By Katherine Chiglinsky
(Bloomberg) --Charles Munger, the longtime business partner of Warren Buffett, is skeptical of recent Democratic proposals to tax the wealthiest Americans.
“A lot of civilizations work very well with low taxes on the rich,” Munger, 95, said in an interview Thursday after the annual shareholder meeting in Los Angeles of the Daily Journal Corp., where he serves as chairman. “So it’s a very complicated subject” and there’s a lack of evidence that one system is better than another.
Democratic policy makers including Senator Elizabeth Warren and Representative Alexandria Ocasio-Cortez have advocated raising taxes on the rich. Munger, a Berkshire Hathaway Inc. vice chairman who owned more than $1.4 billion in company stock as of September, argued there’s a “lot of ignorance” around the tax issue. He said politicians oversimplify the problem, and their infighting doesn’t help the country overall.
“Hatred blinds reason and both sides are blinding reason,” Munger said. “How can it possibly be good?”
He also criticized states including Connecticut and New York for “driving out all the rich people” after public backlash pushed Amazon.com Inc. to cancel plans for another headquarters in New York. The wealthy are typically older and don’t burden public services such as schools or prisons, while keeping hospitals busy, Munger said in a CNBC interview aired Friday.
“Who wouldn’t want rich people?” Munger said.
Here are some of Munger’s comments on other subjects in the interview with Bloomberg:
Jain and Abel
The promotion of Ajit Jain and Greg Abel to vice chairmen at Berkshire has made the board better, Munger said. Jain is a “never-ending source of talent” and Abel does some things better than Buffett himself, Munger said.
Sears
Sears Holdings Corp., which will exit bankruptcy after its $5.2 billion acquisition by Eddie Lampert’s ESL Investments, proved that some tasks are too hard, according to Munger.
“If you take on the job that’s impossible to do, you’re going fail at it,” he said. “That’s the lesson.”
Investment Environment
Berkshire loosened its share-buyback policy last year and repurchased $928 million of stock in the third quarter. Munger said the company tweaked the policy due to rising levels of cash and the lack of opportunities to deploy it.
“We’ve had a long drought in terms of buying a big company and we don’t like it,” Munger said. “But if we have to go through a much longer drought, we can handle it.”
He cautioned that there might not be a “wonderful, quick end to the investment difficulties of the current age.”
Health Care
Berkshire teamed up with JPMorgan Chase & Co. and Amazon.com Inc. for a health-care venture, a task that Munger says is probably the hardest one on the agenda.
“I don’t know how it’ll work out,” he said. “There’s a lot of vested interests in that field who are probably from the status quo and it’s not going to be easy fixing anything.”
To contact the reporter on this story: Katherine Chiglinsky in New York at [email protected] To contact the editors responsible for this story: Michael J. Moore at [email protected] Steve Dickson
