BECKY QUICK: You said earlier that this is not a tax reform bill. It’s a tax reduction.
Warren Buffett: Tax cuts.
Becky Quick: What do you think about that?
Warren Buffett: Well, I don’t think we need tax cuts.
But, for example, the current proposal would abolish inheritance tax. And it’s not a death tax. 2.6 million people are expected to die in the United States this year. And there will be 5,000 tax returns for people paying taxes, property.
In other words, if you start going to a funeral every month, it will take an average of 40 years before you can go to a funeral that incurs inheritance tax. It’s a very derogatory term.
The truth is, if they pass this bill, they’re talking about, I can leave $75 billion to a bunch of my kids, grandkids, great-grandkids, and if I leave it to 35 of them, they’ll each get billions of dollars. They can put it out at 5 percent and have 100 million.
So is that a good way to allocate resources in the United States, because that’s what influences the allocation of resources in terms of tax law?
So if they are lucky enough to come out of the right womb and have the right name, Buffett, they can sit there like the Egyptians and build their own tombs – something Pharaoh never dreamed of.
They can, they can, they can do anything. And capitalism is all about the wise allocation of resources.
Now, some people say, “Well, they’ll blow it all away, so you don’t have to worry about it.”
But if they blow it all up (laughing), that means they’ve done something with — you know, significant resources. That’s bad for capitalism. I don’t think it’s good for the children either. Indeed, I think it is bad for society to have so much inequality in the first place.
And — so I would — like, I think that’s a terrible mistake.
Becky Quick: But let’s play devil’s advocate here.
Warren Buffett: Of course.
Becky Quick: You have three children, each with a foundation that they run. Do you think they allocate that money better than the federal government?
Warren Buffett: Yeah. But let’s say I died when my children, my grandchildren, they were 20 years old. I don’t think they will ever be the same people they are. I didn’t encourage that foundation program until they were in their 40s, and I’ve seen what they did in their lives, and they – and they went to public school and lived like everyone else in Omaha and had a chance to live a long life.
But I just don’t think the Olympic team 20 years from now should be the eldest son of the current Olympic team. and –
Becky Quick: So it’s a dynasty —
Warren Buffett: Dynasty —
Becky Quick: —The influence of money.
Warren Buffett: I don’t think about dynasties with huge amounts of wealth. And keep in mind that wealthy people are much richer today than they were 25 years ago. What we’re talking about is that 400 companies now have 2.4 trillion versus 90 billion, or 25 times more.
So you have – all over the place – these children and grandchildren – those 400 alone could be two – and they’re going to inherit 2.4 trillion.
This is because this country, which boasts a GDP of $20 billion (less than $20 trillion), has vast resources.
I think that’s completely contrary to what this country was built on and what this country stands for.
And if those 5,000 people can’t bear to spend 20 or 25 billion, they still have a lot of money left over. Trust me.
And incidentally, that would be bad for philanthropy as well. In other words, a certain number of people will choose to give billions of dollars to their children rather than donate to charity.
But I don’t think that’s the main reason. But I think that’s a byproduct.
Although the bill that Buffett and Becky were discussing did not pass, the exemption has been increased over the years to its current level of $15 million per person.
