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NO TAXATION WITHOUT IRRITATION |
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Strange things are happening. Mr. Warren Buffet, the richest man in the world, has found something to complain about. You think that’s impossible? So do I, but there it is. It’s complete proof that money doesn’t bring happiness. Kind of resigns one to one’s lot in life, doesn’t it? I mean, if the richest man in the world has problems, how can the rest of us complain? All we can do is sympathize with him and hope his troubles will soon pass and he’ll walk in the sun once more.
Mr. Buffet’s problem, as he tells it, is that he isn’t taxed enough. He finds that after all the figures have been reconciled he only pays a rate of 17% on his $46M income, less than the 39% his secretary pays on her five-figure income. In some of the resulting commentary this got translated as a claim that she paid more than her boss. The people doing this were confusing the average over-all income tax with the marginal tax rate, that which is paid on taxable income over $97,000 in the case of single people, and similar amounts for the three other IRS categories of taxpayers. You can get to a tax rate of 17%, I suppose, by taking the first three segments of your taxable income, taxed at 10%, 15% and 25% respectively and getting an average. If you have a lot of capital gains taxed at 15%, you could shelter a lot more income this way, if you consider 17% sheltering.
I’m not doing a tax seminar here, so I refuse to do an investigation of how a person could pay a rate of 39% on any income when the top rate is 35%, but I can see ways a person can calculate it by throwing non-taxable income into the scale and working out the consequences tax-wise. I think it’s enough commentary on Mr. Buffet’s complaint to note that the 17% he pays on his millions comes out to millions more than the 39% his secretary pays on her thousands…if she really pays that. So much for the idea that she and her boss are on equal terms with the IRS.
What Mr. Buffet means by his complaint of course is that taxes are simply too low and should be higher. That seems odd coming from a businessman, but Buffet has something other than business in mind. He happens to be hostile to the idea of inherited wealth. He has already pledged his own assets to the Gates Foundation for the relief of humanity globally and does not intend to endow his children with great fortunes like his own.
His objective then in demanding higher tax rates is to keep other high-earners in this country from accumulating the kind of money with which dynasties can be founded. He thinks dynasties have a way of obstructing able people from climbing into leadership positions in our society, since they find them already monopolized by the beneficiaries of inherited wealth.
He apparently doesn’t advocate more taxes for any other reason, because if they were all he cared about, he could have solved his problem by unloading some of his assets on the Treasury. Some people don’t like that suggestion because they say Buffet is thereby being asked to commit economic suicide by stripping himself naked when none of his business competitors have to do the same. This won’t wash, though, because Buffet is stripping himself anyway with his gifts to Gates.
This is proof of how little he really cares about taxes, except as a means of preventing the rise of huge inheritable fortunes. Given a choice of subsidizing the government or entrusting his money to private hands, he chose the second, demonstrating what he really thinks about the way the government uses our money.
Doing this, though, has had the effect of undermining his plea for taxes. He hasn’t displayed any confidence about how they will be used. This is all right with people like me, who don’t buy the idea of more taxes, no matter who is doing the selling. And if low taxes lead to big fortunes in unworthy hands, we’ll just take the risk. Is it that great? It seems like lots of heirs and heiresses don’t live to become a bother to society. Drugs are their downfall. As for those who do take over their family’s business, they have a mixed record. The Ford empire seems to be in a state of collapse. The Chrysler empire vaporized a good while ago. The Rockefellers have stayed on course and kept their flag flying, but they are not what they used to be. Only one Rockefeller is prominent today, the Senator from West Virginia. David Rockefeller, his uncle, is the last of his generation and is pretty well retired from business.
Inheritance has done its work, in other words. Two hundred years ago America ended primogeniture, the right of the first-born son to inherit the whole family estate, thereby making him the family leader using all its resources to preserve its power. Inheritance by equal shares to all legitimate children has made this impossible and has divided and re-divided estates until they are practically non-existent in the third or fourth generation. Mr. Buffet really shouldn’t worry as much as he does over the curse of inherited wealth.
That concludes my observations on the subject of taxes and how to prevent them. You should not go to the length of giving away all your money to avoid paying them as Buffet has. That is going to extremes. Besides, with all due respect to those who administer charities and are likely to be on the receiving end of his contributions, I think today there’s a little more skepticism about them than there used to be. Not because some of them are frauds not to be trusted with anyone’s money -- there have always been people like that -- but because some of them are not frauds, but they’re not completely dedicated people either. By “dedicated “ I mean people who give themselves to their work without caring about what others do. Today there seem to be more and more enthusiasts who care a whole lot about what the rest of are doing or not doing in support of their cause. They try to enlist us with or without our consent. One way is through taxation of course. Get the charity run by you on the government payroll and your troubles are over. All that soliciting and begging alms and appealing to the public can be put aside while the tax money rolls in. No effort is required; the government takes care of that. No refusals are encountered; there are laws against them. I read a speech by Mr. Buffet’s friend Gates the other day, given to the graduating class at Harvard. He exhorted them to support the work he was undertaking to erase “inequities” worldwide. He wants to save a lot of lives that are lost to them. He’s putting up billions for it. Well done, you might say, and I’d agree. It was just that I got a little hazy kind of hint that Bill might someday decide that his fight was everybody’s fight and it was their duty to join in with him whether they wanted to or not. Time will tell.
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