Billionaire investor Warren Buffett, troubled that he ostensibly pays a lower tax rate than his secretary, champions higher taxes on the mega-rich. But he just as easily could have championed the other logical course of action: lower taxes on the likes of his secretary. So why his eagerness for tax hikes on the rich?
It could be rich guilt. The desire not to be envied. The desire to pay a type of “protection money” in order to not to be loathed by the rich-hating hordes.
First off, it often has been pointed out that Mr. Buffett’s premise is questionable. When the up-to 35 percent corporate tax is taken into account, plus the 15 percent dividends and capital gains tax, Mr. Buffett’s true tax rate likely is much higher than that of his secretary. And curiously, he never reveals how much the latter makes. But it must be an unusually highly paid secretary in order to have an effective tax rate exceeding Mr. Buffett’s claimed 17.4 percent effective rate.
But put that aside for now. What do you get when you plop a billionaire in a room full of Obama devotees? Plenty of suspicion or outright contempt, even if the billionaire gives a lot to charity. You’d be especially radioactive if you’re a billionaire who wants lower taxes.
As writer/researcher Lisa H. Warren writes, “People who have been the victims of envy and resentment will tell you that living life essentially being ‘attacked’ and resented through no fault of their own is a crummy thing. Some people will even try to hide what positive things they have in order to keep from being hated.”
Another coping mechanism, in the case of the rich, is to champion higher taxes. That buys you a lot of goodwill among those on the left. You’re still looked upon with suspicion — especially by the far left who believe wealth is theft — but your tax stance at least makes you tolerable.
One way to help ward off envy is to donate a lot to charity. But this is usually done out of public view, and/or is ineffective in assuaging the ill will of the staunchest enviers. It may even backfire; setting up a charitable foundation demonstrates one’s financial superiority. But symbolic self-flagellation through greater taxation, and advocating the flagellation of other high-achievers, cuts down on the ill will considerably.
Mr. Buffett most likely would deny that envy avoidance is motivating him. And that could be true. He probably actually believes that raising taxes on the mega-rich, even amid such an anemic economy, is good public policy.
But one thing is certain: Envy avoidance is a common motivating factor among many people in general.
John Lennon confessed that guilt from his riches largely drove his left-wing political activism. “That radicalism was phony, really, because it was out of guilt. I’ve always felt guilty that I had money, so I had to give it away or lose it,” he told a Newsweek reporter.
Billionaire and Obama supporter George Kaiser has admitted that his charitable giving stems from a sense of guilt.
Rich guilt is not necessarily synonymous with the fear of envy. Wealthy people can feel guilty in the same way that survivors of disasters have survivor guilt — i.e., there’s no rational basis for them to feel guilty, unless they got their money through theft or deceit. Other rich people may not feel guilt at all yet still feel a moral obligation to give back to society and help the less fortunate.
Some rich people not only donate their money, but also vocally support public policies that coerce money out of their fellow rich people. It is this type of person who likely is sensitive to the emotions of the lower-income groups, where feeling guilty is synonymous with the fear of envy.
Clinical psychologist Joan Lavender, who helps people cope with envy, writes that she knows many wealthy people who have chronic guilt related to their good fortune. Whether it is related to wealth, beauty or other advantages, “Women tell me that they are much more threatened by being envied than by envying others,” she reports.
Academic studies confirm that people dislike being envied. “Research on how people feel and behave when they outperform others indeed suggests that people often feel bad after outperforming others,” writes Niels van de Ven, professor at the Tilburg School of Social and Behavioral Sciences in the Netherlands. “Outperformers often feel concerned about the feelings of the persons they outperformed, about how these people will react to them, and about whether the relationship with them might suffer.”
So is Warren Buffett STTUC? That’s the acronym for what academics call Sensitivity about being the Target of a Threatening Upward Comparison. “People experience distress (become STTUC) after an outperformance when they 1) realize that they outperformed another, 2) perceive the other to be threatened by this, and 3) feel concern about this situation,” observes van de Ven.
Helmut Schoeck documents such behavior in his seminal book Envy, from primitive tribesmen who take extraordinary measures to hide their wealth from fellow villagers for fear of the “evil eye” or “mal ojo,” to professors who turn down positions at twice the normal pay for fear of being envied by the faculty.
As van de Ven points out, certain people are more prone to envy than others, especially malicious envy.
There are two main types of envy: benign envy, in which lower-performing persons admire higher-achievers and strive to become like them; and malicious envy, in which the underperformers resent the higher-achievers and wish to see them punished. Malicious enviers believe they are victims of injustice perpetrated by “the system” and/or by the high-achievers themselves. Exhibit A would be the Occupy Wall Street crowd and their supporters.
It is the malicious type of envier whom the rich worry about, and strive to appease, states van de Ven. Conducting a series of experiments, he found that his research subjects who were in a superior position were more likely to help or appease potentially maliciously envious persons than non-envious or benignly envious persons.
Envy appeasement is by no means always a negative thing. Van de Ven correctly points out that it can prompt pro-social behavior, such as donating to charitable causes.
But sometimes, what one thinks is pro-social is actually anti-social. It is one thing to give your own money to charity; it is quite another to demand that the government coerce more money out of other people. Moreover once the government gets its hands on it, much of it will be wasted. The private and nonprofit sectors are much better stewards of money.
If emotion plays no part in Mr. Buffett’s desire for tax increases — and assuming he thinks the playing field is unlevel — then he should instead forcefully push for tax decreases on lower-income people, while vigorously pushing for federal spending cuts to reduce the bloated deficit.
But if his motive for higher tax rates stems from a desire to ward off malicious enviers, then he should ignore their demands and embrace the benign enviers instead. One of the seven deadly sins, malicious envy is a deeply irresponsible emotion that should be spoken out against, not given into. An even greater sin is to urge the government to confiscate the wealth of others just because one feels guilty about one’s own wealth.
It is possible that Mr. Buffett is an exception, and doesn’t harbor the latter motives. But for many other rich folks, those motives are definitely real.
Patrick D. Chisholm is founder and creative director of Accentance, Inc. and blogs at PolicyDynamics.org.