|Dems Fume over Wall Street Trillions||Incomes Taxes, Millionaires and Billionaires|
by Christopher Chantrill
December 09, 2010 at 11:14 am
I KNOW THAT we are all supposed to love Warren Buffett as the Sage of Omaha, businessman and all-around good guy, but I keep reading stories that make me wonder. Heres a story about Warren Buffett, the estate tax, and the life insurance industry.
Did you know that the life insurance lobby is actively lobbying to restore the estate tax?
Why would the life insurance industry care about that? It turns out that ten percent of life insurance industry revenue is related to the estate tax. Wealthy people take out life insurance in order to reduce estate taxes, because when you die, your life insurance payout doesnt count as part of your estate.
Did you know that Warren Buffett owns six life insurance companies? Did you know he supports the estate tax? You do now.
Warren Buffett isnt just noted as an owner of life insurance companies and a supporter of the estate tax. Hes also noted as a buyer of family businesses. As Dick Patten shows, these two business strategies support each other.
A family business owner or farmer takes out a large life insurance policy which he sinks tens or hundreds of thousands of dollars into each year. When he finally passes away, the life insurance pays out his policy to his familytax free...
Even as Mr. Buffetts insurance companies are protecting family businesses from the IRS, he is buying companies that are forced to sell themselves to pay the death tax. Mr. Buffetts ability to buy family businesses at bargain basement prices depends on families being desperate to selland nothing produces family businesses desperate to sell quickly like a 55% bill from the IRS on all of the businesses assets.
Estate taxes must be paid to the US Treasury within a year of the testators death. In cash.
Back in 1931 the liberal son of an immigrant banker knew what to call this kind of business. Matthew Josephson wrote The Robber Barons to argue that the industrial giants of the 19th century had not created wealth in the right way. They had acted like the feudal barons that for centuries had dominated the mountain passes through the Alps. The great corporations of the Gilded Age monopolized strategic valley roads or mountain passes through which commerce flowed just like the old barons-of-the-crags.
Hello Warren? Isnt your business model exactly the one that so offended young Matthew back in the Great Depression after he got back from a decade living la vie bohème as an ex-pat in Paris? Arent your businesses sitting at an economic choke-point, exploiting the unintended consequences of bad government economic policy, gouging successful family businesses both coming and going, exploiting grieving widows?
Matthew Josephson inaugurated the arch, knowing style that liberal John Kenneth Galbraith picked up in the 1950s, and that Noam Chomsky does so well today. These writers all appeal to the liberal reader that wants to believe that America is unjust and crude, but doesnt want to be enlightened much by actual knowledge about business and the economy.
Thats OK. Let our liberal friends spin their fantasies of conspiratorial robber barons and corporate greed. We have Hernando De Soto with The Other Path and The Mystery of Capital. He shows us how the real robber barons are the leaders of redistributive combines of special interests competing for privileges from favor-dispensing politicians and bureaucrats.
And now we have Deirdre McCloskey and her bubbly, one-of-the-girls style. In The Bourgeois Virtues she argues that, no matter whether you like capitalism or not, there are now six times as many humans living today as in 1800 and that the average living human consumes eight and a half times as much as 200 years ago. Plus capitalism has made us ethically better people whereas socialism does the opposite.
Its hard to think of Warren Buffett as a robber baron. Hes a jolly chap that just seems to be along for the ride. But the ugly truth is that his businesses benefit from one of the major big government redistributive programs by which the ruling class makes government big and families small. Hes a leader of a redistributive combine that wants to keep what it got from the government favor factory. Hes one of the chaps sitting by the side of the road taking their cut, courtesy of Uncle Sam.
It would be nice if our liberal friends would be as hard on their green-energy crony capitalists and their high-speed rail robber barons as they would like to be on the white working class striver trying to buy a small construction business.
But at least Warren Buffett is a nice robber baron. We all like life insurance companies. They are different from health insurance companies.
