Alan K. Henderson's Weblog


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Monday, June 26, 2006

Warren Buffet Cheats Death Tax

James Taranto places the multibillionaire's recent generosity in context:

You can see why Buffett would want to give his billions to charity. The federal death tax is currently being phased out, but it will reappear in 2011 unless Congress acts--which means that if Buffett lives that long, the government will confiscate 55% of his assets upon his death.

But wait. Buffett is, as a New York Sun editorial notes, "an avowed supporter of the estate tax." As we noted in 2001, so is Bill Gates Sr., the Microsoft founder's old man, who is an executive of the Bill and Melinda Foundation.

The Sun article notes that some of Buffet's charitable donations are staying in the family:

The Gates Foundation isn't the only recipient of his largesse--three foundations headed by Mr. Buffett's three children, Susan, Howard, and Peter, will get hundreds of millions of dollars. Tax documents show that in 2004, Peter Buffett and his wife Jennifer each took a $40,000 a year salary for what they reported was 30 hours a week each of work on the foundation.

The super-rich can avoid the estate tax by setting up trust funds for their next-of-kin, as in the case of Joseph Kennedy, or, as in this case, by funding tax-exempt charities which serve in part as de facto trust funds for family members who draw salaries from them. The small business owner does not have such maneuvering room; his or her death often means the death of the business, whose assets must be sold to pay the tax.

For once, I'd like to see a rich guy leave his largesse to fund business formation. Charities are nice, but they don't create jobs (outside of their own paid staff) and grow economies.

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