In conservative political circles, the estate tax is one of the most despised parts of the U.S. tax code. The tax, levied on the estate of wealthier people, has been nicknamed the “death tax” and critics argue it penalizes people who have become a success during the lifetimes. Given that, it might be surprising to hear that conservative billionaire Warren Buffett believes repealing the tax would be a mistake.
In numerous interviews, Buffett says the tax only impacts a very small number of wealthy Americans each year – somewhere in the range of 5,000 people. Repealing the tax wouldn’t have such an impact on the economy since that untaxed estate money is likely just going to be sliced up by the family members, each of whom will likely spend the money on themselves rather than on the business. “I’m worth $75 billion,” he told one reporter during a 2016 CNBC interview. “What good is it to just give each of my children and grandchildren a few billion dollars?”
Part of Buffett’s problem with passing the wealth along to the next generation is that it ends up concentrating more and more money in fewer hands. “The wealthiest Americans today control a much bigger percentage of the country’s wealth than 20 or 50 years ago. We should be working to reverse that trend, not make it worse.”
But while Buffett is an influential investor, he is unlikely to be successful in his quest to keep the estate tax. His opinion is not shared by many politicians, who believe the government should not financially punish a family simply because the head of the family has passed away.