Warren Buffett a Wealthy Philanthropist with Some Bad Ideas
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Stopping Juvenile Detention: Warren Buffett A Wealthy Philanthropist with Some Bad Ideas By Martin Morse Wooster Summary: Warren Buffett has a genius for making money, and he has some good ideas about how to voluntarily give it away. But he has some very bad ideas about taxing people who know how to make money. Un- fortunately, President Obama is listening to his bad ideas. n August, Warren Buffett, America’s second-richest man with $39 billion in Iassets, complained in the op-ed pages of the New York Times that his taxes were too low. “Last year my federal tax bill— the income tax I paid, as well as payroll taxes paid by me and on my behalf—was $6,938,794,” the CEO of Berkshire Hathaway wrote. “That sounds like a lot of money. But what I paid was only 17.4 percent of my taxable income—and that’s actually a lower Tip toe through the Tax Code: Liberal billionaire Warren Buffett sings the praises of higher tax rates. percentage than was paid by any of the other 20 people in my offi ce. Their tax burdens some time. Buffett served on the presidential increase the “Buffett rule,” which is perhaps ranged from 33 percent to 41 percent and transition team for economic policy, and in the fi rst time in history that a tax increase averaged 36 percent.” 2010 the president gave him the Presidential has been named after a billionaire. Medal of Freedom, the nation’s highest civil- Buffett demanded that Congress raise taxes ian honor. Buffett’s grandson, Howard W. Buffett’s remarks provoked considerable on America’s millionaires and impose an Buffett, spent a year and a half in the Obama controversy. Many observers noted that additional surtax on those who make more administration as a staffer in the White House Buffett chose to keep his tax returns private, than $10 million. “My friends and I have Offi ce of Social Innovation and Civic Partici- leaving it impossible to verify his claim of been coddled long enough by a billionaire- pation. He then worked for the Department of November 2011 Defense promoting agricultural development friendly Congress,” Buffett contended. “It’s CONTENTS time for our government to get serious about in Iraq and Afghanistan. Warren Buffett shared sacrifi ce.” Page 1 In September, President Obama called for a tax on the rich and super-rich that his friend Philanthropy Notes President Obama and Buffett, an ardent lib- Page 8 eral Democrat, have known each other for from Omaha had proposed. He dubbed the tax FoundationWatch a low tax rate. “The opportunity to educate salary, which may explain why his tax rate over $5 million for two lunches. Wechsler the public would be even greater if Mr. is lower than it would be had his primary was rewarded for his generosity in September Buffett would let everyone else in on his source of wealth been his paycheck. by being named one of the three people who secrets of tax avoidance by releasing his tax will manage Berkshire Hathaway’s invest- returns,” the Wall Street Journal recently Still others think it’s hypocritical that Buffett ments whenever Buffett steps down as CEO. editorialized. demands that his taxes be raised at the same “Only at Berkshire Hathaway can you get a time that Berkshire Hathaway subsidiaries job by paying $5 million for an interview,” Nor did the rich appreciate the advice Obama reaped billions from the 2008 bank bailout Buffett biographer Alice Schroeder told the was given. “I deeply resent that President and the 2009 stimulus. An article in the Financial Times. Obama has decided that I don’t need all the February Vanity Fair calculates that Berk- money I’ve not paid in taxes over the years, shire Hathaway had $26 billion invested And in July 2010, a fi ve-pound replica of a or that I should leave less for my children in companies that received $133 billion in red Dairy Queen spoon signed by Buffett and grandchildren and give more to him to government stimulus subsidies. Even Alice sold for $4,500 at an eBay auction benefi ting spend as he sees fi t,” said Harvey Golub, Schroeder, Buffett’s biographer, noted in a the Children’s Miracle Network, which said former CEO of American Express and former Washington Post commentary that the mas- it would use the proceeds to benefi t Gillette chairman of American International Group. sive government subsidies given to banks Children’s Hospital in Minneapolis. Dairy “I also resent that Warren Buffett and oth- ensured that “Berkshire Hathaway benefi ted Queen is a Berkshire Hathaway subsidiary. ers who have created massive wealth for handsomely from the bailouts of companies themselves think I’m ‘coddled’ because they in which it invested, such