Buffett favors an estate tax, but like virtually all billionaires, he won’t be paying it

BECKY QUICK: You said earlier that this is not a tax reform bill. It’s a tax cut.

WARREN BUFFETT: A tax cut.

BECKY QUICK: What do you think about it?

WARREN BUFFETT: Well, I — I don’t think I need a tax cut.

But — for example, the current proposal eliminates the estate tax. And it’s not a death tax. There are going to be 2.6 million people die this year in the United States. And there’ll be 5,000 tax returns that people — estates that pay tax.

So if you start going to a funeral every month, it’s going to be 40 years on average before you go to one where there’s any estate tax due. It’s a very pejorative term.

The truth is if they pass the bill that — they’re talking about — I could leave $75 billion to a bunch of children, and grandchildren, and great-grandchildren— and if left it to 35 of them — they’d each have a couple billion dollars. They could put it out at 5 percent, have 100 million.

I mean, is that a great way to allocate resources in the United States? Because that’s what you’re doing with — for the tax code, is you’re affecting the allocation of resources.

So if they were lucky enough to come out of the right womb, have the right name, Buffett, they could sit there and build tombs for themselves like Egyptians — pharaohs never dreamt of.

They could — they could — they could do anything. And — and capitalism is all about intelligent allocation of resources.

Now, some people say, “Well, you don’t have to worry about that because they’ll blow it all.”

But if they (LAUGH) blow it all, that means that they — you know, that they’ve done some done things with some important resources. And that’s — that’s not good for capitalism. I don’t think it’s good for the children. I sure as — I sure don’t think it’s good for society when there’s a ton of un — inequality — to start with.

And — so I — I would — I think that’s a terrible mistake, for example.

BECKY QUICK: However — let’s play devil’s advocate here.

WARREN BUFFETT: Sure.

BECKY QUICK: You have three children who have foundations that each of them are running. Do you think that they’re a better allocator of that money than the federal government?

WARREN BUFFETT: I — I do. But I — I — I don’t think that setting it up so children, grandchildren — let’s say I died when they were 20. I don’t think they’d be the same individuals that they are. I didn’t — encourage that foundation program until they were in their 40’s and — and I’d seen what they’d done with their lives — and they — and they’d had a chance to live for a long time, going to public schools, living just like other people in Omaha live.

But I — I just think that — I don’t think we should have our Olympic team 20 years from now be the eldest sons of the Olympic team currently. And —

BECKY QUICK: So it’s the dynastic —

WARREN BUFFETT: The dynastic —

BECKY QUICK:  —impact of money.

WARREN BUFFETT: I don’t think — I don’t think — a dynastic system with huge sums of wealth — and bear in mind the wealthy are so much wealthier now than they were 25 years ago. We’re talking about the 400 now having 2.4 trillion against 90 billion — 25 times as much money.

So you have — sprinkled around — you have these children and grandchildren that — that just with those 400 could have two — 2.4 trillion passed down to them.

That’s a lot of resources in this country with a $20 billion G — not even quite a 20 bill — trillion-dollar G — GDP.

I think — I think it goes totally against what’s built this country, what this country stands for.

And if those 5,000 people can’t stand to spend the 20 or 25 billion, they’ve got lots left over. Believe me.

And incidentally it would be bad for philanthropy. I mean — people would — a certain number of people would elect to set their kids up with — you know, billions and billions of dollars rather than — than have it go to philanthropy.

But I don’t think that’s the primary reason. But I do think that’d be a byproduct.