Eminentoes
Beware Rich Guys Talking Taxes
Bill Gates Sr. talks the talk even better than his famous super-wealthy son.
Every time the air fills with talk of tax increases, Bill Gates Sr. is trotted out to make the case that higher estate taxes are good for philanthropy, good for the country and good for goodness sake. Now, with the estate tax set to expire January 1, there he was again at a recent press event, joined by oil heir Richard Rockefeller and mutual fund pioneer John Bogle, the three of them singing from the same high-tax hymnal. The press, hushed as usual in the presence of accumulated wealth, responded with uncritical coverage.
Permit me a moment of skepticism.
Consider the cast of characters, beginning with Mr. Rockefeller. While he may be a source of wisdom on many matters, Americans are unlikely to seek or accept his advice on the vexed subject of inheritance. As the grandson of the great oil man, he was trust-funded at birth and has had little influence over the primary course of his own financial life. It seems safe to say that, to the vast majority of Americans, his experience will seem more alien than instructive. Mr. Bogle makes a more credible witness. He not only built the great Vanguard financial services firm from the ground up, but he was in large part responsible for democratizing and demystifying the financial markets for America’s middle class. Whenever he has something to say on the subjects of savings, investment, philanthropy or taxation, we should listen respectfully. And when he says, specifically, that the tax exemption for charitable gifts is a “huge incentive” for him and will result in the donation of a “substantial part” of his estate, we have no reason to doubt him.
Then there’s Mr. Gates. It is no slight to Messrs. Rockefeller and Bogle to point out that, had they shown up without Mr. Gates, their conference would have registered a zero on the media Richter scale. Mr. Rockefeller’s fortune has been barricaded for generations, which places his tax situation somewhere beyond the range of general curiosity. And Mr. Bogle, for all his business success, probably made less money in a half-century of service to Vanguard than a few 29-year-old hedge fund managers will take home to Greenwich this year. As the man said, life is unfair. No, it is Bill Gates’s presence at these high-tax rallies that gives them snap and crackle. It is Bill Gates’s presence, carrying as he does the name of the most successful entrepreneur of the age, that midwifes the headline, “Rich Guys Seek Higher Taxes,” a contrarian tease lodged squarely in the long journalistic tradition that began with the query, “Say, is that a man biting a dog?” If Bill Gates’s’ name happened to be, say, Walter Gates, he would be dismissed as just another tax lawyer hyping tax increases because they’re good for business.
Why then is it problematic to call Bill Gates Sr. as a witness in this case? For openers, he’s not really a rich guy. He’s related to a rich guy, a fate that has befallen many an American and ruined more than a few Thanksgiving dinners in the process. Then there’s the fact that he’s the father of the world’s richest child, which makes him uniquely unqualified to speak to the dynamics of inheritance. He will never know either the difficulty or the satisfaction of leaving the family business to his children — his family business was created in the successor generation. Nor will he face the challenge of passing on the family farm — if he bequeaths the family farm, assuming he has one, it will amount to no more than a rounding error in his son’s real estate portfolio. And he will never understand the emotional importance of smoothing life’s path for his children and grandchildren — life’s path for his children and grandchildren is freshly Zambonied each morning.
That’s on the personal side. On the professional side, Mr. Gates’s background is more question-begging still. Now retired, he was for most of his career a partner in a Seattle law firm called Preston Gates. Back when Bill Jr. was starting to build his software company in the Seattle suburbs, Preston Gates employed 13 attorneys: it enjoyed a solid reputation, but it was nobody’s idea of a legal powerhouse. Then Bill Jr.’s company began to grow and grow and Preston Gates grew along with it, not as exponentially as the Microsoft miracle, but fast enough to become a substantial regional firm with a presence in Washington, D.C. One could thus say that Bill Sr. became one of those demographic oddities — a parent who, in effect, inherited wealth from his child. But that would make the story too pat. In his legal practice, Bill Sr. never really immersed himself in intellectual property rights or antitrust issues or any of the legal esoterica critical to Microsoft’s future. His specialty at the law firm was estate planning, which is to say that he made his living advising clients on how to avoid paying estate taxes. By all accounts, he was good at it. It has long been a poorly-kept secret that top-tier lawyers regard the estate tax as a “voluntary tax,” in that it is actually paid only by taxpayers who are ill-informed or under-advised. The clients of Bill Gates Sr., by all accounts, fell into neither category.
