Sunday, July 23, 2006

Buffet's Gift: Another View

Recently I wrote an essay criticizing Warren Buffet's $44 billion gift to the Gates Foundation upon Mr. Buffet's death.

A former graduate student of mine at Creighton University, Shawn Deluhery responded with the following:

I have a response to your Buffet tax article I'd like to share with you. I learned in my little experience in tax planning and in my tax classes one universal rule in tax. Everyone's earnings will be taxed in one form or another either now or at some other point in time. My best friend, who happens to be a Republican, wants to reduce tax rates so people can determine who should receive their "charitable" dollars. I replied, as a liberal, this wouldn't be feasible because people wouldn't give enough to make the difference a government can make. However, similar to my friend, I see charitable giving as a form of tax. After all, tax really is giving or having someone else take your money, then spend it.

If I use this definition of tax, isn't Buffet's "gift" to the Gate's foundation a 100% tax on the $44 billion? To me this is great because this is a 100% tax, meaning the foundation gets all of the gift, and will utilize it to pursue some good toward achieving the foundation's mission. Just think what the "return" on the investment will be for the foundation.

Well, that's my view on the transaction. Buffet's gift was 100% taxed by the foundation. Buffet doesn't get to use the money any longer for his own use. He did reduce his tax liability in the past to accumulate this $44 billion. But it's all now in the hands of another, thus a tax.

Ernie Goss

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