Why Do Super Wealthy Support Higher Taxes?

Warren Buffet, Bill Gates father and about 43 other millionaires have sent a letter to President Obama in support of his attempt to repeal the Bush tax cuts for the wealthy. Some of them have also previously spoken out in support of reinstating the estate tax.

Why do some of the most wealthy people in the country want to pay more taxes?

Is it because they are genuinely patriotic or are they financial masochists? They argue that it's because the country needs the taxes on the super wealthy to help pay down the deficit.

But these are the same people whose wealth is mostly generated from owning stock in some of our largest corporations. And I suspect that all but a few of them have established a family foundation to own a large part of their stock. So if you have a billion dollars worth of stock do you sell it and pay taxes on the gain, or do you hold it and let the estate tax consume a large part of it -- or do you donate a few million each year to your foundation and claim an income tax deduction for that contribution? And by giving the stock to a charitable foundation, it isn't subject to the estate tax.

Another way that the super wealthy are able to generate tax free cash to pay for their multiple homes and planes is with borrowed money, that is secured by the appreciated stock in their corporation and/or by the assets they acquire.

From my perspective, there is nothing wrong with doing what the law permits. But let's not be deceived into thinking that the super millionaires who advocate higher taxes on the wealthy are going to incur any financial pain from their patriotic gesture.

Vern