Tuesday, December 11, 2007

Warren vs. Whoopi and the rest of us

This story still seems to have some legs:

During a discussion of Republican Presidential candidates on ABC's "The View," which the comedian co-hosts, Ms. Goldberg said, "I'd like somebody to get rid of the death tax. That's what I want. I don't want to get taxed just because I died." The studio audience started applauding, but she wasn't done. "I just don't think it's right," she continued. "If I give something to my kid, I already paid the tax. Why should I have to pay it again because I died?"

When another co-host, Joy Behar, responded to Ms. Goldberg's remarks by asserting, "Only people with a lot of money say that," Ms. Goldberg shot back, "No, I don't think so . . . It doesn't matter if you have or don't have money. Once you paid your taxes, it should be a done deal. You shouldn't have to pay twice."

Ms. Goldberg has her political facts down. It's not just "people with a lot of money" who oppose confiscatory estate taxes. Billionaires like Warren Buffett have made a crusade of urging Congress to keep the death tax, even as he shelters much of his own wealth from that tax by giving to charity. However, according to polls, some 70% of voters favor a full repeal. And many, like Ms. Goldberg apparently, do so on moral grounds. Death as a taxable event and double taxation offend the average American's sense of fairness.

Today, CNBC's very own Buffett Beat Reporter, Becky Quick, softballs this back to Warren, who says that giving money to charity is not tax sheltering. I would agree with that, but still, we can't keep trying to compare Mr. Buffett to his receptionist (who pays a higher marginal tax rate) or to the rest of us who make between $40k-$400k per year and/or have $0-$4mil of net worth (i.e. most of us).

Even though Buffett is designating 85% or $37 billion of his estate to charitable foundations, that still leaves $6 billion in his estate, which could be allocated to trusts for each of his three children--essentially, dad could leave each of his kids as billionaires. Besides, about 10% or $3.5 billion of his charitable donations are placed in foundations headed by his kids.

I'm OK with the death tax (i.e. estate tax) if the first $6 billion is exempt. Warren, next time you testify before Congress (or that cutie Becky Quick), could you clarify these basic facts?

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