So whenever Bill Gates Sr. starts dispensing advice on estate-tax policy, aren’t we entitled to ask — to whom should we be listening? The high-paid professional who helped his clients avoid the tax? Or the public moralist who advises the rest of us that it is our civic duty to pay it?
About the Author
Neal B. Freeman is chairman of the Blackwell Corporation.
Letter to the Editor View all comments (49) | Leave a comment
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Yosemeti Sam| 12.30.09 @ 7:04AM
" ... It is Bill Gates's presence, carrying as he does the name of the most successful entrepreneur of the age ...."
BS.
" ... most successful entrepreneur ...." ?
Yeah, sure.
An army of programmers - and Gates Jr.
'led' them all the way to:
Non-innovational Windows. Crap - par excellence! Feeble contrast to Apple for
example.
Its' 'success' story: PR cum monopolistic market
'prowess' cum easy Borg assimilable users per
industry cheerleading shills.
Plain and simple reason for Microsoft -
lucky SOBs benefiting from synchronicity.
Rich SOBs waxing paternalistic about taxes?
Like, pukeswille.
Ret. Marine| 12.30.09 @ 7:42AM
Yeah and I too have concerns with those who wish me to pay for what they have not given. I'll stick to helping those around me with the true need for help. As I understand the Constitution as orginally stated, Corp. were required to pay taxes not the fruits of one's labor, average Joe with his 40 hr. work week. As we see it today, voluntary means, at the point of a gun, or else. Pleeeease, talk to the hand.
Ole| 12.30.09 @ 8:21AM
In an ideal world the estate tax would be the primary source of goverment income, which would allow much lower income and consumption taxes. I would much rather enjoy what I earn while I am alive than wait for a loved one to die to inherit their wealth. Besides, research shows that wealth beyond what is necessary to give your children a good education, frequently has a negative effect on the children.
Pingback| 12.30.09 @ 9:34AM
Twitter Trackbacks for The American Spectator : Beware Rich Guys Talking Taxes [spec links to this page. Here’s an excerpt:
PolishKnight| 12.30.09 @ 10:10AM
Wow! What an informative article! I had no idea that Bill Gates' father made money helping people avoid paying the same tax he advocates keeping around.
Sadly, I'm typing this on a windows computer (XP, of course.) IBM made overpriced gray box junk in the 80's and MS has made the overpriced gray box junk up until now.
The only mainstream alternative is apple and that's run by a raving mad leftist.
Alert1201| 12.30.09 @ 11:01AM
Doesn't Buffet, who is often paraded out in support of the estate tax, benefit from the tax as well? From what I've read his clearing house buys companies that need to be sold off cheaply from families who need to pay estate taxes from the sale. He then polishes them up and sells them for even more.
Gill O’Teen ✝✡| 12.30.09 @ 11:33AM
Around 1966 Fab Four lead guitarist George Harrison was shocked, shocked I say, when he learned just how much money the British gum’mint was confiscating from him and his mates as a reward for their economic contributions to the English music industry. So he wrote a little tune to commemorate the occasion. He called the song “Taxman” and it appears on one of his band’s greatest albums - “Revolver”.
As a former English Teacher, I especially liked Harrison’s interior quatrain:
if you drive a car - I’ll tax the street;
if you try to sit - I’ll tax your seat;
if you get too cold - I’ll tax the heat;
if you take a walk - I'll tax your feet.
So to commemorate the rapidly approaching 1 Yo (2009 A.D.) tax filing season, I thought a fun contest would be in order. The rules of this competition are simple.
1) email me an original quatrain in which the final syllables of each line rhyme with each other (street, seat, heat, feet).
2) Each line must contain exactly 9 syllables.
3) These 9 syllables must be divided by a hyphen with 5 syllables before the hyphen and 4 after.
4) Each line must begin with the word “if”.
5) The 4 syllables after the hyphen must begin with the words “I’ll tax”.
6) Each entry must be date/time stamped before January 10, 2 Yo (2010 A.D.).
7) I will scan each quatrain to judge simply whether or not it meets these rules.
8) I will compile all entries complying with the rules and send them to all submitting an entry or who are on my contact list without revealing their composer’s names.
9) These ‘judges’ will score each quatrain on a scale from 1 to 10 with 10 being the best possible grade.
10) After scoring the quatrains, each grader should return the scores to me as soon as possible, within a week of my sending them out.
11) The quatrain scoring the most points will be declared Champion and its creator will be designated the Gill O’Teen Poet of the Year for 2 Yo (2010 A.D.).
