Everybody knows that Warren Buffett feels awful because his marginal tax rate is less than his secretary’s …. and so, he wants fellow millionaires & billionaires (i.e. those folks making more than $250,000) to throw more money into the Federal coffers.
Well, the current fiscal cliff mess has rekindled my thinking re: tax changes required to advance Buffett’s obsession with his “paying his fair share”.
Glad to report that I got it !
A tax change that will totally free Warren of guilt.
Ken’s “Buffet Rule”
For purposes of estate taxation, estates shall be limited to a maximum deduction of $1 million for charitable donations.
Now that Buffett has leveraged the tax laws to amass his $62 billion fortune, he advocates higher taxes for high-earners.
He’s suddenly amped about everybody paying their fair share.
Give me a break.
Let’s walk through Saint Warren’s personal “fair share” plan.
First, to the extent that any of Buffett’s wealth is in stocks with “unrealized capital gains” … the the dough gets bequeathed at a “stepped-up basis”.
English translation: no capital gains get paid on his “unrealized gains” … ever !
Nice dodge, right?
Ken’s Buffett Rule doesn’t fix that.
But, the big daddy tax dodge is that Buffett is bequeathing his estate to his buddy Bill Gates’ tax exempt foundation … part, I guess, to “give back to society” … but in large part to dodge estate taxes.
If his buddy Barack gets his way, estates will be taxed a minimum of 45%.
That means that Buffett dodges over $25 Billion in Federal estate taxes by channeling the estate to his buddy Gates.
Note: According to the Wash Post, Obama’s Buffett Rule is only projected (by Obama) to raise $46 billion over 10 years … $4.6 billion annually … and most analysts think that number is a pipe dream.
So, Ken’s Buffett Rule would cop over half of Obama’s 10 year Buffet Rule tax haul, while isolating the tax to the man who won’t shut up about wanting pay his fair share … put YOUR money where your mouth is Warren.
Great idea, right?
P.S. For folks who worry about the collateral damage done to charities, the deduction limit can be raised to $1 billion per estate …. that would exclude practically every estate … except Buffett’s.