Sunday, September 18, 2011

Economy: Who Is the Loser From A Buffett Tax?

The economics news of this weekend is this message: U.S. President Obama is proposing a special tax rate for millionaires. The politician follows advice from Warren Buffet, who recently proposed a special tax for billionaires like himself, report the media. Therefore they call this proposal the Buffet Tax.

The plan of a Buffet Tax raises some questions. Warren Buffett is a praised philanthropist who donates a lot of his fortune to charitable organizations. Other billionaires like Bill Gates do the same.  If Buffett & Co. have to give more money to the government, they have less money to spend for charities. That´s simple arithmetic.

"The world’s second richest man continues to make his fortune in investment and turn it to philanthropy in the grand tradition of Carnegie and Rockefeller", writes this website ( ). There you can find a lot of charities which benefit from Buffet`s generosity.

All these organizations could loose donations, if a Buffet Tax will be realized, just because the donor  has less money to spend. This could also happen to organizations which are financed by other billionaires, like the Bill and Melinda Gates Foundations, which was founded by the Microsoft founder and his wife. This organization is supporting health and education around the world.

The history of the U.S. has been shaped by donations from billionaires like Carnegie, Guggenheim and Rockefeller. A lot of museums, libraries an other public institutions are financed by donations from billionaires. Could a Buffet Tax endanger them? And: Does the government make better use of the money than these institutions? Does the government spend money more wisely than the Bill and Melinda Gates Foundations or the Rockefeller Foundation?

I doubt it. Governments don´t have a good track record in spending money. Otherwise there wouldn`t be such mess  today.

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