Warren E. Buffett never embraced the idea that a moral life is one lived content with small means, but it still would be hard to deliver a sterner moral rebuke to the greed and materialism of public life than how and when he chose to shed his stupendous riches.
Buffett, who at 75 has accumulated one of the three or four greatest fortunes in the history of the world, announced Monday that he would give 85 percent of it, some $38 billion, to foundations to combat disease, poverty, illiteracy, injustice and environmental destruction in the United States and around the world. Most of it will go to the foundation run by Bill and Melinda Gates, forming the most potent philanthropy in history and dwarfing the Ford, Rockefeller and Carnegie foundations. He said the Gateses were better than he at giving away money and getting good works with it.
He divulged his plans just as the Republican Congress and President Bush prepared to give the scions of Buffetts, Gateses, Waltons and other men of riches one of the largest tax cuts and surely the most undeserving one in history. The Senate will vote by the Fourth of July, if not this week, to virtually repeal the 90-year-old federal tax on large estates. Democratic senators blocked full repeal earlier this month but the Republicans are coming back with a bill that would leave only a small amount of taxes on great inheritances after the year 2010 in hopes of getting the votes of wavering senators like Mark Pryor of Arkansas.
For years, Buffett has been saying that the estate tax needed to be raised, not lowered, on vast estates like his, and those of the Gateses and Waltons.
He would have been happy to have a good part of his estate, which will be between $40 billion and $50 billion, taxed away after his death to meet the social obligations of the capitalist society that enabled him to accumulate the money. But Buffett found a way that he thinks will return the wealth to people in a more humane way than, say, letting a George Bush government do it.
Those whom global capitalism made rich, Buffett said Monday, should help the less fortunate of the world.
He had earlier argued that the U.S. government was surrendering its role in achieving that by getting rid of the tax on large inheritances and rolling back income tax rates on the wealthy, which has been the overriding domestic goal of the Bush administration. Monday, Buffett said that the ability of rich men to pass on “dynastic wealth” to their grandchildren was offensive to the American tradition of meritocracy and he never intended to do it.
In the men’s grill of his Omaha country club, Buffett said, he overhears people cussing welfare mothers for getting food stamps while the country clubbers “are trying to leave their children a more-than-lifetime supply of food stamps and are substituting a trust officer for a welfare officer.”
Though he was perhaps the man most directly affected, Congress never invited Buffett to testify on the annual rounds of tax cuts for the rich and corporations that were passed nearly every year since 2001. He would have been as dismissive as he was Monday about the national priorities that they represented.
Asked on the Lou Dobbs business show last year about charges that criticism of tax cuts for the wealthy amounted to “class warfare,” Buffett replied. “Oh, it is. But the war is over and my side won.” That is, the rich.
He was right. Taxes on America’s wealthiest citizens now are at their lowest level in 60 years and heading lower, but the drive to shield vast wealth from the estate tax is still conducted like a moral crusade.
Part of the fortune that Buffett is turning over to charities resulted from the Bush tax cuts, including the 2003 cuts in income taxes on dividends and capital gains.
Writing in the Washington Post that spring as the Senate voted on Bush’s proposal to eliminate those taxes altogether, Buffett said that he and his receptionist paid about the same aggregate tax rate, 30 percent. If the full Bush tax cuts took effect, he said, her cumulative taxes would still run about 30 percent of her income but his $310-million-a-year tax cut would drop his effective tax rate to 3 percent. Eventually, he said, her class will have to pay even more taxes to compensate for his benefits because someone always must pay the bills. (The estate tax bill forced on the Senate in the next few days will leave $750 billion in bills in the first 10 years that you and she will have to pay.)
“She’s not complaining,” he wrote. “Both of us know we were lucky to be born in America. But I was luckier in that I came wired at birth with a talent for capital allocation — a valuable ability to have had in this country during the past half-century. Credit America for most of this value, not me. If the receptionist and I had both been born in, say, Bangladesh, the story would have been far different. There, the market value of our respective talents would not have varied greatly.”
Henry David Thoreau would not have counted Warren Buffett a moral exemplar, but in the year 2006 he comes as close as we can get.