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Financial Planning > Tax Planning

Bravo, Mr. Buffett!

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When I got the story from Matt Brady and Dave Postal for the November 19th issue about the Senate Finance Committee hearing on the estate tax held earlier this month, I let out a loud and sustained cheer on reading Warren Buffett’s comments.

Our office environment is not exactly what you would call buttoned up, but even so the Texas-size quality of my cheering brought some members of my staff running into my office, questioning what the heck was going on.

“What happened,” one of them inquired. “Have the president and vice president resigned?”

I had to laugh at that. “No,” I chuckled. “You know I’d still be cheering.”

So, I went on to tell them how exhilarated I was upon reading how the Sage of Omaha, as the legendary investor and multi-billionaire is fondly known in some circles, used his testimony to rip at the hypocrisy of the term “death tax” and how it has been used by proponents of repeal of the estate tax.

The term “death tax,” he said, showed the “intellectual dishonesty” of those who use it. Then he said, “It’s clever, it’s Orwellian, and it is, if you pardon the expression, dead wrong.”

Here’s some more of what Buffett said (quoting from story): Only a very small number of Americans, he added, pay the tax, roughly the equivalent of one half of one percent of the population. “You would have to be at 200 funerals to attend one where the decedent paid the tax.”

Furthermore, Buffett argued that those calling for an end to the estate tax rarely speak of where the government would find other sources of income to make up for what he said was roughly $24 billion annually. “They just say ‘free us,’” he said. “They don’t say who to further shackle.”

Finally, I felt on reading his comments, somebody who will be paid attention to has exposed how utterly shameless has been the campaign to get rid of the estate tax. (And you know that the senators at the hearing paid attention although they may not have agreed with him, because while most of them are millionaires, Buffett is a billionaire many times over. The old adage–”When money talks, senators listen”–pertains more than ever in that hallowed chamber.)

On rereading his comments I think what I really liked best of all was his use of the word “Orwellian” to describe the situation. This is of course nothing new. In a world where legislation is purported to promote cleaner air or water and yet contains provisions that would emasculate stronger provisions in legislation already on the books, you can expect anything.

Politicians can get away with this nonsense because they know that the vast majority of the people in this country have no interest in the fine print and intricacies of legislation, nor for that matter do they show much interest in the macro effects of legislation.

Thus, the “death tax” campaign has succeeded to the degree it has because somehow people have been made to feel that the estate tax is going to pummel them. The reality of the situation, of course, is that most people are as likely to have to pay the estate tax as they are likely to be the sole winner of $300 million in the Powerball lottery.

What I’ve never been able to understand is why opponents of estate tax repeal have not been vociferous in letting the public know what a scam repealing the “death tax” is. The public is capable of being stirred from its habitual torpor if prodded enough.

Judging from his comments, Buffett doesn’t seem like he’d mind being used as the cudgel in an anti-repeal campaign.

The Cudgel of Omaha. I like the sound of that.


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