as Goldman Sachs This article on Warren Buffett and his chari- believe they should pay more in taxes.” and Wells Fargo.” ties updates “Warren Buffett’s Philanthropy: What About the Other $6 Billion?” by Many commentators note that one reason Most of Buffett’s wealth will go to charity. Jonathon McClellan and Robert Huberty, why Buffett’s taxes are so low is that, as In 2006 he announced that the bulk of his published in Foundation Watch in October chairman of Berkshire Hathaway, he is paid fortune is destined for the Bill and Melinda 2006. only $100,000 a year. His wealth comes from Gates Foundation. Every year since then, he Berkshire Hathaway capital gains rather than has transferred Berkshire Hathaway shares The article includes new information about worth about $1.5 billion to the Gates Founda- Buffett’s philosophy of giving, gleaned from Editor: Matthew Vadum tion. In addition, Buffett’s wealth was used Alice Schroeder’s biography of Buffett, The Publisher: Terrence Scanlon to create four smaller foundations: the Susan Snowball, and from other sources, and exam- Thompson Buffett Foundation, named after ines how Buffett, his sister, and his children Foundation Watch is published by Capital Research his late wife, and the Howard G. Buffett, are using their nonprofi ts. Center, a non-partisan education and NoVo, and Sherwood Foundations, each research organization, classifi ed by the IRS as a 501(c)(3) public charity. headed by one of Buffett’s three children. Warren Buffett Becomes a A smaller share of Buffett’s wealth endows Philanthropist Address: 1513 16th Street, N.W. the Sunshine Lady Foundation, headed by Like many liberal donors, Warren Buffett Washington, DC 20036-1480 Buffett’s sister Doris. came from a conservative family. Buffett’s Phone: (202) 483-6900 fi rst job at age 12 was when he helped clean Long-Distance: (800) 459-3950 Buffett also helps charity in smaller ways. his grandfather Ernest Buffett’s store. Ernest E-mail Address: Each year Buffett auctions off a lunch with Buffett made sure to take two cents out of [email protected] him that supports the Glide Foundation, the his grandson’s tiny paychecks, as a way of Web Site: nonprofi t of a San Francisco church that is warning his heir of the bite Social Security http://www.capitalresearch.org so far to the left that it refuses to accept do- would take out of his income. Organization Trends welcomes let- nations of used clothes, on the grounds that ters to the editor. second-hand clothes demean the homeless. Buffett’s father Howard was a four-term Reprints are available for $2.50 pre- The winner of the lunch in 2010 and 2011 was Republican congressman from Nebraska. In paid to Capital Research Center. hedge fund manager Ted Wechsler, who paid a 2003 profi le in The American Enterprise, 2 November 2011 FoundationWatch Bill Kauffman notes that Howard Buffett “compiled an almost purely libertarian re- cord” in Congress, as “he opposed whatever New Deal alphabet-soup agencies and Fair Deal bureaucracies emerged from the black lagoon of the Potomac.” Howard Buffett was a staunch foe of foreign aid, and one story about him was that one night he passed the British Embassy with its lights on and grumbled, “They even stay up at night to think of ways to get our money.” In an interview for a biography published in 2010, Warren Buffett’s sister Doris said that if her father were alive in 2009, he would have staunchly opposed the stimulus as fi ercely as he opposed the New Deal. Howard Buffett, Buffett receives the Medal of Freedom from President Barack Obama his daughter recalled, “was far more con- in February 2011. cerned about the rise of socialism than he was of communism. He thought we’d lost all our which were enormous and growing. Buffett freedoms. He also said once that if it got to A few months later Buffett responded to took this tip to the Omaha Sun, a weekly the point—some percentage—of people who Bundy, telling his investors, “I will not newspaper he owned, and the newspaper’s got a check from the government, it was all abandon a previous approach whose logic I editor assigned four reporters to investigate over. The world has changed since he died understand even though it means forgoing Boys Town. The charity refused to release in 1964. I’m afraid he’d be very saddened large, and apparently easy, profi ts to embrace its fi nancial records. But Buffett knew some- if he could witness it now.” an approach I don’t fully understand.” thing that his newspaper’s reporters did not: Beginning in 1970 the federal government Warren Buffett became a liberal Democrat, Buffett was proved right while Bundy required that nonprofi ts submit an annual although he did not formally switch parties was wrong.