|
|
WARREN BUFFETT'S "VALUE POLITICS"
By Matthew Miller
Tribune
Media Services
Back on orange alert? Cut taxes for the wealthy. Economy
sluggish? Cut taxes for the wealthy. Mideast peace prospects dimming? Cut taxes
for the wealthy. Heartbreak of psoriasis? Let's try the acronym for variety:
CTFTW.
This recap of Bush administration economic policy has evoked too
little outrage from business leaders who ought to know better. But when Warren
Buffett weighed in against "dividend voodoo" on the op-ed page of the Washington
Post the other day, he made an argument that could inspire a sea change in
national priorities.
Buffett noted that today both he and the
receptionist at his firm, Berkshire Hathaway, pay about 30 percent of their
income in overall federal taxes (including taxes on income, capital gains and
the payroll tax). If dividends became tax-free to recipients, and Berkshire
decided to pay $1 billion in dividends next year, Buffett's share would be $310
million in additional income.
Under the Bush plan, of course, Buffett
would owe not a penny more in taxes. As a result, his federal tax rate would
plummet to 3 percent. His receptionist would still be at 30 percent. "She would
be contributing about 10 times the proportion of her income that I would to such
government pursuits as fighting terrorism, waging wars and supporting the
elderly," Buffett writes.
The reason such a result strikes Buffett as
absurdly unjustified comes down to one word: luck. Buffett says he and his
receptionist both know they were lucky to be born in America. "But I was
luckier," Buffett adds, "in that I came wired at birth with a talent for capital
allocation - a valuable ability to have had in this country during the past
half-century.
"Credit America for most of this value, not me," the
multi-billionaire continues. "If the receptionist and I had been born in, say,
Bangladesh, the story would have been far different. There, the market value of
our respective talents would not have varied greatly."
Put simply,
Buffett is crediting luck - where he was born and what talents he happened to
come into the world with - with being the major force in explaining differences
in economic status.
Buffett's sensitivity to the "pre-birth lottery"
tends to be in short supply among America's well-to-do. Polls show that the
richer people are, the more likely they are to feel that their wealth is a
function of effort as opposed to luck.
But who in public life ever
challenges America's elite to examine that premise as a way of thinking about
national tradeoffs? Especially at a time when it is simply not possible to have
endless tax cuts targeted to the rich and also provide things like basic health
coverage to the uninsured?
Besides Buffett, there's only one group of
well-to-do Americans I can think of who routinely look at things this way:
Hollywood stars. They don't gripe about taxes the way many other wealthy
Americans do - and they overwhelmingly support Democrats who seem likelier to
raise them. Why?
My theory is that these super-talents are more
sensitive than the average rich person to the portion of their wealth that's
attributable to luck. Yes, there's hard work and persistence and making your own
breaks, but the voice, the presence, the body (well, minus certain modern
enhancements) clearly come from God.
The idea that beneficiaries of such
income-enhancing blessings might be asked to bear more of the burden of
government seems fair to them, not cause for resentment. Even though similar
accidents of birth (i.e., brains) account for the lofty incomes of, say,
corporate lawyers, they're much more likely to credit their toil, presumably
because what they do all day is less pleasant.
(If I'm right, maybe the
platonic ideal for tax reform would combine a flat tax on income that's due to
one's own efforts and character, with sharply higher rates on cash derived from
an excess of gifts from God. Over to you, IRS.)
Buffett, who has
peerless credibility in the business and financial worlds, should be encouraged
to make his luck-based view of political economy a crusade. Given the stakes for
the nation at today's fiscal and moral crossroads, an op-ed here and there won't
do it. At 72, maybe it's time for the Sage of Omaha to consider that a campaign
on behalf of "value politics" could be the logical coda to a lifetime of "value
investing."
- - - -
Note to editors: Matt Miller would greatly
appreciate it if you would consider running his e-mail address,
mattino@worldnet.att.net, at the bottom of his column. Columnist Matt Miller is
a senior fellow at Occidental College in Los Angeles and host of "Left, Right
& Center" on KCRW-FM in Los Angeles.
© 2003 MATTHEW MILLER
|
