The Audacity of Hope

“I’ll tell you, not very many,” he said. “They have this idea that it’s ‘their money’ and
they deserve to keep every penny of it. What they don’t factor in is all the public
investment that lets us live the way we do. Take me as an example. I happen to have a
talent for allocating capital. But my ability to use that talent is completely dependent on
the society I was born into. If I’d been born into a tribe of hunters, this talent of mine
would be pretty worthless. I can’t run very fast. I’m not particularly strong. I’d probably
end up as some wild animal’s dinner.
“But I was lucky enough to be born in a time and place where society values my talent,
and gave me a good education to develop that talent, and set up the laws and the
financial system to let me do what I love doing—and make a lot of money doing it. The
least I can do is help pay for all that.”
It may be surprising to some to hear the world’s foremost capitalist talk in this way, but
Buffett’s views aren’t necessarily a sign of a soft heart. Rather, they reflect an
understanding that how well we respond to globalization won’t be just a matter of
identifying the right policies. It will also have to do with a change in spirit, a
willingness to put our common interests and the interests of future generations ahead of
short-term expediency.
More particularly, we will have to stop pretending that all cuts in spending are
equivalent, or that all tax increases are the same. Ending corporate subsidies that serve
no discernible economic purpose is one thing; reducing health-care benefits to poor
children is something else entirely. At a time when ordinary families are feeling hit
from all sides, the impulse to keep their taxes as low as possible is honorable and right.
What’s less honorable has been the willingness of the rich and the powerful to ride this
antitax sentiment for their own purposes, or the way the President, Congress, lobbyists,
and conservative commentators have been able to successfully conflate in the mind of
voters the very real tax burdens of the middle class and the very manageable tax
burdens of the wealthy.
Nowhere has this confusion been more evident than in the debate surrounding the
proposed repeal of the estate tax. As currently structured, a husband and wife can pass
on $4 million without paying any estate tax; in 2009, under current law, that figure goes
up to $7 million. For this reason, the tax currently affects only the wealthiest one-half of
1 percent of the population, and will affect only one-third of 1 percent in 2009. And
since completely repealing the estate tax would cost the U.S. Treasury around $1
trillion, it would be hard to find a tax cut that was less responsive to the needs of
ordinary Americans or the long-term interests of the country.
Nevertheless, after some shrewd marketing by the President and his allies, 70 percent of
the country now opposes the “death tax.” Farm groups come to visit my office, insisting
that the estate tax will mean the end of the family farm, despite the Farm Bureau’s
inability to point to a single farm in the country lost as a result of the “death tax.”
Meanwhile, I’ve had corporate CEOs explain to me that it’s easy for Warren Buffett to
favor an estate tax—even if his estate is taxed at 90 percent, he could still have a few
billion to pass on to his kids—but that the tax is grossly unfair to those with estates
worth “only” $10 or $15 million.