Monday, February 27, 2012
Suspicious Dishes at the Buffett Table
Warren Buffett sings a good song, but there is something wrong with his lyrics. Lets long at this man who spent his life bellied up to the Buffet Table of wealth.
He says he has no real need for money, he lives a modest frugal life, and he doesn't believe in inherited wealth so his kids be left enough to sit about on wealthily bottoms doing nothing, but will have to earn their own keep. It isn't right people just got lucky in the sperm lottery. He is going to give away 99% of his wealth when he dies because he looks at what he earned as a collection of Social Credit Claims. He also famously complained about paying less taxes than his employees and how unfair that was.
All very righteous statements it seems.
After all he had such a rough beginning, being the son of a Brokerage Firm owner and four-time Congressman.
Buffett is an example that if you're only goal in life is to rich, you can become rich. Now, he did get paid a salary of only $12,000 a year for the job he took at age 24. A modest sum, right, except it would be a starting salary of about $100,000 in today's money. He got almost as much in that first year as I paid for my first house in 1961. Put that $12,000 in perspective. In 1959 my starting salary was $2,808 a year and that was considered above average for a beginning wage. When I was a teenager we dreamed of making a fabulous $100 a week and really successful guys, guys who were at the top, guys who had it made, earned $10,000 a year.
He doesn't feel any guilt about doing nothing in life but chasing after more money. He says he has little use for material things and so doesn't spend a lot. (Then why didn't you have an ambition to go out and become a plumber, garbage collector or something useful like that, but not as well paid?) After all, he still lives in that modest little house he bought for $31,500. Of course, that modest house is valued at $700,000 today and I guess his $4 million home in California doesn't count. But then again, when you have $37 Billion dollars more or less $4 million is a modest sum.
But his viewpoint on consumption is this: "The way I see it is that my money represents an enormous number of claim checks on society. Its like I have these little pieces of paper that I can turn into consumption. If I wanted to, I could hire 10,000 people to do nothing but paint my picture every day for the rest of my life. And the GDP would go up. But the utility of the product would be zilch, and I would be keeping those 10,000 people from doing AIDS research, or teaching, or nursing. I don't do that though. I don't use very many of those claim checks. There's nothing material I want very much. And I'm going to give virtually all of those claim checks to charity when my wife and I die."
Well, why didn't he take that money and hire those 10,000 people to do AIDS research? Or use it to train those 10,000 as teachers and nurses and pay their salaries for the rest of his life so they can nurse the indigent or teach the downtrodden? Wouldn't that still help the GDP? Wouldn't that be a good use of those claim checks?
He does make charitable donations. For instance, he auctioned his 2001 Lincoln Town Car off on eBay to raise money for Girls, Inc. Don't know what it went for. I've given three of my cars to charity, by the way, and I don't rank on any Forbes List; I can't even afford to subscribe to Forbes magazine. Big deal, Warren.
Lets see there was also:
He auctioned a luncheon with himself and got $650,100 for charity.
He auctioned a Power Lunch with Himself and got $2,110,100 for the Glide Foundation.
And Salida Capital Corp. gave $1,680,000 to dine with him. (I bet they wanted to get some valuable advice for their "gift".)
Don't you love how the really rich people are always getting praise for the charitable contributions that cost them very little of their time and nothing out of their own pocket.
And why don't the people who can afford to pay $650,100 for lunch, just give the money to a charity without having to get something in return, even if only a Buffett?
But never fear, he is going to give 99% of his fortune to charity when he died. Why not now? Just do it. Give the 99% away now while you can bask in all the testimonial dinners and see the plaques they'll hand you. You'll still have enough left over to live your modest life style.
But when he dies he'll give the 99% away elsewhere so his children will "have enough to do what they want, but not enough to do nothing". I would love to leave my children in that position, to tell the truth, but I don't have enough to leave that they could do what they want. My kids will inherit one-third of an artificial Christmas Tree and one-third of an electric wok and they'll have to fight over the tree stand and the power cord.
He will leave behind to his heirs a meager 1% of his fortune, which is $370 Million. His three kids will have to get along on a mere $123,333,333 each. Now maybe, just maybe considering his children are all middle-aged and doing okay in their own right, that just might be enough they could kink back a bit in their later years.
Finally we have the big tax concern of the man who spent his life on his one great purpose, making money. Poor thing doesn't pay enough taxes. His statement was made in 2006, and his claim is he only paid 19% of his $48.1 million income in tax and his employees paid 33% on theirs. His employees evidently are paid well to be in that 33% bracket, so some generosity there. So his complain was he only paid $9.139 Billion in tax. Well, if you felt so bad why didn't you just give a gift to the government that would equaled with your tax that 33% rate? You can legally do that, you know?
Besides, why this discrepancy anyway? You didn't pay the 33% because you took measures to avoid paying income tax in the first place. He paid himself a salary of $100,000 a year. A nice sum, but far less than other CEO in his league. A lot of these CEOs take these modest salaries, some only take One Dollar a year. My, aren't they a generous lot? They care about the welfare of the company so much they take almost no salary. But they do take a lot of Stock Options and that kind of compensation, because then they only have to pay the capital gains tax of 15% on their income -- while their employees have to pay the full measure of their tax bracket because they are getting a salary considered earned income!
You want to pay the higher taxes, give yourself a great big salary! And don't take the allowed deductions! Then maybe you'll be happy.
And stop running about patting yourself on the back and telling everybody else to give away their money.