Posted on 11/29/2012 4:15:21 AM PST by Kaslin
Once again, billionaire investor Warren Buffett urges his fellow high-on-the-hoggers to pay more in taxes. "Only in Grover Norquist's imagination," says Buffett, do taxes make much of a difference in how people invest. "So let's forget about the rich and ultra-rich going on strike and stuffing their ample funds under their mattresses if -- gasp -- capital gains rates and ordinary income rates are increased. The ultra-rich, including me, will forever pursue investment opportunities. ...
"We need Congress, right now, to enact a minimum tax on high incomes. I would suggest 30 percent of taxable income between $1 million and $10 million, and 35 percent on amounts above that."
So taxes, says Buffett, do not deter the ultra-rich "from pursuing investment opportunities." Really?
The Weekly Standard's Adam J. White writes about how tax considerations affect investment decisions by Buffett despite his assertion that tax considerations don't much matter when it comes to investment decisions. White gives examples from Buffett's biography "The Snowball," written by Alice Schroeder:
"Early in his career, Buffett invested heavily -- almost one-third of his early fund's capital -- in Sanborn Map, a company that mapped utility lines and such. ... Buffett amassed more and more stock, and with control of the company finally in hand, he pressed the board of directors to split the company in two. ...
"Finally, the board capitulated. But with victory finally at hand, Buffett nearly scuttled the deal because of ... taxes. As Schroeder recounts, quoting Buffett, one director proposed that the company just cleanly break the company, despite the tax consequences -- 'let's just swallow the tax,' he suggested. To which Buffett replied (as he recounted to Schroeder): 'And I said, 'Wait a minute. Let's -- 'Let's' is a contraction. It means 'let us.' But who is this us? If everyone around the table wants to do it per capita, that's fine, but if you want to do it in a ratio of shares owned, and you get 10 shares' worth of tax and I get 24,000 shares' worth, forget it. ...'
"Later in the book, (Schroeder) recounts how Buffett chose to structure his investments under Berkshire Hathaway's corporate umbrella, rather than as part of his hedge fund's general portfolio, precisely because of the tax advantages (emphasis added)."
White quotes Buffett's 1986 letter to his investors, where Buffett warned about the consequences of the1986 tax reform act: "If Berkshire, for example, were to be liquidated -- which it most certainly won't be -- shareholders would, under the new law, receive far less from the sales of our properties than they would have if the properties had been sold in the past, assuming identical prices in each sale. Though this outcome is theoretical in our case, the change in the law will very materially affect many companies. Therefore, it also affects our evaluations of prospective investments. ... My impression is that this important change in the law has not yet been fully comprehended by either investors or managers (emphasis added)."
Taxes matter -- to Buffett.
Harvard's Economic Department chairman, Greg Mankiw, writes that "Mr. Buffett never mentions doing anything to eliminate the tax-avoidance strategies that he uses most aggressively. In particular:
"1. His company, Berkshire Hathaway, never pays a dividend but instead retains all earnings. So the return on this investment is entirely in the form of capital gains. By not paying dividends, he saves his investors (including himself) from having to immediately pay income tax on this income.
"2. Mr. Buffett is a long-term investor, so he rarely sells and realizes a capital gain. His unrealized capital gains are untaxed.
"3. He is giving away much of his wealth to charity. He gets a deduction at the full market value of the stock he donates, most of which is unrealized (and therefore untaxed) capital gains.
"4. When he dies, his heirs will get a stepped-up basis. The income tax will never collect any revenue from the substantial unrealized capital gains he has been accumulating.
"To be sure, there are pros and cons of changing the provisions of the tax code of which Mr. Buffett takes advantage. Tax policy always involves difficult tradeoffs. But it seems odd to me that whenever Mr. Buffett talks about taxing the rich more, the 'loopholes' that he uses never seem to enter into the conversation."
Guess who else thinks Buffett should pay more in taxes: the IRS.
Buffett's Berkshire Hathaway has been fighting the IRS over the $1 billion in taxes the government claims it is owed, dating as far back as 2002. Last year, one of Berkshire Hathaway's companies, NetJets, sued the IRS, demanding that the feds return $642.7 million in already paid taxes. And this year, the IRS sued NetJets, claiming it is owed $366.3 million in unpaid taxes.
Meanwhile, scientists at the National Institutes of Health are working feverishly to develop a cure, vaccine or treatment for this disease -- that appears to afflict guilty/super-wealthy liberals -- known in medical circles as "Buffettitis." It's early, and one risks being premature. But NIH just may have produced a workable solution: "Mr. Buffett, whip out your checkbook, and cut the U.S. Treasury a check. Given the state of the economy, let's hope it doesn't bounce."
You beat me to it. I was just getting ready to post this. Good job!
Yeah, and about every other day Warren Buffett is seen on CNBC where they treat his ass like a Slurpy.
let him set an example by opening his own checkbook and writing a large check to the US government. then let him challenge all his rich friends to do the same.
LLS
Dear Mr. Buffett:
Shuffett.
After a month or so it will be obvious nothing changed except the dims won't be able to use their favorite mantra that the rich must pay their fair share. I suspect around March of 2013 they will redefine the rich as anyone making $75,000 or more.
Thanks
Excellent article from a good source
I suspect the marxist democrats are moving toward defining “the rich” as anyone with an IRA or 401K ...
obviously people who set money aside with their own planning have more than they “need” and can “pay a little more”, two of obama’s favorite populist lines
Warrrrrrrrren just wansta make sure that NOBODY ELSE get rich.
Warrrrrrrrren just wansta make sure that NOBODY ELSE get rich.
!
So Warren is just a fantastic hypocrite, huh? A fantastically wealthy hypocrite, but a hypocrite nonetheless.
What liberal isn’t a hypocrite?
He’s a liberal and all liberals lie. It comes natural to them
He’s a liberal and all liberals lie. It comes natural to them
Yes, I was redundant... I will try harder! ;-)
LLS
The government should follow their own guidelines against singling out any group, whether by race, religion, ethnicity, national origin, gender, sexual orientation, age, health or financial status, for special treatment unless they are truly unable to participate, such as the very old, the very young or the infirm.
Everyone who is able should participate pulling the wagon or walking along with it. Man up. Don't make us carry your burden for you.
Only a very small number of us truly are unable and we owe them a place in the wagon. Anyone faking and taking their place in the wagon deserves shame and scorn.
The truth is, we hurt them and ourselves by stealing from one group to give to them what they are able to earn for themselves.
Warren Buffett is a domestic terrorist.
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