Warren Buffett, the third richest man in the world, testifying in favor of inheritance taxes at a Senate Finance Committee on estate tax reform: “I believe in keeping equality of opportunity. You don’t get to be a quarterback … because your father was a quarterback 20 years ago.”
Today’s rich good guy
November 19, 2007 by will shetterly
18 Responses to “Today’s rich good guy”
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Bill Gates is also in favor of inheritance taxes.
As for wealth mobility, a study by the US Treasury Department, tracking income from 1996 to 2005, found that over half the people in the lowest quintile in 1996 were in a higher one in 2005. Median income increased 24% (after inflation). For people in the top 10%, median income increased 2.9%. For the top 5%, median income dropped 6.8%. For the top 1%, median income dropped 25.8%.
Does income necessarily have anything to do with wealth mobility? I’ve usually heard “wealth” defined as “net worth” versus income, which is defined by the amount one earns in a given period of time.
Let’s say I’m Bill Gates. I have a fortune worth $50 billion. I have a good stock market year, and make $25 billion. The following year, I decide to just sit on all that cash and not invest in anything.
I’m still worth $75 billion, my wealth hasn’t moved an inch, but my income has dropped by 100%. I’d say the correlation between income changes and wealth mobility is lower than you think.
In fact, given the preponderance of sub-prime lending and people overextending themselves to buy things they can’t afford, the fact that the people in the lowest quintile have moved up a notch have probably put them in a worse position in terms of creating and/or gaining wealth. Most studies I’ve seen show that there are more people in the US with a negative net worth than ever before.
I’m also not entirely clear on how taking half of someone’s wealth and giving it to the government when they die will necessarily help solve this problem.
The problem being discussed, to (over)simplify, is that the rich don’t pay taxes.
Define “the rich” and “don’t pay taxes”.
Taxes are based on things like income and real estate value. In general, people with higher numbers on those pay more taxes.
Income has a lot to do with wealth mobility. If you have no income, you’re unlikely to move up in the wealth category. (In your hypothetical, Bill Gates goes from being the world’s richest man to being the world’s richest man. Not much of a percentile change.)
Down in the real world, income is the way wealth changes.
Median income increasing 90.5% (for the bottom quintile) is not, I believe, likely to make people less able to increase their wealth.
I don’t believe inheritance taxes should be 50%; I believe they should be extremely progressive, with none for the first few million, up to 95% for huge estates.
I’m praising Buffett’s and Gates’s principles, not their practices, just as I praise the good things Jefferson said while remembering that he was a racist, a rapist, and a slaver.
As for wealth mobility, the important part in an unjust society is at the top of the pyramid.
In general, people with higher numbers on those pay more taxes.
Warren Buffet disagrees.
Did you mean to have a link there? If it’s just a way to quote, it’s clever, but I haven’t noticed it before. (’Cause I’m 52!)
No… I really don’t know what happened there
If you had a choice between helping the people at the bottom (with no effect on the people at the top), or dragging down the people at the top (with no effect on the people at the bottom), which would you do?
Does that make the people on the bottom the part that’s more important to you?
Cite? Does he think he pays less taxes than I do? Or does he believe he should be required to pay even more taxes than he does?
When you’re palming cards, you shouldn’t announce that you’re doing that. *g*
Bringing up the people on the bottom helps everyone. It’s good to live in a society where no one is desperate.
It is very hard to say, since I don’t know how much money you make. He frequently goes on the record indicating he should have to pay higher taxes.
The critical principle here is equality of sacrifice– that is the justification behind progressive taxation. Additional information upon request, but I gather you understand the concept even if you don’t agree with it.
Buffet pays 17.7% tax rate, his employees pay 32.9%
This doesn’t even touch all the ways that very wealthy Americans can afford to hide their money by one means or another. (Guys like John Templeton, for example)
As far as the estate tax goes…
more on why it is a good thing here.
It’s no challenge to palm cards when people aren’t looking.
I suppose I should have written “no direct effect”. Enabling everyone in the US to be decently well off wouldn’t change where Bill Gates lives, or what he eats, or . . .
Dragging down the people at the top might make the people at the bottom feel less jealousy, or more schadenfreude, but wouldn’t really help them: they’d still lack housing and food to the same degree.
I prefer to help the people at the bottom, because that’s where I can do the most good.
Thomas Jefferson was a rapist? How so? If arising from his supposed relationship with one of his black slaves (Sally?) didn’t DNA tests show that her descendants weren’t his descendants (though they likely were of another closely related male, such as one of his ne’er do-well nephews)?
There’s a good take on it here. The quick answer is that all the evidence points to it being true.
Good links!
Because we tend to disagree on specifics regarding wealth, I want to say that anyone in favor of progressive inheritance taxes has the right principles. Now I just have to get you to push the range in both directions! (*g*)