Random Thought of the Day
Among the provisions of Elizabeth Warren’s Wealth Tax proposal is an annual tax on charities who don’t distribute their accumulated assets. On the surface, forcing charities into paying their benefits immediately to recipients sounds reasonable; however, sometimes the assets are held for good reasons; for example, to pay off projected benefits in the future (such as scholarships), and more importantly, to invest and grow the assets so there is more money to give. The perfect examples are Bill Gates and Warren Buffett, who have given over $100 billions to charity that will be distributed over decades. Warren Buffett has an estimated net worth of $67 billion and would be richest man in the world if not for his charitable giving. However, a little known fact is that he didn’t become a millionaire until his 30s and didn’t accumulate $1 billion until the age of 56. Suppose he had given everything away his million in his 30s. A $1 million donation would be pretty awesome, right? If he had done that, he wouldn’t have been able to invest & grow the money, which will result in his personally giving over $100 billion. The same goes for Bill Gates. This further illustrates why capitalism always beats socialism: citizens are simply better at allocating their own money than bureaucrats in D.C.; it also illustrates the opportunity cost when politicians start screaming about stealing the wealth of millionaires and billionaires.
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