Mankiw: Buffett is a Master of Tax Avoidance
For those who missed it, Warren Buffett was in the NYT yesterday, explaining why rich guys like him should pay more taxes. Greg Mankiw skewers him with this:
Mr. Buffett is a long-term investor, so he rarely sells and realizes a capital gain. His unrealized capital gains are untaxed.
There’s more. Mankiw lists all the ways in which Buffett would be able to continue dodging taxes under his “minimum tax” proposal, just as he does currently.
Well, at least he is not a greedy, selfish, conceited rich man. According to the article, he is giving much of his wealth away to charity. That compensates for the tax avoidance…right?
I’m completely ok with Warren Buffet making a check out to the US Treasury.
There’s a lot of cultural cache in a rich individual indicating their willingness to be taxed at a higher rate. This not only ignores the fact that most of their assets aren’t taxed. It fundamentally ignores that the majority of the individuals hit hardest by these tax increases will be upper middle class.
It’s not a big deal if you’re Warren Buffett, but if you are Warren Buffett you shouldn’t speak for the family of 5 in NYC making just over 250k. Your situation isn’t comparable.
Although Buffet has amassed a huge fortune, he lives a relatively meager life. He doesn’t pay much in taxes because he rarely sells the companies he buys. Thus, he has no realized capital gains to pay tax on. Besides being an astute investor, he is also a philanthropist; he plans to give away most of his huge fortune to charity.
Buffet is an investor who looks for strong, but under-valued companies to invest in and hold over the long term. As such he is a great role model for fund managers to emulate. However, as a philanthropist, he is not a role model that other wealthy families should be forced to emulate.
If you read between the lines (so to speak), what Buffet is really saying is that wealthy families should either: 1) pay high taxes that confiscate their wealth (preventing the accumulation of significant wealth); 2) be forced to carry capital gains for long periods — never being able to realize the capital gains lest they be lost to high taxes; 3) avoid taxes by giving away much of their wealth; or 4) lose accumulated wealth to high estate taxes at time of death.
Buffet doesn’t spend much of his wealth. It seems he doesn’t believe anyone should be allowed to enjoy this type of wealthy accumulation and certainly not pass it down to heirs.
If you raise taxes on the most wealthy it reduces the money that they have to donate to charity. I just can’t get behind the government telling people what to do with their own property.
Interesting list of loopholes.
“My friends and I have been coddled long enough by a billionaire-friendly Congress” – Probably because your friends donate quite a bit.
His intention were to help this country. The fact that he gives so much to charity is enough proof. And so, I doubt he is pushing through this reform so that he amass more wealth.
Robert Frank has written some interesting books on the lives of the truly wealthy. Of particular note is the idea that that both the top and bottom decile gravitate toward the left; because of their respective tax burdens.
Why is it that when Warren Buffet or some other Lefty gives money to charity they are considered to be “compassionate” and this makes it ok for them not to pay a higher percentage of taxes. Yet, when Mitt Romney donates a large percentage of his income to charity, he’s called a tax cheat. Guess you only get a pass if your on the Left.