Warren Buffett has again found himself at the center of the estate-tax debate, this time after speeding up annual gifts from his roughly $140 billion Berkshire Hathaway shareholding to four family foundations. The move drew a wave of reader reaction, including praise for his philanthropy and criticism from those who said the strategy helps him sidestep estate and capital gains taxes.
Buffett has never hidden his comfort with paying taxes. He has said he feels under-taxed relative to what society has given him, and he has pointed to the fact that his secretary has sometimes faced a higher effective rate once payroll taxes are included. He has also taken issue with the lower tax rate on capital gains compared with ordinary income. Those views helped inspire President Barack Obama’s proposed “Buffett rule,” which would have set a 30% minimum tax on Americans earning more than $1 million a year, though the Senate rejected it in 2012.
His support for an estate tax has been just as consistent. In a 2017 CNBC interview, Buffett said he did not need a tax cut when Congress was weighing a proposal that would have phased out the 40% estate tax. He argued that only a very small number of estates actually pay the tax each year and said eliminating it would encourage wealth to be concentrated among heirs who may have simply been born into the right family. In his view, that would be a poor use of resources and unhealthy for capitalism and society.
At the same time, Buffett also acknowledged the practical reality: like most billionaires, he is unlikely to be personally affected by the tax he supports. The article notes that if the estate tax were removed, Buffett could leave tens of billions of dollars to descendants, but he has questioned whether that would be a sensible outcome for the broader economy. He has also said he believes his children’s foundations are better able to allocate money than the federal government, while drawing a distinction between mature adult children running foundations and much younger heirs receiving large fortunes.
Source: cnbc.com
