Reason # 9--Cuz Warren Buffett Bought Me a Latte

One early Saturday morning last year I was in the Laurel Village Starbucks in San Francisco. That is one of two Starbucks that serves the Pacific Heights-Presidio Heights neighborhoods- altho most of the residents go to Peets which is much cooler. Anyway I actually like Starbucks (yea I know that makes me a latte sipping liberal) because they have great seating and wifi so I can work while I wait for my kids to return from socializing, studying or playing some sport.

Sorry- I digress---

So I was in line and the old man just in front of me was taking forever to order- he kept asking questions and stumbling all over grande and venti. He was taking so long that the barista opened the second register and as I stepped up next to the high maintenance customer he turned to me and said, "What do you usually order?" I thought he was asking for advice so I recommended soy latte. Before I fully comprehended what he was doing I got my morning java from the old guy in thick rimmed Mr Magoo glasses and a Berkshire Hathaway windbreaker. I thanked him and reassured him that it was OK to take a long time to order. He started telling how much he likes to visit SF and that he was in town to hear his son play music. We talked about kids and music and I asked him where he was from. When he said Nebraska I mentioned that my kids were born there and he asked how long I lived there so I explained that my kids are adopted and I had never lived in Nebraska. We chatted some more about this and that and then he finished his cup, shook my hand as I thanked him a second time and he left. He was witty in a non-ironic way, also sweet and gracious but I had no clue who he was until a well dressed man who had been in line behind me and was now seated next to me said, "Well that is something to go home and tell your husband." I asked, "What do you mean?" and the guy snickered, "Warren Buffett just bought you a cup of coffee."

OK- cool. Since I have lived in the Bay Area for over 20 years I have had a few encounters with the rich and famous but I usually know who they are when I run into them at a party or in the produce section of Dragers-except for the time I insulted John York but that is another story.

Anyway until that morning I thought Jimmy Buffett was more interesting than Warren. Money and the people who make piles of it just don't excite me all that much. But I opened my laptop and googled Warren, confirmed that he was my coffee buddy and started reading about his life and his thinking. Smart-honest-cool and, although I did not know this on that chilly Saturday last year, an Obama supporter.

Warren Buffett has done a lot of thinking about the economy and taxes. I think it is fair to say if Warren supports reforming the tax system, specifically how we tax estates and capital gains, that these changes are not going to wreck the economy.

Oh yeah- the economy is already wrecked------

Here is what the Oracle of Omaha had to say to Charlie Rose on 10-1-08:

"The truth is I have never had it so good in terms of taxes. I am paying the lowest tax rate I have ever paid in my life and that is crazy. If you look at the Forbes 400 they are paying a lower rate, including payroll taxes, than their secretaries are paying. "

"I think people in my situation should be paying more taxes and the rest of the country should be paying less."

"Capital gains tax is 15% now. So I sit there in my office and I make a lot of money by capital gains and I pay 15% on it and I pay no payroll tax on it. The woman comes in to empty my wastebasket and she is paying 15.3% in her payroll taxes alone. I never had it so good. I think it is terrible for people in effect to say that income from investments should be taxed at a much lower rate than income from labor. I mean we are going to spend 3. 1 trillion or something like that this year and we are going to only raise 2. 6 trillion and you have to raise it from somebody. Who are you going to get it from? Are you going to get it from me and you or are you going to get it from the people who drive the taxi?


"Everybody is against paying taxes and I feel the same way but if you want a government that is going to do the things we ask our government to do you have to get it from somebody. Over the years, particularly the past 6 or 8 years, they have taken less and less from guys like me. Everybody like to talk about how the top 1% pays this % in the income tax but the income tax--- we'll say is 1.3 trillion but the payroll tax is 900 billion and that 900 billion does not come from me. I pay on the first 100K but I don't pay any payroll tax on everything above that. That payroll tax comes from the people in my office.-----they don't take that from me. "


Here is a link to Warren testifying to Congress about the estate tax.


Simply put increasing capital gains tax is fair and necessary. Our current tax system is regressive- because of the structure of payroll taxes and capital gains people who make less actually pay a higher %age of their income than do the super rich.

Thanks Warren.