April 19, 2012

Warren Buffet has "devoted the vast majority of his wealth to those around the world who are suffering, or sick, or in need of help."

President Obama writes for Time Magazines "100 Most Influential People" list (which, of course, he also appears on).

Is it really true? The vast majority of his wealth? The majority would be >50%, but what's the vast majority? That would have to be something upwards of 90%, right? Buffet's given that much of his money away? Or does the truth of the statement depend on the meaning of the word "devoted"? A big old capitalist could claim that investing in your own burgeoning business is devoting your wealth to the greater good. And there's also room to maneuver inside the phrase "those... in need of help." Your friends and family and you yourself need help, right?

ADDED: Based on the comments to this post and a quick read of the "Philanthropy" section of Buffet's Wikipedia bio, I can see that the "devotion" to which our President refers is Buffet's announced plans for what will happen to his money after he dies. Buffet doesn't "believe in dynastic wealth." And there's also the "Gates-Buffett Giving Pledge," which is a pledge — not a legal obligation — to give at least 50% — the majority, possible not the vast majority — to charity. But Buffet has made statements of intent to leave 99% of his wealth to charity.

In the comments, Hoosier Daddy says: "Anyone ask Warren why he's not donating his wealth to the IRS rather than some private charity?" Quayle says: "So if Buffet voluntarily devoted his wealth, why do we need the government to take wealth by force?"

75 comments:

Icepick said...

In this case "devoted" means that he's pledged to give most of it away after he's dead. Buffett is giving his money to the Bill & Melinda Gates Foundation, IIRC.

Of course, the old bastard won't pay his taxes....

David said...

Buffet has retained the vast majority of his wealth. It matters to his image to be at or near the top of the wealthiest person lists. Most of his wealth is in Berkshire-Hathaway stock, and he does not want to lose his ironclad control of the company. He also does not want donees selling the stock, which they would be likely to do.

Further, Buffet, who wants the government to collect more taxes, plans to leave his fortune to the Gates Foundation. He is saying clearly in this plan that he believes a private entity will use his wealth more wisely than the government.

In fact Buffet's vast wealth is just a tiny fraction of one year's Obama deficit. They would be using Buffet's money to pay back for money already spent.

DADvocate said...

What Obama really means is that Buffett contributed to his campaign. Supporting Obama is devoting your wealth to those who are suffering,or sick, or in need of help.

alan markus said...

And that is why we need the Buffet rule? So that he has less wealth to devote to those around the world who are suffering, or sick, or in need of help? In the mind of our government, people like Buffet, while smart enough to amass great fortunes, are not competent to make the best choices on how to help those who are suffering, sick, or in need of help. Not as competently as the government can do it.

Fen said...

Doesn't he have some kind of ponzi scheme set up to avoid paying taxes?

Scott M said...

The majority would be >50%, but what's the vast majority?

51-60% would seem like "a majority"
61-70% "most"
71-90% and up would probably be a good "vast majority"
91% and up "almost all"

I've got pie charts to prove it.

bgates said...

To sum up the comments so far, Obama is a liar, and he isn't that smart, and he used to eat dogs.

Mitchell said...

Ted Sorensen would never have been so sloppy.

JAL said...

Has Berkshire-Hathaway resolved its long running tax problem with the IRS?

Just wondering.

Andy Freeman said...

Ah yes, the sage of Omaha, who advocates estate taxes that his estate will never pay. Curiously, said estate gets significant money from selling insurance so other people's estates can pay those taxes.

How about no one's estate should pay a greater fraction in taxes than does Buffet's estate?

And no, Buffet doesn't get to reduce said estate by donating it to charity.

lemondog said...

His philanthropy is fairly recent....2006.

"Brace yourself," Buffett warned with a grin. He then described a momentous change in his thinking. Within months, he said, he would begin to give away his Berkshire Hathaway fortune, then and now worth well over $40 billion.

Since his give-away is his fortune less than in 2006?

Original Mike said...

