Tuesday, July 22, 2008


One would not expect to see the second richest man in the world to be doing business in Nebraska. And contrary to that assumption, that is exactly the place where 77 year old Warren Edward Buffet calls home. Tucked away in a modest office covered wall to wall in imitation wood paneling is a man who dedicates as much commitment towards the marketplace as he does equality.

It was in that same, humble and unassuming office that Mr. Buffet invited Senator Obama to in order to exchange views on tax policy and inheritance.

The first point of contention that Mr. Buffet made the newly elected Senator aware of was his indifference to the tax structure. He estimated that in 2006, he only paid 19% of his income ($48.1 million) in total federal taxes, while his employees paid 33% of theirs despite making far less money. According to him, “it just makes sense that those of us who’ve benefited most from the market should pay a bigger share.” He was particularly concerned with his receptionist who was taxed almost twice his rate.

He then pointed out how he discouraged getting rid of an estate tax and the tacit aristocracy that would go along with it. Buffet remarked, “When you get rid of the estate tax, you’re basically handing over command of the country’s resources to people who didn’t earn it. It’s like choosing the 2020 Olympic team by picking the children of all the winners at the 2000 games.”

While Buffet may rebuke the passing down of inheritance to those who have not earned it, there are thousands of families who are where they are today not solely based on individual achievement but more due to the trust funds that they started with. In essence, this behavior has spilled its way into universities where “legacy children,” are given more unnecessary advantages and even athletic competition where those who can “pay to play,” become far better off than the children who can’t afford to have the best equipment or travel on AAU teams.

The starting line has become more and more disimilar in America. There are some who get the head start and others who wind up in the back without getting the opportunity to even compete with everyone else. Entitlement has become a way of life for the rich elite and it all starts with a last name.

This false sense of entitlement is best illustrated on MTV’s hit TV show “Sweet Sixteen,” where birthday boys and girls are given extravagant parties on their parent’s dime all the while acting far superior to the rest of their classmates. At sixteen years old, they would have you think that they had earned their places in society.

And yet, outside of the reality TV realm, there stands a world filled with grown up versions of these sweet sixteen brats who feel that by the mere fate of birth, that they hold more stake in the American dream than the founding father’s who created its vision and the millions of immigrants who saw it through. The thousands who wait outside our borders are denied entry because these selfish individuals would rather feed themselves than pay the gift of Democracy forward for future generations of Americans. And still, they are the same people who will have you believe that spreading Democracy overseas in far away lands such as Iraq/Afghanistan is beneficial just as long as it is 'NIMBY.'

Some may call Warren Buffet an enigma by the way he has been able to profit with a unique investing strategy while maintaining a high degree of financial integrity. His views are not always shared by those of similar economic portfolios and perhaps that is what sets him apart from his peers. Mr. Buffet’s net worth is $62 billion and his children will receive less than %1 of that amount when he passes on. His attitudes about his fortune can best be summed up by his description of US capitalism.

“I happen to have a talent for allocating capital. But my ability to use that talent is completely dependent on the society I was born into. If I’d been born into a tribe of hunters, this talent of mine would be pretty worthless. I can’t run very fast. I’m not particularly strong. I’d probably end up as some wild animal’s dinner.

“But I was lucky enough to be born in a time and place where society values my talent and gave me a good education to develop that talent and set up the laws and financial system to let me do what I love doing—and make a lot of money doing it. The least I can do is help pay for all that.”


thetruth said...

I understand the purpose for the B man's ideology for redistribution of wealth, but three things: 1) the tangent about legacy's being passed down seems to me to be counterintuitive. At some point in time someone worked hard, established an estate, and now shouldn’t be able to distribute the estate as they see fit, but that the gov. should have a say in who benefits from the success?
2). If his secretary is paying twice his percentage in income tax that means she is in the highest "income tax" bracket and she is what his friend Obama would call "rich" b/c she is in the top 5% of income earners in the United States. Also B man doesn’t explain that the reason his income tax is so low is that the government rewards(and by rewards I mean takes less of your money) ownership, which I thought was one of the reasons why so many wanted to come to the United States in the first place. If ownership is going to be taxed at a greater rate than that will have a direct negative affect on any American's retirement income by raising the capital gains tax whether you are in a private retirement account or a pension fund. Not to mention most of B man's income comes directly from tax-exempt securities (which direcly fund municipal projects). This does not even cover the negative correlation that increases in taxes on investment income has on the liquidity of money and growth of the economy of which none is needed with the credit markets the way they are.
3) Lastly if he cares so much about the future of America then why is a forced removal of an indiviual's wealth needed. Could he not just offer his millions to the govt. without needing a policy change that forces him to do so? That is also saying that the Govt. is not made up of the "sweet-sixteen brats" that he speaks of so poorly(I have a feeling that it is). Entitlements are the only reward that the govt. gives out by the way, which is what this entire section of the article is trying to prevent.

Just my .02, not trying to take anything away from the blog but I have seen this news item posted numerous places and to someone who doesn’t know anything about the economics of taxes, it doesn’t provide a complete picture.

I also feel that B man's message to the "privileged" class is lost in the politics of his stance. Forced humanity is not a solution to this problem. There are many "brats" out in the world(even on a more dangerous scale (i.e. terrorists)) that do not come from privilege but the exact opposite.

JoJo said...


I appreciate you stopping by and giving another viewpoint of the situation, afterall that is what my blog attempts to do...that is I give an opinion with the hope that a well thought out counter argument will follow, and in your case you did make some decent points. However, while I did almost get my master's in economics, I am by no means an economist and therefore need to re-attack the very premise of the discussion from another angle, with that being "my" firm belief in not accepting anything that I did not work for. In other words, I could not take any pass-down whether it's from my parents or any family members because deep down I know that I did not earn it. The irony of that belief is that in theory it should model that of the conservative view that entitlements are wrong.

It's too bad, that conservatives don't prescribe to that view when it would ultimately just benefit them.

As a general rule, I believe in paying my success forward and I feel obligated to help those who are less fortunate and who have not profited off the "system," as I have.

In closing, I fully understand why someone would want to take mommy and daddy's money, go to their Ivy league school as a legacy, live off their families investments and hold onto their "false sense of entitlement." At the end of the day, we all must take a look at the man in the glass and ask ourselves if that's really the person we want to be. I think people would feel much more empowered if they earned everything that was given to them.

When you get what you want in your struggle for self,
And the world makes you long for a day,
Just go to the mirror and look at yourself,
And see what THAT man has to say.
For if it is not your father or mother or wife
Whose judgment upon you must pass.
The fellow whose verdict counts most in your life
Is the one staring back in the glass.
Some people might think you are a
straight shootin' chum and
call you a wonderful guy,
But the man in the glass says you're only a bum,
If you can't look him straight in the eye.
He's the fellow to please, never mind all the rest,
For he's with you dear up to the end. And
you have passed your most dangerous, difficult test
If the guy in the glass is your friend
You may fool the whole world down the pathway of
years, and get pats on the back as you pass.
But your final reward will be heartaches and tears
If you have cheated the man in the glass.

I hope that you understand where I am coming from...Please stop by again :)