Buffett and The Federal Estate Tax

Last week on CNBC, I heard a knowlegeable Buffett observer say that Buffett's position on the Federal Estate Tax was hypocritical (he supports its retention) because of his estate's future tax savings resulting from his $30 plus billion gift to the Bill and Melinda Gates Foundation.

I don't believe the reduction of his estate's Federal Estate Tax liability was a principal motivating factor in his decision. Rather, I believe he determined that the billions of dollars otherwise going to the U.S. Treasury would be much more wisely spent by the Gates Foundation.

In the concluding paragraph in his June 26, 2006 gift letter to Bill and Melinda, he writes:

"Working through the Foundation, both of you have applied truly unusual intelligence, energy and heart to improving the lives of millions of fellow humans who have not been as lucky as the three of us. You have done this without regard to color, gender, religion or geography. I am delighted to add to the resources with which you carry on this work."

Very simply, I believe Buffett chose the Gates Foundation, rather than Congress, to spend these monies.....another example of his extraordinary capital allocation skills.