The Snowball_ Warren Buffett and the Business of Life - Alice Schroeder [438]
As to the question, it was their money, why shouldn’t they be able to do what they wanted with it?—why should they “subsidize” others?—Buffett’s answer was that they owed some minimum amount to the society that enabled them to become so rich. If they thought they did it all themselves, reincarnate them as one of five children of a scared, starving mother in Mali and see how rich and successful they would be after being sent to work as a slave on a cocoa plantation in Côte d’Ivoire.
If the estate tax were eliminated, he said, somebody else would have to make up the difference, since the same amount of money would still be required to pay for running the government.
For years a supply-side theory had postulated that cutting taxes would force the government to cut expenses. This theory had an intuitive logic; after all, if people were supposed to live within their income, why not the government? (Of course, by 2002, the populace was busy setting up home-equity lines of credit based on artifically cheap interest rates to avoid living within its income.) Debate over supply-side policy still boiled after twenty years; the taxes the government was collecting usually didn’t cover its costs, and it was borrowing to make up the difference. The theory by now looked more dubious. Killing the estate tax would mean that the government would have to raise taxes or borrow even more money, and the interest on that debt, along with its ultimate repayment, would eventually be passed on to everybody else in the form of higher taxes. Buffett felt that proposing an estate-tax cut while running the federal budget at a deficit was, in fact, the height of hypocrisy.28
The average person who would pay these higher taxes if the estate tax were repealed would never face an estate tax. The push to repeal the estate tax was not coming from people who owned small ranches in Oklahoma. No, the real push, Buffett said, was coming from a tiny percentage of the country’s population, people he actually knew, people who were rich enough (often very suddenly rich enough) to own a triplex penthouse in Manhattan, a nine-bedroom log cabin in Deer Valley, a summer house in Nantucket, and a condo in Costa Rica. Buffett felt that politics had slithered into the hands of people who could pay hush-puppy lobbyists from K Street to whisper in the ear of Congress and funnel political donations where they would do the most good. He didn’t blame people for acting in their own interests; he even felt pity for the politicians who were chained to the grindstone of endless fund-raising. It was the system that he scorned, in which money bought power.
Shortly after President Bush’s inauguration in 2001, Buffett had gone to the LBJ Room in the Capitol Building to speak about political campaign financing to a group of thirty-eight Senators who were part of the Democratic Policy Committee, then followed up with appearances on ABC’s This Week and CNN’s Inside Politics. Buffett said that the campaign finance system was corrupt. The current way of electing politicians had echoes of nineteenth-century Tammany Hall, where votes and influence were literally for sale. The laws were shifting in ways that enhanced the ability of the rich to get ever richer, to keep more of what they made, and to pass more of it along to their heirs. Buffett called this “government by the wealthy, for the wealthy.”
He pointed out a growing army of hush-puppies and tax panderers whose job was to push for legislation that benefited the interests of the rich. He said, however, that nobody lobbied for the other ninety-eight percent of Americans. Lacking