Rich People

Yesterday, a rich person woke up, drove to a title company, and then closed on a lakefront home on the bluff of Cedar Point. This rich person paid $1.54MM for a five bedroom lakefront home with 78′ of frontage and a captivating view. The taxes generated on an annual basis by this rich person’s new vacation home total $27,748, which is a pretty good deal for the county and the municipality, especially when you consider that this mean rich person probably won’t be sending his kids to the school system, a right that is afforded to them through their payment of this gratuitous tax amount. This wealth mongering new owner will now set about paying for the exceptional lifestyle that he or she just purchased, and in the hiring of landscapers, cleaning people, pier painters, pier installers, and pest control sorts, they will have created or saved many, many local jobs. These are some of the horrific side affects of generating opportunity for others through personal wealth. (UPDATE: To those who don’t understand the use of satire mixed with hyperbole, I don’t actually mean that the person who bought the lakefront house is bad. I don’t know them. You can exhale now. Same goes for the people who read my 2011 magazine and took offense to my Marco Island fishing story. )

I wasn’t going to write like that this morning, I swear I wasn’t. Warren Buffet got me a little riled up yesterday, with his soak the rich plea, but I was even slightly over that this morning. Over it, at least, until I read a tweet from Mario Batali where he echoed Warren’s statement. The rotund chef simply retweeted something from the New York Times that reprinted Buffet’s message, and in Mario’s endorsement of such I can’t tell if Mario was too telling the treasury to tax him more, or if he was chiming in to tell the treasury to tax just the billionaires more. Either way, it annoyed me, and it forced me to write this post that I’m sure will anger some more of you.

That Mr. Buffet wants the United States to tax him more is fine by me. If Warren wants to get out his crayons and color in any old tax amount, say a few billion dollars annually, and mail that in check form to Saint Louis, that would be swell. He could do that any time he wishes, this donation of sorts, but yet he readily admits that he pays a minuscule amount of income taxes annually because he pays himself just an average middle class salary. Wealth isn’t taxed, income is. His thoughts on taxation:

“My friends and I have been coddled long enough by a billionaire-friendly Congress. It’s time for our government to get serious about shared sacrifice.’’

Bravo, Mr. Buffet. You’re right. It’s time those filthy billionaires pay their “fair share”. No need to get into the semantics of what amount is fair, and no reason to get into details about how subjective fairness truly is, such discussions would only stir up actual debate. It’s much easier to make goofy statements and let the press run with them. But what about the estimated 47% of Americans who pay no taxes at all? What exactly is their fair share? Are they to continue living off of others hard work? Is this the shared sacrifice you seek? If the ultra wealthy are taxed into submission, will this truly fill the budget gaps that plague us and create a utopian society where the haves give what they have earned to the have nots? Are you insane, Mr. Buffet?

The problems with Mr. Buffets stance go deeper than they might, at first blush, appear. In one sentence, Mr. Buffet takes aim at the “billionaire-friendly” Congress. Then in the next he asks for tax increases on every American making in excess of one million dollars per year. Which one is it Mr. Buffet? Is it the billionaires whose wealth the treasury should covet, or that of the millionaires too? When you’ve been a billionaire for so long I imagine it’s hard to remember that a million is just 1/1000 of a billion, so please do take a look at a spreadsheet with oversized font and more carefully count those zeros. Unlike a Buffet style billionaire, who lives in a modest old house and undoubtedly counts every outgoing penny, including those going to the treasury, a new millionaire tends to spend that money on all those things that makes some revile the wealthy. When a person makes a million dollars in one year, do you suppose they stuff it all under their mattress in Buffet fashion or do they go out and buy things? Things like cars, and houses, and clothing, and jewelry, that, in turn, make the car salesman and dealership money, the Realtor and appraiser and home inspector money, the clothing store owner and manufacturer money, and the small town or big city jeweler money, and in turn generate huge amounts of sales, transfer, and registration taxes on these purchases that some deem to be selfish. Isn’t that a more effective manner through which the rich might redistribute their own wealth?

Mr. Buffet also seems to trust his government, which is a trait that few of us, right or left, possess. The black and white of Mr. Buffets mind causes him to believe that the government can more efficiently spend his money than he can. If I had a few billion dollars of unnecessary wealth, I’m guessing I could create more jobs and provide more froth to the economy than a government that loses a few billion on a daily basis ever could. Does Mr. Buffet understand the concept of government waste? Is Mr. Buffet that uncomfortable with his wealth that he feels the government can more effectively disburse it? Has Mr. Buffet ever heard of spending some of that hoarded money on actual goods and services of a personal nature? Or has he simply been a billionaire for far too long to understand that continually throwing money at the black hole that is government spending won’t do a thing to curtail the root problem and will instead just perpetuate the cycle of government waste?

There are more questions here than answers, but I cannot fathom embracing this mindset wherein government knows best. I’d like to see Mr. Buffet stop complaining about not paying enough taxes. I’d like him to take out his crayon set, stroke a check for $50 or so billion dollars to the United States Treasury, and see if that lets him rest easy at night. It’s awfully convenient to complain about not paying enough taxes when your wealth statements read more like GDP statements, so if that wealth is truly such a burden, I wish him the best in his attempt to plug a trillion dollar hole with a few billion of his personal dollars. The sooner people like Warren understand that the answer is limiting spending not increasing revenue, the better off we’ll all be. Mr. Buffet, the most expensive house on Geneva today is $7.9MM. I’d gladly sell you that home in the event that you’d like to spread some of your money around. If you buy that home, I’ll make some money, much of which will go to the Treasury. Then you’ll have to hire someone to cut the grass, which will make that person money, and they’ll have to send some of that into the Treasury. Then you’ll probably need a boat, since I’m guessing Omaha isn’t a huge boating mecca, so the boat salesman will make some money, and end up paying taxes on that income. Then he’ll bring his check home and his wife will go to the store and buy his kids clothing, which in turn will generate sales taxes on those purchases and revenue for the clothier, who will in turn pay taxes on that income… Warren, see how much more effective your wealth could be if you’d just spend some of it?

Repudiate Warren Buffet- Buy a Lake Geneva vacation home.