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GREG MANKIW: Warren Buffett Doesn't Tell You About How He's A Master Of Tax Avoidance
Business Insider ^ | 11/26/2012 | Joe Weisenthal

Posted on 11/26/2012 11:20:51 AM PST by SeekAndFind

In a NYT Op-Ed today, Warren Buffett argued that the rich should pay a certain minimum tax, and he explained to activist Grover Norquist that it's preposterous to think that businessmen would forgo profitable deals merely because the rate of tax on the profits would go up.

But why do people listen to Buffett on taxes?

Basically because he's a rich, successful guy (which is why a lot of people are listened to on a lot of subjects).

To that end, economist and former Romney advisor Greg Mankiw has a short post talking about Buffett as a master of "tax avoidance," wherein he lists four things Buffett does to avoid paying taxes.

* Berkshire never pays a dividend (so the jump in dividend tax hikes don't effect him).

* Berkshire only trades long-term (so short-term cap gains, which are taxed at income tax rates don't effect him).

* He's giving away most of his money away to charity.

* His children won't pay income taxes on any assets that are bequeathed to them, so an income tax hike doesn't affect him.

None of these are wrong or illegal or anything. And giving your money away to charity is admirable. So the point isn't that Buffett is doing anything wrong, but that he's advocating policies which will have very little effect on him. So if we're going to listen to him because of who he is, it's not preposterous to note how little of an effect rule changes would have on him.

Other folks, in the past, have charged that Buffett specifically benefits from the tax proposals he backs.

(Excerpt) Read more at businessinsider.com ...


TOPICS: Business/Economy; Culture/Society; Front Page News; Government; News/Current Events
KEYWORDS: buffett; classwarfare; economics; economists; mankiw; taxavoidance; taxes; warrenbuffett

1 posted on 11/26/2012 11:20:59 AM PST by SeekAndFind
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To: SeekAndFind

SOURCE: http://www.examiner.com/article/buffet-calls-for-taxing-the-rich-while-he-sues-irs-to-avoid-paying-taxes

Buffet calls for taxing the rich while he sues IRS to avoid paying taxes

EXCERPT:

Billionaire Warren Buffett knows how to separate his social activism from his business management. Over the past several months, as advisor to President Obama, Buffett has been calling for additional taxes on the rich, and telling Americans he also would like to pay more to the government.

However, on November 19th, the true side of Warren Buffett, that of the business mogul, came to light as he is now suing the IRS to avoid paying more than $600 million in taxes levied upon Berkshire subsidiary NetJets.

Warren Buffett, who has been running around complaining that the government should “stop coddling the super-rich” and should raise taxes, is reportedly suing the IRS to avoid $643 million in taxes that the government says Berkshire Hathaway’s NetJets subsidiary owes the government for failing to collect ticket taxes from NetJets customers (who include Mr. Buffett himself). The suit against the IRS is filed by NetJets Large Aircraft Inc., not by Mr. Buffett himself, but Mr. Buffett is CEO of NetJet parent Berkshire and its largest individual shareholder.

They say that actions speak louder than words, and if Warren Buffett’s actions regarding taxation of himself, and his company are any indication, then his words prove him a hypocrite. Just as another Obama administration advisor Jeffrey Immelt worked the system to ensure GE paid no taxes in 2010, the rich play by different taxation laws that contridict the notion that there is a system in place to tax them, or the corporations they run, accordingly to their true earnings.


2 posted on 11/26/2012 11:23:48 AM PST by SeekAndFind
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To: SeekAndFind

Buffett is a fraud. A tool and buffoon used by the Communist democRAT Party to stick it to the American people.


3 posted on 11/26/2012 11:25:01 AM PST by FlingWingFlyer (Criminal defense lawyers won't have the Twinkie to kick around anymore.)
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To: SeekAndFind

Buffett has perfected the “country cousin” routine. He knows that playing the role of the simple Nebraskan and paying lip-service to the principles of the Government Party and their many adherents is the best PR he can have.

At his level, he can’t afford to be on the wrong side of Gov’t.


4 posted on 11/26/2012 11:25:42 AM PST by PGR88
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To: SeekAndFind

Buffet gives most of his income to the Bill Gates Foundation. He does not pay taxes on that income due it going to a charity. If he declared it as income he would pay taxes. He obviously would rather have Bill and Melinda Gates Foundation spend his money than to let the Feds get it and spend it

HYPOCRITE!!!


5 posted on 11/26/2012 11:26:10 AM PST by dennisw ( The first principle is to find out who you are then you can achieve anything -- Buddhist monk)
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To: dennisw
Berkshire Hathaway, the eighth-largest public company in the world according to Forbes, openly admits to still owing taxes for years 2002 through 2004 and 2005 through 2009, according to the New York Post. The company says it expects to "resolve all adjustments proposed by the US Internal Revenue Service" within the next year.

From presidential primary debate on 4/16/08:

Charles Gibson: "...And in each instance, when the rate dropped, revenues from the tax increased. The government took in more money. And in the 1980s, when the tax was increased to 28%, the revenues went down. So why raise it at all, especially given the fact that 100 million people in this country own stock and would be affected"?

Obama: "Well. Charlie, what I've said is that I would look at raising the capital gain tax for purposes of fairness".

6 posted on 11/26/2012 11:27:55 AM PST by TurboZamboni (Looting the future to bribe the present)
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To: SeekAndFind

Maybe Warren is hoping for a settlement with the IRS that is favorable, if he continues to run an advertising campaign for them.


