Billionaires and Taxes

I came across a bit I wrote back in 2003, that I dubbed “Billionaire Socialists:”

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What’™s with all the billionaire socialists? Bill Gates€’ dad said some time ago that the rich should be taxed higher, Mike Bloomberg is hell-bent on not only soaking the taxpayers of New York City dry, but also on imposing his personal value system on the rest of us, and now Warren Buffett is out there saying that the recent federal tax cut package is a bad thing.

I used to have a lot of respect for self-made wealthy people.  It takes a lot of drive and a lot of smarts to make money, especially in those quantities. It seems, however, that one additional characteristic of the mega-wealthy is that which is prevalent among the big-city liberal types – the belief that they know what’s good for the rest of us.

If Gates and Buffett think that the wealthy should continue to pay a grossly disproportionate share of the taxes in this country (especially if you consider taxes a payment for services provided), they should just cut checks to the treasury themselves, rather than looking to force the rest of us into their belief system.

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Of course, the story has gotten richer (pun slightly intended) in the ensuing decade. Gates and Buffett, to name two, have created charitable trusts that will hold tens of billions of dollars. A cynical observer would presume that these trusts and the billions donated to them are merely a maneuver to avoid massive estate taxation. But, lets set the question about that specific motive aside for the moment and consider what creating and funding the trust tells us in conjunction with Gates’ and Buffet’s stated positions regarding taxation (i.e. they think the rich should be taxed more).

Taxation above what is necessary for basic government services or that is other than “fee for service” (e.g. gas taxes that pay for road maintenance) is inevitably a transfer of wealth from some people to other people. Those who believe in progressive taxation believe that the wealthier should have more of their earnings taken to benefit the less wealthy. But, this isn’t much different in a broad practical sense than charitable activity. Generally speaking, charities seek to help the poor and less fortunate, and the redistributionist portion of government purports to seek to do the same. So, in this vein of thought, donating to charity and taxation on the rich work towards the same goal – one that we could label the “betterment of society.”

So, then, shouldn’t we consider it odd that the super-wealthy folks who are out there advocating for higher taxes on themselves and their brethren are also sheltering their assets in charitable trusts – trusts that are supposedly going to do the same sort of thing that the taxes they’re avoiding would be used for? What does this tell us?

Perhaps Gates and Buffett feel that they can better manage the redistribution of their money than the government can. It’s not hard to imagine – they’re among the most successful people in the world, so why shouldn’t they think that they’d be good at directing how their money is used? But, in calling for higher taxes on other good earners, they inform us that they don’t extend such a notion to others. They don’t think others should be trusted to manage their own money for the betterment of society.

If we are to accept this analysis and then chart the conclusion about their opinion of economic acumen, we could say Warren+Gates > the government > other very rich people.

But, when presented thus, it sounds a bit ludicrous. Would anyone accept the conclusion that Bill Gates thought John Mackey or Jeff Bezos or Peter Thiel (all billionaires with libertarian leanings) were not smart and economically savvy people? Or, should we look to a different sort of motivation?

If Gates and Buffett want billionaires’ billions to go to redistribution, if they believe in the Marxist/socialist from each according to his ability to each according to his need philosophy, then it would make perfect sense that they support and advocate for a tax structure that gives the very wealthy a choice: give to charity or the government will take the money. Right back to the “billionaire socialists” notion.

And, I’m certainly not the first to contemplate the hypocrisy of people who’ve made fortunes via capitalism embracing socialist ideas later in life. Perhaps, though, hypocrisy isn’t the right descriptor. Condescension seems to be more appropriate, and ties in with the notion that they consider themselves smarter, or perhaps more moral, than everyone else. They’re more successful than you are, therefore they know better what’s good for you and for the society you live in than you do, and therefore they are obligated to impose that wisdom upon you.

Even if they have to lie.