Sunday, May 6, 2012

Fairness & taxes



I have a tremendous amount of respect for Warren Buffett in the world of investing.  He and business partner Charlie Munger have created an incredible business over the decades and have created tremendous value for their shareholders' with their long term approach to investing in quality companies and allowing them to basically run themselves.  I read all 976 pages of "The Snowball: Warren Buffett and the Business of Life" and found parts of the book to be inspirational.  With that said I struggle to to understand Mr. Buffett's position on taxes.  Looking through the Wall Street Journal website today a headline caught my eye: "Buffet on Tax Hike..." The article refers to Warren Buffett stating, as he had in many other forums, at the Berkshire Hathaway's annual meeting that "those with large incomes should pay more [in taxes] in the name of fairness."  While the article focused mainly on the Berkshire Hathaway annual meeting the first sentence of the article set the tone for how I would read the rest.

 How can one advocate taking from someone and giving to someone else in the name of fairness?  The government takes by force either at the point of a gun or by the threat of imprisonment.  As a parent I do not allow my children to impose their will on others by force yet this is how our government takes from one group and gives to another.  

I too fully advocate fairness but from a different perspective: that of the beginning. I believe in fairness of opportunity, not in fairness of outcomes.  Invariably there will be a small percentage of people who do spectacularly well in life financially and there will be others who will struggle to make ends meet their entire life.  Sometimes these outcomes are dictated by choices, self-made millionaires are not often couch potatoes.  However, even in cases where someone worked very hard but remained poor that gives no one the right to take from the wealthy and redistribute that to others.

If Mr. Buffett does indeed pay less in taxes as a percentage of his income than his administrative assistant then I say we have everyone pay that lower rate

I would also fully support Warren Buffett writing a check above and beyond his tax obligations to the Federal Government for the amount he would deem "fair" but please leave me out of it.




 

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