Sunday, February 24, 2008

Liberal Compassion, Acceptance and Tolerance

While I admire Warren Buffet for his investment geneous, I have always personally had issues with certain things about how he lives his life. Being more libertarian socially, it is not really any of my business what he does in his life. On the other hand, when he comes out and speaks in ways intended to change tax policy, that is fair game. The next time Warren Buffet talks about how he pays less in tax than his secretary, someone please, please ask him 2 questions, 1) how much did you pay accountants and tax professionals to get your tax that low and 2) what is keeping you from paying more? There is not a law limiting how much you can voluntarily pay.

All that being said, I recently stumbled across something that makes me think less of the guy, a lot less. An article about an heir to the Johnson and Johnson fortune made a movie about the rich and interviewed Warren Buffet's grand daughter. She is the adopted daughter of Warren's son Peter.

Here is the sidebar about how Warren Buffet treats family members.
In Jamie Johnson's film "The One Percent," Nicole Buffett talks about how lucky she is to be a Buffett. "I feel very fulfilled and happy in my life," says Nicole, the adopted daughter of Peter Buffett, Warren Buffett's son.

Warren Buffett, however, wasn't pleased. Shortly after Nicole appeared on "The Oprah Winfrey Show" to talk about the film, Mr. Buffett sent her a letter saying that, while he was proud of Nicole and her achievements, "...I have not legally or emotionally adopted you as a grandchild, nor have the rest of my family adopted you as a niece or a cousin."

Nicole is the biological daughter of Mary Buffett (with another man), who married Peter when Nicole was 4 years old. Peter and Mary divorced but Peter adopted Nicole when she was 18. Warren Buffett declined to comment.

Nicole says she spent almost every Christmas with Warren Buffett between the ages of 4 and 11 and often went to his home in Omaha for spring break. Susan Buffett, Warren's first wife, who died in 2004, named Nicole in her will as one of her "adored grandchildren" and left her $100,000. She added that Nicole "shall have the same status and benefits ... as if they were children of my son, Peter A. Buffett."

A source close to the family says Nicole spent "very little time" with Warren Buffett over the years but that he paid for Nicole's school and living expenses until she was 28. Nicole says that Mr. Buffett's reaction may have reflected his philosophy about wealth. "Sharing my experience as a Buffett was stepping outside the box," she says.

1 comment:

Anonymous said...

It's very simple for anyone with a basic knowledge of our tax code.

Warren Buffett receives a modest - nominal. perhaps - annual salary of $100K. This salary is taxed as "ordinary income" at ordinary tax rates.

This salary income is dwarfed by a much larger stream of income consisting of dividends and capital gains. These types of incopme are taxed at preferential, lower rates - in Buffett's case, 15 percent.

His secretary is probably in the 28 percent marginal tax bracket. She may well also have some income from dividends and/or capital gains, but they represent a smaller proportion of her income than Buffett's represent of his income.

Buffett doesn't need an army of accountants to reduce his taxes, and he doesn't need to go through any hoops either. If you make money from investments, you pay a lower tax rate than if you make money by going to work to earn it.