Warren Buffett Defends the Estate Tax
On Monday, billionaire financier Warren Buffett made two important contributions to the public good. First, he announced a staggering gift of $30 billion of his fortune to the Bill and Melinda Gates Foundation. Perhaps more important for America's future, Buffett came out swinging in defense of the estate tax.
During his press conference, Buffett offered a strong progressive argument in support of the estate tax:
"I would hate to see the estate tax gutted. It's in keeping with the idea of equality of opportunity in this country, not giving incredible head starts to certain people who were very selective about the womb from which they emerged.
I'm not an enthusiast for dynastic wealth when there are 6 billion people who have much poorer lives. I can't think of anything that's more counter to a democracy that dynastic wealth. The idea that you win the lottery the moment you're born: It just strikes me as outrageous."
Outrageous is a good word for it. Since 2001, President Bush and the Republican leadership have pushing to eliminate the so-called "death tax," a levy paid by only 1% of American families. The Center for Budget and Policy Priorities estimates abolition of the estate tax would burn a $1 trillion hole in the U.S. budget over 10 years. A supposed compromise version passed by the House GOP this week, which would raise the eligible estate size while cutting the rate from 45% to the capital gains rate of 15%, would be nearly as destructive. CBPP forecasts that the House bill would cost American taxpayers $750 billion in lost revenue and increased interest payments on the national debt.
For more background on the devastating budgetary impact of the Republican war on the estate tax, see the excellent CBPP slide presentation. For a discussion about the role of inheritance taxes as one of the cornerstones of a progressive society, see my piece, "Estate Tax or Dynasty Dividend."