Yeah, he "gave" it all away to Bill Gates.

lemondog said...

Warren Buffett Adds $533 Million To His Fortune...And Other Wild Headlines You Can Now Expect From Bloomberg

Hoosier Daddy said...

Did we ever find out how much his secretary makes and what her effective tax rate was? Cause I'm betting it was lower than Buffet's.

Anyone ask Warren why he's not donating his wealth to the IRS rather than some private charity?

Or does that require a media that isn't on its knees for the current administration?

Quayle said...

So if Buffet voluntarily devoted his wealth, why do we need the government to take wealth by force?

Obama's world view is a jumbled cacophony of incoherence.

But judging by the Obama's personal rich and famous lifestyle, his motto should be: I wasn't born with a silver spoon in my mouth, but I got it there as soon as I could.

Jay said...

Well Obama's statement would be news to Buffett himself.

Who is busy fighting the IRS in court over hundreds of millions in back taxes.

Paying your taxes helps those who are sick or are in need of help, right?

*GIGGLE*

William said...

There's a story told that years ago Buffett was in an airport and needed to make a phone call. He asked his assistant for change of a quarter to make the call. The assistant told him that, for God's sake, Buffett had billions of dollars and that he could afford to splurge the whole stinking quarter on a phone call.....Ostensibly, Buffet is in his legacy years and cares more about what he leaves behind than what he adds to. That's probably true, but it's hard to be believe that his acquisitive instincts, so basic and primal to his identity have completely disappeared. People keep looking for the hidden scam in the Buffet Rule and, perhaps, they'll find it.

Hoosier Daddy said...

"... Obama's world view is a jumbled cacophony of incoherence..."

As is with most leftists.

ndspinelli said...

Obama is using Buffett like Jerry Lewis used "his kids." Only Buffett is his poster boy for higher taxes. Pitiful.

JHapp said...

The vast majority of Buffets "charity" goes to causes like
Planned Parenthood and anything concerning overpopulation.

EDH said...

Has Warren Buffet become Obama's "black friend"?

You've seen the white guy who has a "black friend" who he's so proud to show off to others as a reflection of his own magnanimity, to the point the he become so obnoxious the black friend eventually has to say "step back".

Isn't Obama dangerously close to something like that with Buffet at this point?

Ironically Even Warren Buffet Does Not Endorse Obama’s ‘Buffet Rule’ Jobs Bill

IT WOULD APPEAR THAT OBAMA AND BUFFETT HAVE A DIFFERENT DEFINITION AS TO WHO IS CONSIDERED RICH AND WHO SHOULD BE PAYING MORE TAXES.

How disingenuous is President Barack Obama on jobs and the economy? Even billionaire Warren Buffett does not endorse Obama’s “Buffett Rule”. Buffett was not referring to individuals making $50 millions, he was referring to ultra-rich. As Buffett said, he was only referring to about 50,000 people … not Americans who make $250 K a year. Heck, Buffett does not even think those that make $50 million a year are rich.

Hagar said...

I just do not think Warren Buffet is a person I would care to do business with.

alan markus said...

Did we ever find out how much his secretary makes and what her effective tax rate was? Cause I'm betting it was lower than Buffet's.

As I recall, the issue of effective tax rates gets muddied up when the Social Security payroll deduction is factored in. All earned income is taxed at 6.2% (currently it is 4.2% due to a "holiday" on that tax, so in the words of Obama, working families can have $40 extra to spend on pizza night. Never mind that down the road SS recipients will be eating dog food because not enough SS tax was taken) Anyway, the deduction caps at $110,000. So, someone making $220,000 (double the cap) is going to be paying an effective SS tax rate of 3.1%. To really determine effective tax rates in an "apples to apples" comparison, the Social Security deduction needs to be left out of the discussion. Unfortunately, the SS deduction was intended to be a contribution towards your retirement (sort of like a pension). Instead it has become a tax.

Michael Haz said...

All this talk about Warren Buffet, his estate and his tax problems, yet no one in any media seems the least bit curious about the same for George Soros, who is arguably more wealthy than Warren Buffet.

