Chuck Collins
What do you think about someone like Warren Buffett, who lives a relatively simple life and has pledged to give virtually all of his vast fortune away?
Buffett is not a conspicuous consumer. Even his private jet was initially named the “Indefensible.” And Buffett does less to aggressively wield his power and influence in the public sphere. You don’t see his name on the list of big political donors. And he and Bill Gates started The Giving Pledge to encourage other billionaires to give to philanthropy.
But most of Buffett’s wealth will flow in the form of donations to the tax-exempt family foundations run by his three kids, rather than paying estate taxes or taxes on appreciated gains. On the positive side, he’s not creating private wealth dynasties. But his children will become philanthropic titans by wielding taxpayer-subsidized private power through enormous charitable foundations upon his death.
Buffett has gifted Berkshire stock worth billions to his children’s charities since 2006. He plans to give almost all his remaining $140 billion fortune to a charitable trust when he dies. His three kids will be the named trustees and will have to agree unanimously on how the money is used.
How would you tackle the problem of wealth inequality at a scale where individuals can amass net worth of $100 billion-plus?
As a society, we should adapt several public policies to discourage such democracy-distorting levels of private wealth:
1. A progressive annual wealth tax, with rates becoming steeper as wealth goes above $1 billion.
2. A meaningful inheritance tax, taxing wealth transfers at death. For this to be effective, we have to crack down on the massive wealth-hiding industry.
3. A cap on the charitable deduction so that wealthy people, like Buffett, don’t get to opt out entirely of paying taxes.