Stephen Moore had a tenchant item on Warren Buffett in yesterday’s Political Diary, the e-mail newsletter from the Wall Street Journal’s editorialists. First, the good news:
It now appears that billionaire Warren Buffett’s widely-broadcast appeal to keep and even raise the death tax has backfired. Following Mr. Buffett’s Senate testimony two weeks ago, the momentum has clearly shifted to Senator Jon Kyl, who’s been leading the charge to eliminate or at least sharply cut (to a top rate of 25%) the death tax. “Buffett’s testimony sounded canned and the small business owners on his panel made a compelling case for repeal,” says one Senate Finance Committee aide.
“We think the hearing was a victory for our side,” says Dick Patten, president of the American Family Business Institute. “The message was that the rich like Buffett can pay the tax, but small business owners can’t.”
We don’t want to paint Buffett out to be a bad guy, selfish or manipulative. But there’s no doubt he has a powerful self-interest at play. More Moore:
The American Family Business Institute reports that Mr. Buffett had been able to purchase his stakes in Dairy Queen, Jordan’s, the Buffalo News, R.C. Wiley Home Furnishings and other family-owned companies thanks in part to the death tax. There’s little question that a death tax rate as high as 55% has allowed vulture capitalists to snatch up family-owned companies at lower prices. Mr. Buffett is widely reported to be sitting on $40 billion of cash right now. A higher death tax would have families reluctantly lining up to sell to him.
A compelling case against Buffett’s position also came from Eugene Sukup, an Iowa manufacturer and NAM member. Again, Moore:
A poignant moment in the Senate hearings came when Eugene Sukup, chairman of an Iowa-based grain storage company, was asked what would happen to his company under a 45% estate tax. “We would not make it. We’d probably have to sell the business to this guy,” he said, pointing to Mr. Buffett.
Maybe that explains why so many of the truly wealthy advocate the death tax and so many of the merely aspiring wealthy don’t.
Sukup’s prepared testimony is available here. Highly recommended.
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