Warren Bufffet is a very good deal-maker. His current deal with the Obama administration (and the press, seemingly) is to smile, pose for holy pictures and advocate for higher taxes; all while not paying one billion dollars in taxes he owes and holding his assets in a trust so that they that will escape taxation at his death.

Liberals are such naifs.

Triangle Man said...

I've done the math and can confirm that Scott M is correct.

rehajm said...

Anyone ask Warren why he's not donating his wealth to the IRS rather than some private charity?

Or does that require a media that isn't on its knees for the current administration?


CNBC asked him why he didn't just write a bigger check to the IRS:

BUFFETT: "I do think there's something— I do think there are things that— in terms of medicine, in terms of all kinds of things, education, that certainly new ideas can be brought in in the— in the— through philanthropic organizations that are unlikely to get done through government."

drozz said...

as with every statement made by the regime, the truth is actually in the details. and it's usually contrary to what is actually stated.

Chuck66 said...

Correct. Isn't this precisely why we don't want the gov't to confiscate our money?

Buffet and other weathly can give money to causes they believe in.

Or the gov't can take it and spend it on whores in Columbia or parties in Vegas.

Icepick said...

I've done the math and can confirm that Scott M is correct.

But did you make a pie chart?

chuck said...

Obama just says stuff, it doesn't mean anything, it just has to sound good.

John said...

One of the things most people don't realize about Buffett is that until recently he was decidedly middle class. Income wise anyway.

His only source of income was from his salary as B-H CEO and I think that was in the range of $100-150,000/yr.

B-H has never paid any dividends and all his wealth was tied up in it.

So yeah, he, as an individual, did not pay much in income taxes.

Actually he paid quite a bit, as one would expect of anyone making $100-150,000/year. Just not very much compared to how wealthy he is.

B-H paid a bunch, though.

As for B-H and their taxes, who knows. The tax code is so incredibly complicated that it is easy to have a legitimate difference of opinion with the IRS. Should one simply roll over and pay just because the IRS says so? Or should one pay what one believes the law says they owe? And no more.

B-H has a legal obligation to their stockholders not to pay more taxes than they owe.

John Henry

S said...

I support his decision to retain his stake in the firm until he dies.

I think his bequest includes a limit to how many shares the foundation may sell in any given week.

I agree with his fighting for the shareholders when there is ambiguity in how much Berkshire owes in taxes and don't agree with him on how much the government ought to spend.

But the most important issue here, to me, is spelling. The name is Buffett, with two "t"s.

S said...

Actually, John, I believe Buffett has something on the order of $100 million outside of Berkshire Hathaway. Which is very small compared to his total wealth, but very large relative to the rest of us.

He lives a fairly middle-class lifestyle because it suits him.

John said...

Alan Markus,

Social Security was NEVER intended to be a contribution to a pension. FDR wanted it to be but Justice Stone told him, informally via Sec Labor Frances Perkins, that an insurance/pension scheme would be unconstitutional and would be struck down.

He suggested that the pay in be structured as a tax. The payout is a welfare payment just like Food Stamps or AFDC. We have no legal claim to it. Congress could cancel the SS payments out tomorrow and keep all the past and future payments for funding highways or whatever.

Here is a link to the tax story at the SS website. The story is written by Perkins herself:

http://www.ssa.gov/history/perkins5.html

John Henry

John said...

S,

That is true and in recent (past 5 or 10?) he has had a considerably higher income.

For most of his tenure at B-H he had basically no income other than his salary.

John Henry

John Salmon said...

Doesn't what Obama's saying undercut his case for the Buffett Rule? If Warren paid more in taxes, he'd have less to give to benefit the poor. And, to be sure, the likes of Buffett, even if they themselves think they're taxes aren't onerous enough, don't voluntarily give more to the Feds-they give more to charity. They know what works, and what doesn't.

CatherineM said...

Romney gave away his whole family inheritance.

rhhardin said...

