Every time I heard a billionaires proclaiming their philanthropic side, and complaining they’re not being taxed enough, I always look at their comments with the utmost suspicion. Why will a group of filthy mega rich individuals want to pay more taxes? It’s not that I think there are not billionaires who care, but the few ones, who really care, don’t show up on Bloomberg or CNBC telling the whole world how “patriotic” they are.
Let’s take a look at Warren Buffett, who just recently published an editorial in the New York Times titled A Minimum Tax for the Wealthy. In here, he proposes a 30% tax increase on high incomes between $1 million and $10 million, and a 35% increase on incomes beyond those amounts. Buffet later adds that during the good old days of 1951 and 1954, marginal rates and tax rates on capital gains were very high and that “Never did anyone mention taxes as a reason to forgo an investment opportunity that I offered.”
Let’s consider Steve Stanek’s Warren Buffett Makes Money On Tax Breaks He Discredits
But wealth and income are different things. Wealth is the stocks, bonds, real estate, paintings, wine collections, businesses, and other things a person has acquired. Buffett has lots of wealth. Income is what a person gets paid for working or investments, through capital gains, dividends, and the like. Most of Buffett’s “income” is in dividends and capital gains, which are taxed less heavily than wages, and which he can choose to take or not take.
Few wage earners have the luxury of enough wealth to be able to defer income to lower their tax bite. Buffett has that luxury. Few wage earners can take capital gains or not take them at their convenience in order to control nearly their entire tax bite. Buffett can.
[…] Buffett says taxes were never mentioned as a reason to forgo an investment. I wonder, then, about the government’s many credits for alternative energy, the many states that offer film production tax credits, the many companies that go begging for tax incentives before deciding where to put their corporate headquarters, stores or factories, and the many state and local economic development entities that dangle tax incentives to lure and retain businesses.
The people in these industries, businesses and agencies seem to be telling us taxes are a big investment factor.
And this is why I’m always skeptical of billionaires, who claim they are not being taxed enough:
I wonder about Buffett himself, who pays a stable full of accountants and attorneys to provide advice on how to minimize taxes. Nothing in the tax code requires Buffett-owned businesses to take tax deductions or credits, yet they do, thus putting more wealth in Buffett’s portfolio.
Consider this Bloomberg News report from earlier this year: “NetJets Inc., the private-plane company owned by Warren Buffett’s Berkshire Hathaway Inc. was countersued by the U.S. over $366 million in taxes and penalties.
“NetJets in November sued the U.S., saying the federal government had wrongly imposed taxes, interest and penalties totaling more than $642.7 million.” That $642.7 million tax bill would have been small change to Buffett, yet he fought it, as he’s fighting nearly $1 billion of claims the IRS has against his companies.
That Forbes 400 list Buffett mentioned says he’s worth $46 billion. If Buffett were to pay the $1 billion the IRS says his Berkshire Hathaway company owes going back to 2002, that would be less than 1/40th of his wealth. Yet he fights. This is a man who says he wants people who earn $1 million a year to pay a minimum of nearly one-third in taxes.
I suspect if his idea for a minimum tax is implemented, he’ll have a way around it … for himself and those who pay for his services.
Zero Hedge has an excellent blog about these “Patriotic Millionaires, who just can’t wait to pay down the US debt”
Several months ago, an ad hoc consortium of self-proclaimed millionaires, sent a letter to Obama, Reid and Boehner, demanding that “for the fiscal health of our nation and the well-being of our fellow citizens, we ask that you increase taxes on incomes over $1,000,000.” This grass roots initiative was formed in the aftermath of Warren Buffett’s, since defunct, proposal to impose a “millionaire tax” rule. Of course, back then, as now, someone actually did the math and realized what the impact of such as tax would be in the grand scheme of the next decade of deficits, as we reported previously, and as summarized below.
One can see why not only the “Buffett Rule” but any attempt to balance the budget without collapsing government spending, would at best result in laughter, at least for those who who are still proficient with the occasional abacus.
Therefore the problem is not taxes, it’s the wasteful out of control Government spending. Zero Hedge continues:
Luckily, as all these very much informed millionaires know quite well, the US Treasury has a dedicated section, named simply pay.gov, which allows anyone: billionaires (here’s looking at you Mr. Buffett), millionaire, or even thousandaire, to make a donation which is used directly to pay down the US debt. Because in the absence of the government mandating rich people pay their “fair share” (as determined by a subcommittee of course) for now at least, there is always that other alternative: voluntary action, as per the auspices of something called free will.
And not only that, but the US Treasury also provides the general public with a running tally of just how much “Patriotic Millionaire” initiatives have given so far to paying down said debt. As in talk is cheap, signing petitions even cheaper, but putting money where your mouth is actually does go to the bottom line.
The bottom line so far in 2012? $7.7 Million.
[…] There were 165 signatories to the original “Patriotic Millionaires” list, among which Nouriel Roubini, Leo Hindery, Rick Schottenfield, and mysteriously, Whitney Tilson. One should of course add Warren Buffett: the progenitor of the grassroots movement. Thus a total of 166. In other words, assuming only these 166 people donated cash to the US Treasury in 2012 to pay down the debt (while a potential tax deal awaits), the average patriotic millionaire has donated a whopping of $46,684.45 toward paying down the US debt…And this is from the people who continue getting media time for being so “generous” they are willing to give out their money, and everyone else’s, for the common good. Or at least, of course, until one actually calculates how much of their own money they have given.
[…] But certainly hold your breath, because these same people, all of whom are very intimately aware of the details of offshore tax havens, have armies of accountants whose jobs are precisely to find creative ways to minimize their tax obligations, and, not to mention, numerous Swiss bank accounts, if not so aware of the pay.gov website, just can’t wait to fund America’s $16.3 trillion in public debt… and rising at $100 billion each month.
I think New Jersey Governor, Chris Christie, said it best: If Warren Buffett wants to pay more taxes so badly, “he should just write a check and shut up.”
Raise taxes on the rich, and the rich will find a million ways to avoid them, and profit from them. That’s why Facebook co-founder, Eduardo Saverin, renounced US citizenship, Oracle is paying dividends in advance, and some of the rich are leaving the US for good.
Raise taxes on the poor, and the economy will stagnate. Give more money to the politicians, and, unfortunately, they’ll find a good way to waste it.
Steve Stanek calls Warren Buffett a hypocrite. I wouldn’t call him a hypocrite. Buffett is one shrewd businessman. After all, the Wizard of Omaha didn’t become a billionaire because he was thinking like you and me.