12) Have fun!
Here are the lyrics to the original masterpiece:
Taxman by Beatle George Harrison (Beatles “Revolver” 1966)
“One, two, three, four...
“Hrmm!
“One, two, (one, two, three, four!)
“Let me tell you how it will be;
“There's one for you, nineteen for me.
“'Cause I’m the taxman,
“Yeah, I’m the taxman.
“Should five per cent appear too small,
“Be thankful I don't take it all.
“'Cause I’m the taxman,
“Yeah, I’m the taxman.
“(if you drive a car, car;) - I’ll tax the street;
“(if you try to sit, sit;) - I’ll tax your seat;
“(if you get too cold, cold;) - I’ll tax the heat;
“(if you take a walk, walk;) - I'll tax your feet.
“Taxman!
“'Cause I’m the taxman,
“Yeah, I’m the taxman.
“Don't ask me what I want it for, (ah-ah, mister Wilson)
“If you don't want to pay some more. (ah-ah, mister Heath)
“'Cause I’m the taxman,
“Yeah, I’m the taxman.
“Now my advice for those who die, (taxman)
“Declare the pennies on your eyes. (taxman)
“'Cause I’m the taxman,
“Yeah, I’m the taxman.
“And you're working for no one but me.
“Taxman!”
Here are two quatrains I composed as examples:
1) if you’re overweight - I’ll tax your fat;
if you have a pet - I’ll tax your cat;
if you play baseball - I’ll tax your bat;
if your head is chilled - I'll tax your hat.
2) if you need to sneeze - I’ll tax your nose;
if you try to stand - I’ll tax your toes;
if your grass is dry - I’ll tax your hose;
if you wrap a gift - I'll tax its bows.
Gill O’Teen ✝✡
gill.Oteen07041776@gmail.com
Celebrate Galt Day 1/20/2010
Don’t Tread on Me!!
ncatty| 12.30.09 @ 11:49AM
As a former teacher you will understand our reluctance to do your homework assignment.
Gill O’Teen ✝✡| 12.30.09 @ 1:45PM
Good grief! If you’re that paranoid that you are afraid to participate in a silly little game, then you should google something like “secure email provider” and locate a company that will sell you an untraceable email address. While you’re at it, buy a secure router that scrambles your internet signal so that no one can trace you to your PC. Better yet, only use a wireless laptop and change your location every 5 minutes. Unless ‘ncatty’ is actually your real name, I suspect you already know how to create an alias. You had to give “American Spectator” an email address just to post here. Do you know what they do with each and every email they collect? Neither do I. Could they be bundling them together and selling them for a dime each to the FBI? Well, yes. Could they be bundling them together and selling them for a dime each to an internet spammer? Well, yes. Could the email request be totally bogus and what is entered is simply ignored? Well, yes. I have no idea how “American Spectator” uses these. Neither do you. Believe me, if you choose not to play, I won’t care one bit.
Gill O’Teen ✝✡
gill.Oteen07041776@gmail.com
Celebrate Galt Day 1/20/2 Yo (aka 2010 A.D.)
Don’t Tread on Me!!
ncatty| 12.30.09 @ 4:32PM
It was a joke Mr. former teacher. Your poor pupils.
Jim| 12.30.09 @ 12:35PM
There's an office in the Treasury Department whose function is to accept donations. If they truly think they should pay more, I'd be more impressed with Gates (and Buffett) if they literally put their money where their mouths are -- just opened their wallets and gave to the Treasury.
Dean| 12.30.09 @ 8:02PM
I agree. I get tired of those who are extremely wealthy telling me I need to pay more in taxes. If they want to pay more in taxes, just send it in.
I happily give to my church, homeless groups, schools, veterans groups and others, as I prefer to go directly to those in need, rather than to the government bureacracy.
Northern Rebel| 12.30.09 @ 12:41PM
Liberals are smart enough to know that whatever you tax, you discourage it's use. That is why the wealthy created the income tax, instead of a national sales tax.
The wealthy do not need an income, so it's a double edged sword for them. They might not raise as much money for their beloved government as cutting taxes would, but at least it's kept out of the little people's hands, and they won't be able to invade their cocktail parties.
A national sales tax would allow people to choose how much taxes to pay, (BMW, or Chevy?) and they don't want the great unwashed to have these options. Allow people to spend their own earnings as they see fit? Blasphemy!