The load of the rich on society is what they consume, not their wealth.

Their wealth is specifically investment that they think pays more than it costs, which means investment that increases the standard of living of the nation.

It does not increase their load on society - just the opposite, they're finding what society finds most useful.

What the rich do for charity is usually a loss, unless they do hard work and have a deep knowledge of the particular case - very unlikely.

The rich have lots of seed corn, which is called their wealth. Don't eat the seed corn, is the wisdom of the ages. The rich don't eat the seed corn, unless they give it to charity.

A fair distribution of seed corn across society is Obama's plan. Send your seed corn to us to buy votes with.

Seeing Red said...

That's bullshit. He's spent 50+++ years avoiding paying his fair share, only found charity religion because of Gates, but conveniently avoids billions on taxes he thinks we should pay.

CatherineM said...

Buffet has said his family won't see a dime and his grandaughter went on Oprah in her studio apt to prove it.

bagoh20 said...

Why do both of these guys want to transfer more of Buffet's money, and others like him, from a successful philanthropist to a bunch of greedy, unqualified, unethical, incompetent congresspeople and their bureaucrat toadies.

Are people like Buffet good with money or not, because we have pretty clear evidence that the alternative users of the money are absolutely the worst stewards possible.

I think we would be much better served to take the whole Federal inflow and bet it in Vegas... on the Packers.

bgates said...

You guys are being too hard on ol' Warren. I heard he's been a pioneer in providing seeing eye dogs to both the blind and the hungry.

Obama ate a dog.

Damon said...

I know Ann want to have a discussion about the meaning o vast and devoted, but let's just hijack this thread an rail on Buffett for the buffoon he really is. Great start everyone! :)

hawkeyedjb said...

"Buffet has said his family won't see a dime"

That's good (in my opinion) but none of my business.

The government also won't see a dime. That's good (in my opinion, and in Mr. Buffett's opinion).

But what does president Obama think of all that loot going to good works without being laundered through the government? Wouldn't it be better for all (and Fairer) if the federal government took a big chunk of of the Buffett fortune?

ndspinelli said...

Ed Asner played Buffett in the HBO flick about the financial meltdown. Inspired casting.

m stone said...

I refuse to believe anything without a pie chart.

And, yes, as spinelli wrote, Buffet is Obama's poster child.

bagoh20 said...

I've been hearing - I think from Rush - that Berkshire Hathaway got some kind of special exemption from the Buffet Rule. Is that true?

CWJ said...

John@11:33

Your comments sound about right. Except I don't believe for one minute that FDR sincerely meant for SS to be a legitimate pension/insurance scheme. If that were the case, he couldn't start paying out full benefits from the get go, and would therefore get no political credit for it.

No the flaws of the system were a feature not a bug. People accepted it because it was sold as a legitimate pension system. That's why seniors continue to believe that they paid for the benefits they receive and that it is not welfare. On the other hand because of the legal but impractical technicality that congress could end SS at any moment, the feds don't have to carry it on the books as an unfunded liability. At the same time they get to spend the current SS revenues like drunken sailors.

It's a win-win-win until the unsustainable bills come due. Just like the Ponzi scheme it is.

No (evil) corporation would legally be able to set something like up to "fund" its pension obligations, but who was there to stop the feds then or now other than the harsh reality I saw coming from the seventies when I took my first economics and demography classes.

Seeing Red said...

--Buffet has said his family won't see a dime and his grandaughter went on Oprah in her studio apt to prove it.----


My parents saw a program w/his adopted granddaughter and she said he was divvying out money and she didn't get any because she wasn't blood. This was after his wife died.

She said I called him grandpa, he never treated me any different until the ex-wife died.

Didn't he also pull funds from a grandkid cos s/he talked to the media?

Michael said...

Obama is so completely full of shit. He made this up on the spot.

This is the man who in the same sentence says THEY gave him an education. He wasn't born with a silver spoon in his mouth. Proving again that he is not as smart as he believes he is.

roesch/voltaire said...

