THIS IS THE LIVE REAL-TIME BLOG COVERAGE OF WARREN BUFFETT'S APPEARANCE BEFORE THE SENATE FINANCE COMMITTEE FOR A HEARING ON ESTATE TAXES.
9:47 AM: Buffett has been sitting at the witness table for about 45 minutes. About 15 people are now seated in the audience. Another 20 or so press are here.
9:52 AM: Room is really filling up now. Photographers taking pictures of Buffett waiting at the witness table.
9:57 AM: Must be about 100 people now in seats for the public, 25 press. Buffett posing for a picture with Senator Baucus. Big laugh from people in the vicinity but I couldn't hear what they said.
10:01 AM: Hearing has begun. Chairman Baucus making opening statement. Says he favors repeal but in any case estate tax needs to be simpler and more predictable.
10:05 AM: Vice Chairman Grassley making opening statement. "Death shouldn't be a taxable event."
10:09 AM: Grassley says he wants total repeal of estate tax but is willing to compromise.
10:10 AM: Buffett begins his comments. He says he will limit his comments to three points. First, use of phrase "death tax" is Orwellian and unfair.
10:12 AM: Buffett says very few people pay the estate tax. Harder and harder to make the Forbes 400 billionaires list. Tax law changes have benefited the very wealthy a great deal.
10:14 AM: Dynastic wealth is on the rise.
10:14 AM: Buffett asks where money now collected from estate tax (24 billion) will come from if not from the very rich.
10:15 AM: Buffett says 23 million lower-income households should get $1000 tax credit.
10:15 AM: Buffett: Shifting tax burden away from the very wealthy is not the way to go.
10:16 AM: Buffett has ended his opening statement. Repeated much of what he's been saying both on campaign trial for Hillary Clinton and Barack Obama and in his big interview with NBC's Tom Brokaw.
10:19 AM: Financial planner Conrad Teitell from Connecticut now making his statement. Says as law currently stands there is a great deal of uncertainty for those trying to plan ahead. Recounts how he plays Monopoly with his family at Thanksgiving. To make game more interesting they change rules so that value of the play money changes over time, just as estate tax law exemptions change over time.
10:23 AM: Rancher Dean Rhoads of Tuscarora, Nevasa begins his statement. Says he is here representing small business owners.
10:26 AM: Rhoads talking about how estate taxes are putting heavy financial burden on his family, making it hard to pay for capital improvements. Uncertainty over changing exemption levels also making it hard to plan. "Ranching is a tough business" and unfair tax burden of estate taxes makes him pessimistic about the future.
10:29 AM: Eugene Sukup, Chairman of the Board of Sukup Manufacturing Company in Sheffield, Iowa begins his statement. Says he has a strong business based on a single idea he had years ago. Strength of company comes from its employees.
10:30 AM: Sukup says he believes in giving back to the community and his family has a foundation that makes charitable contributions.
10:32 AM: Sukup says one of greatest threat to his business is the estate tax. If he and his wife were to die now, his sons would have no choice but to sell the business to pay the estate taxes. Changing exemptions make it hard to plan.
10:33 AM: Senator Baucus asks Buffett how Finance Committee should go about restructuring nation's tax code.
10:35 AM: Buffett: "My druthers": a very aggressive progressive consumption tax. That makes the most sense. "But I don't know how you get there from here."
10:36 AM: Buffett: Family businesses have tough problems, but no tougher than having a $20,000/year income and having a big chunk taken out in income and payroll taxes.
10:38 AM: Buffett: "In the tradition of America to have freedom of opportunity. The resources of America should not be passed along in a dynasty of wealth."
10:39 AM: Buffett: Need to do more for the nation's poor and take more out of the "hide of people like me."
10:40 AM: Grassley asks Sukup question about having to sell the business due to estate taxes despite taking advantage of available estate planning tools. Sukup says might have to be a fire sale and that a big competitor, like Buffett, might buy it.
10:43 AM: After Grassley implied Buffett might shut down or move the Sukup business should he buy it in a fire sale, Buffett points out that he hasn't changed the operations at all at the competitor to Sikup's he bought a few years ago.
10:45 AM: Buffett: Looked at spending of 30 largest foundations, 27 of them spend exactly 5%, due to the way the tax code is written. He calls that "absurd."
10:49 AM: Buffett says he does not favor a flat tax. Points out that payroll tax is in effect a flat tax after income reaches a certain level.
