So multibillionaire investor Warren Buffett is worried that the permanent elimination of the "estate" or "death" tax (the tax is to be eliminated in 2010 and then reinstated in 2011 as the Bush tax cuts expire) would turn America into a wealth-concentrated plutocracy. He told Congress as much yesterday. What's more, he wants the revenue from estate taxes to be used to pay for lower taxes for lower-income Americans. (Payroll taxes, I guess, since fewer and fewer pay income taxes anymore.) Now an observation and comment or two on what the Oracle of Omaha had to say:
1) Buffett is known for his frugality. I'm surprised he doesn't worry that high estate taxes merely punish saving and investing and wealth building (particularly in the form of small businesses) and create an incentive for consumption and leisure by folks who know they can't easily pass on their wealth to future generations.
2) Estate taxes contribute only around 1 percent of total federal revenues, or about $25 billion. Is risking the possible negative side effects really worth a relative budgetary pittance? And certainly any tax cuts for lower-income Americans could be paid for through spending cuts.
3) This all reminds one of Buffett's plea earlier this year for higher income taxes on the wealthy. He's publicly lamented paying a lower tax rate than his office assistant. But if Buffett so worried that he doesn't pay enough in taxes, he can cut Uncle Sam a check. If he and Bill Gates are worried about creating a financial aristocracy, then they are free to disperse their fortunes—as both, indeed, seem to be doing. Maybe they can get their superwealthy friends to do the same.
4) As I write this, I am sitting in a greenroom at the Capitol Hill studios of the new Fox Business channel and watching humorist-actor Ben Stein opine on the estate tax. His view is that there should be an estate tax as a revenue raiser but that the threshold should be raised from the current $2 million to somewhere in the $10 million to $20 million range so the IRS doesn't nab middle-class folks who were diligent savers throughout their lives. Yet that would raise less revenue and is thus self-defeating if the one reason you support the estate tax is that it's a revenue raiser.