Buffet and Gates are outstanding examples of generosity and support to many organizations that improve our lives, in stark contrast to other billionaires like the Koch's who seem to serve only their self-interests.

Elle said...

I really wish these two would get a room and get it over with - the public lovefest is gag inducing.

"He's cooler. NO, he's cooler..."

Calypso Facto said...

in stark contrast to other billionaires like the Koch's who seem to serve only their self-interests

I know you're not one to let facts get in the way of your agenda, RV, but don't you EVER double-check the bullshit you hear in the echo chamber? The Kochs are among the leading philanthropists in the USA, giving money to such "self-interested" charities as cancer research, the Smithsonian, PBS, and the performing arts.

Seeing Red said...

Gates Sr & Buffet went to Congress to say please, please tax us. As Bob Brinker said when a caller asked him about this, "multi-millionaires and billionaires should not be making policy."


Buffet recently got on the charity bandwagon.

If Buffet were as caring as you want to believe, he wouldn't be what he's worth, would he? He certainly wouldn't have waited until this late in life.

Seeing Red said...

All they ever had to do was get out their checkbook. If they really wanted to be stand-up guys, don't take it as a tax deduction.

Walk the talk.

Michael said...

RV: Take a moment or two to Google the Koch brothers' philanthropic activities. You will be embarrassed if you can be.

crosspatch said...

Buffett's current social contribution is blocking the Keystone pipeline so his Burlington Northern railroad can continue transporting all that oil by surface transport.

prairie wind said...

His current deal with the Obama administration (and the press, seemingly) is to smile, pose for holy pictures and advocate for higher taxes; all while not paying one billion dollars in taxes he owes and holding his assets in a trust so that they that will escape taxation at his death.

I have always thought that Buffett is willing to play the shill for Obama, as long as Obama leaves him alone. There seems to be real risk in going against this president.

bagoh20 said...

"Buffet and Gates are outstanding examples of generosity and support to many organizations that improve our lives,..."

So why would you want to tax them more than anyone else and give the money to corrupt congresspeople to spend on building political support for themselves?

And as rhhardin said above, charity is one of the least effective ways that the rich can use their money, as it simply buys fish instead of creating more fish or teaching people how to fish for themselves. Although it has a place, it should be a last resort when more effective and sustainable help is not possible.

roesch/voltaire said...

The libraries that Carnegie established are hardly a waste of money, for example.

Freeman Hunt said...

Anyone can give it all away after death! You don't go without anything that way, your heirs do. Maybe you don't even like your heirs. Maybe your heirs endured long absences and inattention as you built your empire, and now you also deny them any fruits of that.

Giving it away upon death is not impressive. Living well below your means so that you can give it away while you're alive, and I know many people who do this, is.

Freeman Hunt said...

There are quite a few people at our church who live far below their means in order to fund economic development missions abroad and intensive mentorship programs that include daily tutoring for underprivileged youth here at home.

lemondog said...

Higher taxes, more bailout money available:

Warren Buffett’s latest tax dodge

As economist Susanne Trimbath points out, “We may not want to look too closely at where [Buffett’s] money comes from – like the 15 percent return he’s earning on the $5 billion investment he made in Goldman Sachs the week before they got a $10 billion bailout; or the fact that Berkshire Hathaway was the largest shareholder in American Express Co. when they received $3.4 billion from Uncle Sam.”

Ken said...

roesch/voltaire,

Buffet and Gates are outstanding examples of generosity and support to many organizations that improve our lives, in stark contrast to other billionaires like the Koch's who seem to serve only their self-interests.

Your claim is that Koch industries doesn't improve people's lives? You're a fool.

In the private sector, the only way to make money is to convince people to give you money. This usually means providing people with value. This means improving people's lives. To become a billionaire, this means improving millions, if not billions, of people's lives.

The number lives improved by charity is infitesimally small compared to the number of lives improved by the libertarian idea of free markets.

edutcher said...