10:53 AM: Video clip of excerpt from Buffett's opening testimony is now in and available for viewing. (Below)
10:55 AM: Senators and panel members sparring over estate tax.
11:00 AM: Sukup questioned again about how estate tax could imperil his family's ability to keep their business. He urges "Repeal the death tax."
11:02 AM: Buffett says he does not favor going back to pre-2001 estate tax rates. Those, he says, were too high.
11:07 AM: Questions focusing on whether estate tax makes family businesses vulnerable to takeovers by large Wall Street firms and big competitors.
11:11 AM: Senator Rockefeller now countering with statement about need for fairness in American tax code, wealthy need to pay their share. Bush tax cuts have mostly helped the very rich. He also agues calling the tax a "death tax" is inaccurate because it implies everyone who dies gets taxed. Very few numbers of people would benefit from elimination of estate tax but a very large amount of government revenue would be lost.
11:15 AM: Buffett is asked how the estate tax should be reformed. Buffett says exemption should be at $4 million and that estate tax rate should slope higher at larger amounts. As far as passing on wealth dynasties, rate should be higher than 45%.
11:20 AM: Buffett asked how big is the issue of uncertainty in estate tax. Buffett says it is enormous, shouldn't have to guess when you are going to die.
11:22 AM: Buffett suggests estate taxes be deferred until a business leaves the family, rather than be imposed at the death of each generation.
11:24 AM: Senator Lincoln asks financial planner on panel if exemption was at a reasonable amount, say $4 million, wouldn't it make all the complex planning and strategies unncessary. Teitell agrees.
11:27 AM: Hearing room still packed. No one has left. Most people listening intently, some taking notes.
11:29 AM: Washington State Senator Cantwell says especially interested in how estate taxes affects family-owned businsses. Buffett replies that estate taxes on large successful businesses are tough but not debilitating. "You don't complain too much when you win the lottery." When you have a business that's bringing in income, thus justifying a large overall value, the estate taxes are affordable.
11:33 AM: Buffett again argues that there's money left over for family-owned businesses that are earning money, despite the estate tax. They may not want to pay the taxes, but they can, far more easily than can the average American. In effect, having to pay estate taxes is a good problem to have.
11:35 AM: Chairman Baucus asks estate tax opponents what they can live with, noting that very improbably estate tax will be repealed entirely. Rancher Rhoads says most families in his state could live with $4 to $6M exemption, indexed for inflation.
11:37 AM: Sukup disputes Buffett's argument that there would be enough money to pay estate taxes on his family business, which he values at $75 million. He says his sons would have to either sell or borrow.
11:42 AM: Senator Kyl suggests life insurance industry benefits by selling policies designed to help shield people from estate taxes. Buffett points out that none of his companies directly sell life insurance. Kyl argues estate tax should be reformed (not enough votes to repeal" and again mentions the $4 million exemption level several have been throwing around this morning.
11:47 AM: Sukup, from standpoint of family business owners, argues exemption should be much higher and estate tax rate should be lower, say 15%. Sukup agrees with questioner that estate tax poses the biggest threat of all the potential tax changes (income, capital gains) that could endanger the continuation of his business.
11:56 AM: Video clip of Buffett's entire opening statement is now available.
12:00 PM: Buffett says he would have no objection if estate taxes were deferred with interest until a family sells a business, so that families would not be forced into selling or borrowing to pay the taxes upon the death of a family member.
12:03 PM: The hearing is over.
12:12 PM: After the hearing Buffett spoke briefly with reporters. He limited his comments to the estate tax, declining to answer anything on the markets or credit crunch. I asked him if he thought the estate tax exemption would wind up around the $4 million figure that's been mentioned. He said he had no idea. I'll be bringing the videotape back to CNBC's Washington Bureau so I can post it here on WBW.
12:15 PM: After his very brief chat with reporters, Buffett walked out of the hearing room and down the hallway to the elevators. He was trailed the whole way by a couple of TV cameras and still photographers. While waiting for the elevator, he chatted with one of the photographers about how it seems they always have to take a lot of pictures of him to get a good shot. At one point, it looked like the elevator had arrived, and he said good-bye to those standing around taking pictures. When the elevators doors did not open right away, he joked, "It seems the elevators here don't stop for billionaires." Finally the door opened, Buffett got on and started heading home to Omaha.
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