The Wisdom of Warren Buffett: A Christian Reflection
One of the frequent criticisms that I, and perhaps others like me, have received in recent years concerning my position on obscenely large accumulation of personal wealth is that I (and so very few of the critics) are in that camp of financial barons known as the super wealthy. Therefore, I was unable to speak from fairly from my position of challenge, because it was easy for someone who professes a vow of sine proprio to say what I do, not having to be concerned about protecting, growing or managing my own personal wealth. Yet, it seems, thanks to a recent New York Times op-ed piece by the multi-billionaire Warren Buffett, at least some of the super wealthy have spoken, and they share my outlook.
One thing that is often overlooked in discussions about tax rates and personal wealth is who the mouthpieces are for a given position. Disturbingly, the ground swell of support for freezing, if not lowering, taxes in this country come from self-monikered “tea partiers,” most of whom are working and middle-class Americans. One doesn’t find the New York Park-Avenue super-wealthy dressed up in eighteenth-century colonial attire on the National Mall protesting anything. Why? Because, truthfully, as Buffett bravely notes with honesty in his piece, whether his tax rate was 10% or 50% he would still make millions and billions of dollars. The super wealthy have no need to be concerned.
The working and middle-class, it seems, has been led to work against their own personal interest for just a few of the super wealthy and, perhaps more tellingly, the corporations that seek to raise profits. This is not coincidental or accidental, by which I mean to say that the tea-party narrative did not arise among the lower classes of this country independently of the corporate interests of those who seek to raise the revenue of the super wealthy without concern for the pedestrian laborers who fight for that cause. Such invidious conniving has been uncovered by serious investigative reporting such as was seen in Jane Mayer’s excellent article in The New Yorker last Fall, titled, “Covert Operations: The Billionaire Brothers Who are Waging War Against Obama.”
Think the tea party is the organic voice of the people? Think again.
One of the ways that such populist fervor is invigorated among self-identified tea partiers, and others, by folks like the Koch brothers is through the instrumental ignorance of the audience about how income is acquired and taxed. There is an empathetic impulse into which the Koch brothers and others with similarly vested interests tap when it comes to the working and middle classes. Those who have every only earned their livelihood by “working a job” (versus money management, which is how many of the super wealthy have accumulated their money) do not instinctively understand that a super wealthy person’s source of revenue is not something so discreetly identified such that it would appear on an IRS W-2 form. Therefore, the “idea” of “raising taxes” appears to many working and middle-class people as something akin to their pay-stub reflecting a higher cut of their net income. The truth is, the super wealthy have a functionally lower tax rate because so much of their actual wealth is acquired, not from salary (IRS “income”), but through other more complicated means. Buffett explains:
If you make money with money, as some of my super-rich friends do, your percentage may be a bit lower than mine. But if you earn money from a job, your percentage will surely exceed mine — most likely by a lot.
To understand why, you need to examine the sources of government revenue. Last year about 80 percent of these revenues came from personal income taxes and payroll taxes. The mega-rich pay income taxes at a rate of 15 percent on most of their earnings but pay practically nothing in payroll taxes. It’s a different story for the middle class: typically, they fall into the 15 percent and 25 percent income tax brackets, and then are hit with heavy payroll taxes to boot.
Fear is something that is also used or is at least something capitalized by those with their own super-wealth interests in mind. Those who acquire millions or billions of dollars annually have nothing to fear, they will weather most financial and economic storms. It is the working population that has so much to fear because, as Buffett keenly observes, this population is so dependent on their “jobs,” from which they earn the whole of their income. So a false narrative that is often used to enlist the support of the working and middle-class populations is that if taxes were raised on the wealthy and corporations, then they would be less inclined to spend more, invest, hire and the like, thereby stagnating the economy and risking the job security (weak as it is for so many) on which the non-wealthy depend. Buffett, in clear and direct language, explains the absurdity of that claim:
Back in the 1980s and 1990s, tax rates for the rich were far higher, and my percentage rate was in the middle of the pack. According to a theory I sometimes hear, I should have thrown a fit and refused to invest because of the elevated tax rates on capital gains and dividends.
I didn’t refuse, nor did others. I have worked with investors for 60 years and I have yet to see anyone — not even when capital gains rates were 39.9 percent in 1976-77 — shy away from a sensible investment because of the tax rate on the potential gain. People invest to make money, and potential taxes have never scared them off. And to those who argue that higher rates hurt job creation, I would note that a net of nearly 40 million jobs were added between 1980 and 2000. You know what’s happened since then: lower tax rates and far lower job creation.
Since 1992, the I.R.S. has compiled data from the returns of the 400 Americans reporting the largest income. In 1992, the top 400 had aggregate taxable income of $16.9 billion and paid federal taxes of 29.2 percent on that sum. In 2008, the aggregate income of the highest 400 had soared to $90.9 billion — a staggering $227.4 million on average — but the rate paid had fallen to 21.5 percent.
The taxes I refer to here include only federal income tax, but you can be sure that any payroll tax for the 400 was inconsequential compared to income. In fact, 88 of the 400 in 2008 reported no wages at all, though every one of them reported capital gains. Some of my brethren may shun work but they all like to invest. (I can relate to that.)
There is a Christian commentary that I believe accompanies this op-ed, although Buffett has not proffered such reflection (nor is he at all obligated to do so). I have written here and elsewhere that excessive personal (and corporate, lest we not forget that in the US — thanks to the Supreme Court Decision two years ago — corporations are considered juridic persons) wealth, when there are such disparities in society and so many are left to struggle and suffer, is simply wrong, sinful.
In order not to be mistaken, let me say plainly that I do not believe that all Christians have to live like women and men in professed religious life. I recognize and honor the commitments that women and men have to each other and their families as it concerns financial security and providing the necessities required for full human flourishing. But where does one draw the line between necessity and gratuity, between security and selfishness, between honesty and greed?
I do not believe anyone can justify so-called “super wealth” from within the Scriptural or Theological Christian tradition. Those who try to fit that square peg into a round hole are left to their own to rationalize such a maneuver. While I believe it to be obscene and unjust that people, even good people like Warren Buffett, are permitted in our world to have so much while others have nothing (something I believe should be outlawed), in the meantime I support Buffett’s call for real shared-sacrifice in supporting all people in society.