Note: This post also appears here, in Tali Satele's Critique of American Samoa's Government.
Warren Buffett, the world's second-richest person, is yet another leftwing billionaire who goes around blabbing about the depravity of laissez-faire economics and the glories of the welfare state.
Lately, he has been demanding the retention of the estate tax, a.k.a. "the death tax."
And why shouldn't he? He brags that he won't let any of his kids inherit the vast fortune he's built himself, since he wouldn't want them to become spoiled wastrels who feel entitled to properties they haven't even managed.
That may very well be Buffett's conscious reason for opposing the repeal of the estate tax. However, there may be other reasons why an investor of his stature would fear an end to this law.
In a Wednesday, July 5 op-ed released by the Reason Foundation, J. Peter Freire observes,
The estate tax weighs heavily on those who have asset-rich businesses, typically family businesses that have taken years to break even and accumulate value. When the owner dies and the children take up the reins, the estate tax comes into play, sometimes costing as much as the business itself. The heirs are then forced to sell the business before losing any more money. This is how Buffett came to own Dairy Queen and the Buffalo News, among other businesses, as they were being sold at lower prices than their actual value. In the latter case, Buffett bought the paper for less than what it would wind up making him each year.
Beyond providing Buffett with a bumper crop of businesses to purchase, the estate tax also provides him with customers. Any financial advisor will tell you that the major component of a sound financial plan is composed of asset allocation, not blue chip trades on the stock market. And that is why they recommend you purchase some life insurance to shelter your money from large taxes such as the estate tax. And why not purchase that life insurance from Buffett's very own insurance company, GEICO?
So I have bad news and good news.
The bad news is that the estate tax has provided "corporate welfare" to the world's second-richest man.
The good news is that he saved a bunch of money on investments by purchasing GEICO.