Buffett has devoted the vast majority of his time acquiring and hanging onto his vast wealth.

FIFY, Barry.

damikesc said...

Buffet and Gates are outstanding examples of generosity and support to many organizations that improve our lives, in stark contrast to other billionaires like the Koch's who seem to serve only their self-interests.

As has been pointed out, the Koch brothers are major philanthropists.

Why should anybody take you seriously when you don't take you seriously?

David said...

"People keep looking for the hidden scam in the Buffet Rule and, perhaps, they'll find it."

It's there in plain sight. It has to do with the "tradeoff" for the Buffet rule--a reduction in corporate taxes from 35% to 28%.

Buffet pays a little more (maybe) on his personal income. But he gains much more through Berkshire-Hathaway's reduced taxes.

In 2010 Berkshire paid $5.6 billion in federal income taxes. But under the new scheme, at a minimum the corporate rate would be reduced by 20%. Thus Berkshire saves $1.12 billion in corporate taxes.

Buffert, who owns 30% of Berkshire, benefits by much more than the $330 million which is his share of the tax reduction. Here's how:

Berkshire's PE ratio is about 20 times earnings. Thus a tax savings of $1.12 billion increases Berkshire's market cap by 20 times the tax savings, or $22.4 billion.

Buffet, who owns 30% of Berkshire, sees the value of his stock increase by over $6.6 billion dollars.

In other words, in return for a small increase in his personal income taxes, Buffet's wealth increases by $6.6 billion.

Now that's a great deal. Does Obama understand it? I would bet that he does not, but that's irrelevant. Bufffet understands the deal, and knows that it is immensely beneficial to Warren Buffet.

Berkshire paid

Ken said...

The "goodness" of philanthropy is over blown at best, if not an outright fraud.

Also, for those of you who think other people should pay "their fair share", please define what "their fair share" actually is. Otherwise you're just whistling Dixie.

CWJ said...

David,

Now that's one heck of a killer comment. Is the corp tax reduction tied to the Buffett tax, or can Lucy Obama still pull that football away?

Also if I remember the corp rate reduction came with certain penalties for offshore profits/operations. If correct, does BH avoid those?

ken in sc said...

Henry Ford is supposed to have said that nobody ever made a reputation out of what he was going to do.

Nora said...

So what's new?
Obama spins?
Obama does not know what he is talking about?
Obama protects the interest of his donors?

Joe said...

Are people in general finally realizing that Warren Buffett is a major asshole, especially to family? Seriously, this has been obvious for years.

The man is 81, yet still hoards money. The image of Scrooge McDuck pops into mine.

(I used to like and respect the man, but the more I learned about him years ago, the more I grew to dislike him at all levels. I now see him more as a slimy, though very good, con artist than anything else.

I should also point out that many of things Romney has been accused of doing, Buffett has done repeatedly. Another point, Buffet decried derivatives while he was a major investor in them.)

Ken said...

Joe,

The man is 81, yet still hoards money.

I'm not really sure what you mean by "hoarding" here. There is absolutely nothing wrong with not spending any of the money you earn. In fact, doing this, hoarding as you call it, is actually GOOD for everyone else because it lowers prices. But more importantly, this money is INVESTED, not locked away in a vault a la Scrooge McDuck. These investments are also GOOD for everyone else, by providing jobs and building new opportunities.

Giving away your money is the least productive and least beneficial thing you can do with it. Everyone swoons over Bill Gates giving away his money, but the reality is that he did far more good in this world when he focused on developing software and building a software company.

Buffett is really not a good person, but it has nothing to do with him not being a huge philanthropist. It has to do with his preening falseness and obvious use of political power for self enrichment.

Laura said...

"I just do not think Warren Buffet is a person I would care to do business with."

Mr. Buffet just bought the local newspaper. Hope the job ads stay free online.

Tom Watson said...

devoting your wealth to the greater good. And there's also room to maneuver inside the phrase "those... in need of help." Your friends and family and you yourself need help, right. Matawan income tax preparation services