Leader Blues

Tuesday, June 27, 2006

EDITORIAL >> Giving it all away

Warren E. Buffett, the shrewdest investor in history, has always been an iconoclast in the mercantile world. His uncanny and intuitive grasp of markets made him the envy of investors everywhere and often the object of their resentment. Buffett thinks the estate tax is the fairest tax on the books and should be raised, not eliminated as President Bush and wealthy families like the Waltons want. He opposed all those tax cuts for his class since 2001 and suggested instead that working people be given a holiday from payroll taxes.

Monday, the 75-year-old businessman announced that he was going to give 85 percent of his vast fortune of $45 billion or thereabouts to foundations that seek to combat disease and environmental misfortune in the third world and educational shortcomings in America. Here is the shocker: The name of Warren E. Buffett will not be on the door of any of the foundations, and his name will not be written across the skylines like those you see on the towering edifices at the University of Arkansas Medical Sciences campus at Little Rock or other universities where rich men have their names enshrined.

The largest share by far, some $37.5 billion, will go to the philanthropic foundation of Bill and Melinda Gates. The rest will go to foundations run by his family, including his three children, which spend the money to promote literacy, end poverty and discrimination and restore the environment. Buffett said he was good at making money — how’s that for understatement? — but not good at spending it. He will leave it to the Gateses to see that his stupendous fortune will perform efficient good works. Gates and his wife, who already run the biggest philanthropic foundation in the world, said they hoped that the money would produce cures for the 20 major diseases afflicting poor countries and distribution of the cures throughout the third world.

History records generous and selfless men and women of wealth, including even a few who left their money anonymously to do good works, but Warren Buffett’s gesture puts him on a different level among history’s philanthropists, ahead of Ford, Rockefeller and Carnegie. The Gates foundation, already by far the largest in the world, will more than double in assets, and its ability to elevate health and reduce suffering around the world will multiply. It will spend many times the aggregate of the United Nations on health and education around the globe.

It occurs to us that the timing of Buffett’s dramatic announcement is not a coincidence. This week or next, the Bush administration and the Republican Congress will make the final push to eliminate the estate tax forever, or at least to make it little more than a nuisance for the mega-rich. If they can bring Arkansas’ Sen. Mark Pryor over, Bush should get the bill in July. The estate tax, which averages about 19 percent, is collected on less than 1 percent of estates — this year on estates valued at more than $2 million ($4 million for couples). Family farms and businesses qualify for special exemptions, deductions and long grace periods that make the tax almost inconsequential for even the few that are large enough to owe taxes.

Buffett denounced the effort to repeal the tax Monday, as he has so often the last decade. He said he never intended to pass on dynastic wealth to his children and grandchildren, who nevertheless are and will be very wealthy people. Like Andrew Carnegie, an early exponent of the estate tax, he thinks vast dynastic wealth is undemocratic and un-American. Eliminating the estate tax and giving rich investors like himself far lower tax rates than other Americans pay, Buffett said, shifts the burden from the rich and corporations to poor and middle-class families, who ultimately will have to pay much higher taxes when the government’s staggering bills finally have to be paid.

American and global capitalism afforded him and others like him the special opportunity to aggregate great wealth, Buffett said, and they have a moral obligation not to hoard it like feudal aristocracies but to help the underprivileged and unlucky through philanthropy or fair taxation.

What a weirdo! May his example spread in this brave materialist world.