Scott Galloway channels Warren Buffett; outlines major U.S. plan | Official Website of Louis Velazquez, entrepreneur, finance guy and tech innovator

There’s a story that Warren Buffett once created a chart detailing the tax burdens of the people working in his office.

He had asked each employee to calculate a fraction: The numerator was the amount they paid in federal income tax plus payroll taxes for Social Security and Medicare, and the denominator was their taxable income. Most of those employees, it is told, were secretaries and clerical staff, though not exclusively.

What the exercise revealed was striking. Despite earning vast sums through dividends and capital gains, Buffett’s own tax fraction was significantly lower than that of his staff — lower than the secretaries, the clerks, and everyone else in the office.

Buffett pointed out that he wasn’t using elaborate tax shelters or loopholes. He simply paid what the Internal Revenue Code required. “How can this be fair?” he is said to have asked. “How can this be right?”

Writing about this account in the New York Times in 2006, Ben Stein explained that he once mentioned to Buffett that whenever this tax payment discrepancy was raised, the person bringing it up was accused of class warfare.

“There’s class warfare, all right,” Buffett reportedly replied, “But it’s my class, the rich class, that’s making war, and we’re winning.”

Scott Galloway explains generational wealth problem

New York University professor and bestselling author Scott Galloway argues that not much has changed in this regard since then — but he does add a generational component to the discussion.

In essence, wealthy individuals contribute a large share of the nation’s total tax revenue, but relative to their income, they pay far less than they could reasonably afford.

And in Galloway’s perspective, older Americans are increasingly well off, while younger Americans toil away with little reward.

“To paraphrase Warren Buffett,” Galloway wrote in the Nov. 14 edition of his “No Mercy / No Malice” newsletter, “there’s a generational war in America, and my generation is winning.”

“Budgets illuminate national priorities and values,” Galloway wrote. “Our three largest expenditures — Social Security, Medicare, and the interest on the debt — are nearly half of the federal budget, mostly benefiting the 18% of Americans who are over 65.”

“The Department of Education and SNAP — spending that overwhelmingly benefits the 30% of Americans under 25 — register 4% and 1.5% of the budget, respectively,” he added.

Galloway proposes national service for young people

Citing a Gallup poll that found younger generations are less proud of being American than older Americans, Galloway proposes national service as a way to address the problem.

“For my boys’ generation, their fellow citizens are strangers,” he wrote. “Our connective tissue is fraying.”

Galloway suggests that enlisting in the military isn’t the only way young Americans can serve their country and develop a sense of pride in their community and nation.

“The U.S. has a long history of civilian national service programs,” he wrote. “While the mission of each program varies, Congress has historically identified two goals for national service: meeting the needs of communities and developing the capacities and character of participants.”

“Republican Senator Bill Cassidy has co-sponsored bills to strengthen AmeriCorps and provide tax relief to volunteers,” Galloway added. “Republican Senator Todd Young co-sponsored the Unity through Service Act. In 2016 candidate Trump said there was ‘something beautiful’ about national service. On that point, we agree.”

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Galloway believes that underinvestment in these programs is a mistake.

“Higher levels of civic responsibility, voting, volunteering, employment, respect for diversity, and overall life skills such as decision making and time management are all associated with AmeriCorps participation,” a National Institutes of Health report concluded.

“If we want our youth to feel invested in their country, then America needs to invest in its youth,” Galloway wrote.

Scott Galloway’s arguments for national service

National service provides benefits to all participants.
The benefits may be especially significant for boys, who have experienced notable setbacks in recent years.
Boys often develop physically faster than they mature intellectually or emotionally.
A structured one- or two-year period after high school could allow boys to mature without immediate academic or career pressures.
Such a period could also offer some boys a second chance to succeed.
A Brookings report estimated that expanding national service to 600,000 young people would cost $19 billion annually.
Scaling national service to all 3.9 million members of the high school class of 2025 would raise the cost to $123 billion.
This figure represents about 17% of the nearly $700 billion annual tax gap between taxes owed and collected.
A 2020 analysis of AmeriCorps programs projected a 17-fold return on investment from expanded service opportunities.