The Secret Diary of Warren Buffett's Secretary

Dear Diary,

Wow OMG!! I was on national TV! I got to sit with the First Lady! Woo hoo! My girlfriends were soooo jealous when I showed them all the pictures I got with the Obamas.

When Warren first brought up this whole tax fairness thing, I had no idea how far it would go. Out of the blue, he called me into his office and explained he was working on a “special project” with the White House.  Pretty cool, I thought.

Warren wanted to talk publicly about his taxes and mine and wanted to know if I had a problem with that. I shrugged and said sure, whatever. I mean, he’s my boss and all, so I can’t really say no, you know?

So then he’s explaining about this super big oil deal in North Dakota. Warren bought the train to ship oil out of there and is making beaucoup bucks (as usual) because he has no competition. But some Candians want to put in a big pipeline to get the oil out of there. Then he’s all blah, blah, blah, numbers, numbers, numbers –Yawn- we lose money.

So the “special project” is we help the President get re-elected, and the President promises to keep the Canadians out of the deal. Sweeeeet! Warren’s smart like that.

But I asked what that has to do with our taxes.

“Well,” he said, “it isn’t fair that you pay less taxes than me.”

I was stunned.  “Wait a minute,” I said. “I pay more taxes than you? You’re one of the richest dudes in the world. How come you’re not paying more than me?”

Warren goes, “I am paying more – millions and millions of dollars compared to your thousands. But I’m paying a lower rate than you overall because of capital gains.”

“Huh?”

“If things were fair I’d pay even more millions in taxes.”

“Oh, is that like the flat tax thing?”

“Oh no no no. We don’t want that. That’s not fair either.”

I was confused. “But doesn’t that make everyone pay the same rate? Wouldn’t that be fairest?”

“No, poor people can’t afford to pay taxes. Fairness means taking money from rich guys like me and giving it to poor people like you.”

Cool! Warren’s plenty rich and he won’t miss a few million dollars. I started thinking about all the things I could buy – an iPad would be sweet!

“Cool! How much would I get?”

“Well, that’s a tough question,” he said before explaining why it was all so complicated. I nodded along until he finished talking. My eyes glaze over so much when he talks like that. I tried really hard not to yawn. I think he answered my question but I didn’t get it.  I didn’t want to seem stupid by asking him to explain it again. Still, if Warren’s paying more taxes then he’d be paying out huge amounts. An iPad? Maybe I could get a Corvette! Or take a big vacation. I wondered if it would make me rich like Warren.

I looked him square in the eye. “Are you suuurre you won’t mind paying more taxes?” I sure as hell would.

“Oh no! Rich people like me have tons of money sitting around. We just sip martinis on our yachts while ordinary people are out of work. That’s just unfair.”

I nodded. I wanted a yacht. How unfair that only a few people had yachts. “Yeah! Everyone should have a yacht – that would be fair!”

“Right!” he said. “And that’s where our ‘special project’ comes in.”

I was confused.

“See the President is in real trouble for this election. The economy is a big problem. People are mad at the President because of it.”

I nodded.

“So he wants to deflect that anger. He wants to get people mad at someone else.”

“Who?”

“Millionaires and billionaires like me. See Obama wants to say that the problem with the economy is that people like me aren’t paying enough taxes.”

“Oh.”

“Saying it that way doesn’t matter to most people. But tell them that it isn’t fair somebody has a lot of money while you’re out of work, and that fires ‘em up!”

“But can’t people just get a job and make money?”

“Sure, but not everyone wants to.  Lots of people – let’s call them the President’s main audience – don’t think it’s fair that they have to work for a living. They’d rather just get someone else to give them money.”

“Like welfare?”

“Sure, but that’s small potatoes. Some people have actual jobs but want lots of more money without working really hard. Those are the people Obama wants to vote for him.”

“So how does he get them to do that?”

“He’s going to campaign on the idea that everyone is entitled to more money. Well, except the rich, who aren’t entitled to anything.”

“Why not?”

“Because we’re rich.”

I was confused again.

“If guys like me work hard and save, we can get rich. But then what do we need to President for? We don’t need a handout.”

“But then why do you need this ‘special project’?”

“Oh, but that’s totally different. It’s not a handout, it’s a business deal.”

I didn’t get that.

“I help the President, he helps me. I help him get elected, he keeps competitors out of the way.”

“Oh, I see,” I said, but I didn’t get it. I don’t get a lot of things Warren said.

“So this is where you and I come in. See, some people will look at the President’s talk about the rich paying their ‘fair share’ and feel like there’s something wrong with it. They won’t quite see it clearly. It’ll be more of a sense that something is wrong. This is where I come in. If a rich guy, a successful businessman, says it’s ok, and it’s the right thing to do, and will make a difference to the economy, then people will believe it.”

“Oh. You do have a great reputation. People respect your opinions,” I said, but didn’t add that I didn’t understand them a lot of the time.

“Exactly! They’ll feel reassured. They’ll say to themselves: ‘Well, I think there’s something fishy about it, but if Warren Buffett says it makes business sense for the country, then it must be true. He’s made billions so he knows what he’s thinking about.’”

I nodded.

“And they may wonder about whether it’s fair or the right thing to do. Well, if they think I have nothing to gain by doing it, and end up giving up lots of money in higher taxes, then they must agree that I’m doing a very moral thing.”

“Ok.”

“So if a rich businessman like me endorses Obama’s plan, then people will think there’s no ground to object. It’s like both sides – government and business – agree on this.”

“Oh, I get it! When everyone agrees about something, there won’t be lots of questions. People will just accept it as the right thing to do.”

“Exactly! So this is why we’re going to talk about your taxes and mine. People will see that I pay a lower rate than you do, and agree to raise taxes on the rich.”

“But… Warren, why not just lower my rate to yours? That would make things fair, right? And I’d get to keep more money that I earned and you’d keep yours.”

“Well, that’s just naïve,” he said. I felt small. Warren was so smart. I didn’t understand this but I trust Warren and didn’t want to upset him.

“If we all kept the money we earned, the President couldn’t hand out money to other people. In the real world, he has to hand out favors to people to get their votes. Everyone does it. That’s just the way it is.”

“So taking money from one group of people is fair, and letting everyone keep their own money is unfair?”

“Now you get it!”

I didn’t but I went along anyway. It didn’t make sense to me. I guess I just wasn’t smart enough for that. It takes a lot of smarts to make sense out of this.

And boy is Warren smart!