The estate tax is cut from the same cloth, in that the average northern NY farmer would be forced to sell his estate, to pay the taxes, rather than pass the fruits of his lifelong labor along to his children.
Unless of course, he hires Bill Gates Sr.
Gill O’Teen ✝✡| 12.30.09 @ 1:50PM
Huh?????????????
Gill O’Teen ✝✡
gill.Oteen07041776@gmail.com
Celebrate Galt Day 1/20/2 Yo (aka 2010 A.D.)
Don’t Tread on Me!!
aaron nboy| 12.30.09 @ 4:29PM
Aye!
Their beloved government, which uses our money to regulate and control us, to the benefit of the priveledged few.
Margie| 12.30.09 @ 1:52PM
The Communists, Statists, Leftists or whichever title you wish to use, will continue their confiscatory taxing until vote them all out.
In the meantime I will continue LOVING my Apple MAC!
Northern Rebel| 12.30.09 @ 2:12PM
Too tough for you, Gill old buddy?
Better stick to your little contest.
Carabao| 12.30.09 @ 4:07PM
I blame S. Jobs, not Gates for the fact that the substandard Windows rather than MAC is the prevalent computer system. Gates may not have been a brainy programmer but he was a brainy entrepreneur. Jobs went the elite route, as much as saying you are something special if you have an Apple and hoi polloi if you don't. Meanwhile Gates sold the military on the idea of DOS and eventually Windows use. I suppose it's not too much to allow that a million or so Windows users rotating thru the military annually will constitute an adequate customer base. I don't reckon Jobs cares though, being as he still got rich, allowing him to remain the elitist snob he loves to be.
Margie| 12.30.09 @ 4:54PM
It's not that you're something special if you have a MAC. It's just that the MAC is something special.
Works like a charm, no viruses, faster by far, and even the simplest of simpletons can operate it.
This has not been a paid commercial. Although I'm sure it could be.
Oh, and you do get what you pay for.
Dan| 12.30.09 @ 7:13PM
"and even the simplest of simpletons can operate it": case proven.
Margie| 12.30.09 @ 11:06PM
Oh hello again Dan-O. You were the one over in the Catholic thread that was telling me nasty little things because I'm not a Catholic.
Following me around now with more insults? How "Christian" of you, little man.
davedanger| 12.30.09 @ 4:32PM
You forgot Warren Buffett. Another thing to consider is the insurance company angle. How much do these guys make selling life insurance to 70-year olds so that the family business assets stay in the family... You either pay the estate tax or the insurance company.
Gill O’Teen ✝✡| 12.30.09 @ 10:11PM
ncatty, I apologize for not getting your 11:49 AM joke. I haven’t been laughing too much of late, since Christmas Eve to be exact.
Northern Rebel, I must admit that if your 12:41PM comment was not in jest, its point totally eludes me. Maybe some references would help. If it was meant to be humorous, as I just pointed out, I haven’t been laughing too much of late.
Gill O’Teen ✝✡
gill.Oteen07041776@gmail.com
Celebrate Galt Day 1/20/2 Yo (aka 2010 A.D.)
Don’t Tread on Me!!
michigander_sandusky| 12.30.09 @ 11:10PM
I will never have a large enough of an estate to worry about estate taxes. BUT, I'm intelligent enough to understand that any estate taxes are inherently unfair. Estates represent the accumulated wealth the government has already taxed. Taxman leave it alone!!
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Oldefarte| 12.31.09 @ 1:53PM
As with MOST lawyers, he talks out of both sides of his mouth!!!!!!!!!!!!
sinanju| 12.31.09 @ 2:40PM
I had not known that this guy was an estate lawyer but I wonder how smart he could be. When I first heard of him I wondered how it was he did not look around and make professional inquiries to line up K street representation for MS and counsel his soon back in the late eighties to make sure he had a lobbying shop in D.C.
Had Bill set up his lobbying shop back twenty years ago to walk the halls of Capitol Hill with a big back of money he could have bought half of Congress and certainly outbid the Chinese in purchasing Slick Willy. He could have spent the nineties drafting plans with Bill Clinton to redesign Mt. Rushmore to include his face on it rather than being anally probed by Janet Reno. Bill Sr. should not have been such political naif like his son. He really fell down on the job.
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Northern Rebel| 1.1.10 @ 11:31PM
The tax systems have been set up in such a manner, so the wealthy remain wealthy, and it's difficult for the average American to join them.My weird friend Gill, the contest guy, didn't seem to figure this out from my last post, proving.......something.
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