicts of interest he faces when he testifies on estate tax planning.
Published: December 8, 2007 11:36 PM