Buy his Road to the Middle Class.
[The Axial Age] highlights the conception of a responsible self... [that] promise[s] man for the first time that he can understand the fundamental structure of reality and through salvation participate actively in it.
Robert N Bellah, "Religious Evolution", American Sociological Review, Vol. 29, No. 3.
[To make] of each individual member of the army a soldier who, in character, capability, and knowledge, is self-reliant, self-confident, dedicated, and joyful in taking responsibility [verantwortungsfreudig] as a man and a soldier. — Gen. Hans von Seeckt
MacGregor Knox, Williamson Murray, ed., The dynamics of military revolution, 1300-2050
Civil Societya complex welter of intermediate institutions, including businesses, voluntary associations, educational institutions, clubs, unions, media, charities, and churchesbuilds, in turn, on the family, the primary instrument by which people are socialized into their culture and given the skills that allow them to live in broader society and through which the values and knowledge of that society are transmitted across the generations.
Francis Fukuyama, Trust
[W]hen I asked a liberal longtime editor I know with a mainstream [publishing] house for a candid, shorthand version of the assumptions she and her colleagues make about conservatives, she didn't hesitate. Racist, sexist, homophobic, anti-choice fascists, she offered, smiling but meaning it.
Harry Stein, I Can't Believe I'm Sitting Next to a Republican
[T]he Liberal, and still more the subspecies Radical... more than any other in these latter days seems under the impression that so long as he has a good end in view he is warranted in exercising over men all the coercion he is able[.]
Herbert Spencer, The Man Versus the State
These emerge out of long-standing moral notions of freedom, benevolence, and the affirmation of ordinary life... I have been sketching a schematic map... [of] the moral sources [of these notions]... the original theistic grounding for these standards... a naturalism of disengaged reason, which in our day takes scientistic forms, and a third family of views which finds its sources in Romantic expressivism, or in one of the modernist successor visions.
Charles Taylor, Sources of the Self
Families helped each other putting up homes and barns. Together, they built churches, schools, and common civic buildings. They collaborated to build roads and bridges. They took pride in being free persons, independent, and self-reliant; but the texture of their lives was cooperative and fraternal.
Michael Novak, The Spirit of Democratic Capitalism
For [the left] there is only the state and the individual, nothing in between. No family to rely on, no friend to depend on, no community to call on. No neighbourhood to grow in, no faith to share in, no charities to work in. No-one but the Minister, nowhere but Whitehall, no such thing as society - just them, and their laws, and their rules, and their arrogance.
David Cameron, Conference Speech 2008
As far as the Catholic Church is concerned, the principal focus of her interventions in the public arena is the protection and promotion of the dignity of the person, and she is thereby consciously drawing particular attention to principles which are not negotiable...
[1.] protection of life in all its stages, from the first moment of conception until natural death; [2.] recognition and promotion of the natural structure of the family... [3.] the protection of the right of parents to educate their children.
Pope Benedict XVI, Speech to European Peoples Party, 2006
No lesson seems to be so deeply inculcated by the experience of life as that you should never trust experts. If you believe doctors, nothing is wholesome: if you believe the theologians, nothing is innocent: if you believe the soldiers, nothing is safe. They all require their strong wine diluted by a very large admixture of insipid common sense.
Lord Salisbury, Letter to Lord Lytton
What distinguishes true Conservatism from the rest, and from the Blair project, is the belief in more personal freedom and more market freedom, along with less state intervention... The true Third Way is the Holy Grail of Tory politics today - compassion and community without compulsion.
Minette Marrin, The Daily Telegraph
In England there were always two sharply opposed middle classes, the academic middle class and the commercial middle class. In the nineteenth century, the academic middle class won the battle for power and status... Then came the triumph of Margaret Thatcher... The academics lost their power and prestige and... have been gloomy ever since.
Freeman Dyson, The Scientist as Rebel