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Warren Buffett has been in the news several times recently talking about how he believes that the fact that his secretary pays a higher effective tax rate than himself is unfair.  He takes this observation one step further and states that he and his wealthy friends should pay more in taxes.   While I agree that the difference between his tax rate and that of his employees is indeed unfair, the conservative/libertarian in me would argue that his employees should get a lower rate vice him getting a higher rate.  Clearly we differ philosophically, but perhaps we can agree on another point – the need for jobs vice higher tax rates on the wealthy.

Mr. Buffett,

Instead of dumping ever more of your wealth into the bottomless pit of bureaucratic inefficiency that is Washington DC, why don’t you put it where it can actually do some good?  I propose that instead of volunteering to pay a higher tax rate, you instead divert a small part of your fortune into job creation.  Our good friends in DC do not really believe that they have a spending problem, they think they have a revenue problem.  Yes, many like to talk a good game but in the end nobody will ever agree to any cuts meaningful enough to put a dent in the staggering debt we have accumulated.  Even if we get as serious as we can with five hundred or so bickering politicians at the wheel, it will still be decades before we reduce to debt to a more reasonable portion of GDP.  So maybe those of us with the means and the know-how should get serious about creating jobs and restoring confidence in this economy.  Once that ball starts rolling, it should be hard to stop (as long as those five hundred obstacles in DC stay out of the way).

So here is my challenge to you.  Your net worth is about $65 billion give or take a few dollars depending on which day we look.  How about you take $1 billion of that and establish a fund to provide grants to small business start ups?  Grants would be awarded based on a thorough review of business proposals and assistance provided to get the business through that critical first year.   A committee would monitor each company and help out where needed.  Rules could be put in place to prevent the business owners from paying themselves too high of a salary for a specified period of time, the point of this is to hire people and re-kindle the economic fires.   If you were to award say, 1,000 grants of $1 million each, and each start up employed an average of 15 people in the first year, then you will have directly created 15,000 new jobs!  Now imagine that your uber wealthy friends follow your example, its a job creation bonanza!  We know that not each of these businesses will last beyond that first year but a good percentage will.   Assuming an average salary of $30,000/yr, those 15,000 jobs will spend about $450 million in the economy!  If a few of your friends follow suit, then we might get a few billion or so flowing into the maket place.  This creates more demand for other goods and services and thus more jobs get created.

I don’t intend to fully flesh this out in this brief post.  I am sure some of my numbers are off a bit.  The fact that the plan needs polish does not make it a bad plan.  The great thing about blogs is that people can leave comments and I know that this will generate quite a few.  Perhaps by the end of the process we will have a more workable proposal but at least this is a start.  I also know that $1 billion sounds like a lot of money and indeed it is for most of us.  For you though, this is less than 2% of your net worth.  I hardly think you will miss it too much; Ted Turner gave $1 billion to the United Nations and he was only worth $3 billion at the time.  Personally, I think the $1 billion I am asking you to put into this proposal will do more good, but I am sure Ted sleeps well at night knowing his money is being well spent at the UN.  I am tired of hearing the pundits calling on DC to put out a “jobs plan” or to pass a “jobs bill”.  I am sure that you yourself will admit that politicians cannot create jobs.  Lets stop asking them to do what they cannot do and start taking care of each other instead!

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