7 posted on 11/26/2012 11:29:49 AM PST by Ohioan
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To: SeekAndFind

It has been known for years that W.B. and a few of his ilk pay little or no taxes legally. Obama knows it also...but he still used the rich against the poor to elevate his election chances....Americans are not color blind they care little about nor understand how Third World America is becomming...just as long as ‘their guy’ stays in the W.H.


8 posted on 11/26/2012 11:37:19 AM PST by yoe
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To: SeekAndFind

Good article.

What Mankiw might have pointed out is that Buffett’s proposals for higher tax rates on the wealthy not only will NOT affect him, but they WILL affect many of his potential competitors.

Most economists acquainted with “Public Choice Theory” recognize that Big Business (and Big Businessmen) like government regulation because they can usually afford to comply with it, while upstarts — which always threaten to knock those Businessmen off their perch — usually cannot.

The one thing that Big Business really doesn’t like is competition on a free market that gives it no special privileges, and provides no special barriers to entry for newcomers.


9 posted on 11/26/2012 11:58:27 AM PST by GoodDay
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To: SeekAndFind

this is why “the rich” aka limosine liberals do not care if they are taxed more. It is ALL show and no substance. They will never pay a dime more.

This is about “I got mine” syndrome and keeping any competitor from rising to the top through the taxation turbulance.


10 posted on 11/26/2012 12:05:13 PM PST by longtermmemmory (VOTE! http://www.senate.gov and http://www.house.gov)
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To: SeekAndFind

Berkshire Hathaway paid about $5.6 billion federal income tax in FY2010

http://finance.yahoo.com/news/pf_article_112560.html


11 posted on 11/26/2012 12:35:42 PM PST by FewsOrange
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To: SeekAndFind

How is it that none of these geniuses that shoot their mouths off about Buffet get around to mentioning that Buffet makes a large portion of his income from TAX EXEMPT municipal bonds. It’s HIS BUSINESS. He’s the largest buyer in the country for buying municipal bond issues, frequently buying the whole issue but immediately passing along part of it to spread the risk. He sells INSURANCE which has it’s own set of tax-favorable rules. The man is IN THE BUSINESS of avoiding taxes, it’s all legal and I don’t blame him in the slightest for pushing on the rules as hard as he can. Everyone with a few bucks to save ought to be studying what he does-—I do. But then I take exception to the ignorant mouth-shooters who whine about him without knowing what he does——as well as Buffet himself moaning about wanting to pay higher taxes. As with everything else just watch what he does, not what he says. You’ll be able to believe his “more taxes” mumblings if he advocates killing tax exempt muni’s.


12 posted on 11/26/2012 12:41:41 PM PST by cherokee1 (skip the names---just kick the buttz)
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To: SeekAndFind

He’s a master FASCIST...

http://www.zerohedge.com/news/obama-puppetmaster-warren-buffett-biggest-winner-keystone-pipeline-rejection


13 posted on 11/26/2012 12:42:23 PM PST by mo (If you understand, no explanation is needed. If you don't understand, no explanation is possible.)
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To: dennisw
Gates, Buffet and other billionairs shelter their money by placing it in a Charitable Foundation that they and their families live off of forever. Bill Gates foundation lasts until their are no more Gates alive. A law should be passed that mandates that all the money in a foundation has to be distibuted to a charity during the lifetime of the founder. You would hear severe screaming from these so called philanthopists.
14 posted on 11/26/2012 12:56:35 PM PST by The Old Commander (Anyone who voted for Obama did so to steal from the productive class.)
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To: The Old Commander; dennisw

” Gates, Buffet and other billionaires shelter their money by placing it in a Charitable Foundation that they and their families live off of forever. Bill Gates foundation lasts until their are no more Gates alive”

Most people don’t know this.


15 posted on 11/26/2012 1:39:11 PM PST by stephenjohnbanker
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To: SeekAndFind

Warren Buffet does a good job of picking stocks. Beyond that he knows nothing of the economy or taxes.And his constant harping on raising taxes is perfect proof of that.I believe the phrase is idiot savant.


16 posted on 11/26/2012 1:54:10 PM PST by chuckee
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To: The Old Commander; stephenjohnbanker

I don’t think Gates’ children, grandchildren and so on can raid the Bill and Melinda Gates Foundation but they can get cushy jobs there for the next few centuries. Cushy jobs with big expense accounts for them and their friends. I would want to be paid at least one million per year


17 posted on 11/26/2012 3:13:09 PM PST by dennisw ( The first principle is to find out who you are then you can achieve anything -- Buddhist monk)
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To: SeekAndFind
But why do people listen to Buffett on taxes?

He controls the rail roads that ship fuel cross country. If that pipeline from Canada were to ever be built, this guy would suffer a huge financial loss.
It's better to suck up to liberals on taxes, screw the average hard working Joe, than it is to end up losing a few dollars of his OWN money, right?
Sure. Trust this guy. He's doing it for our own good, right? (NOT).

18 posted on 11/26/2012 4:53:18 PM PST by concerned about politics ("Get thee behind me, Liberal")
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To: SeekAndFind

19 posted on 11/26/2012 6:48:59 PM PST by GalaxieFiveHundred
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To: cherokee1
"You’ll be able to believe his “more taxes” mumblings if he advocates killing tax exempt muni’s."

Never. Gonna. Happen.

20 posted on 11/26/2012 6:55:04 PM PST by StAnDeliver (Own It.)
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To: PGR88
I agree....

as far as his "charity" money, I say its hardly charity....

you and I would LOVE to be able to send our money to our favorite causes instead of having to pay taxes...

this is what Buffoon is doing....he's giving his money to his concerns and his likes...he's choosing where to send his taxes instead of the govt doing whatever with it...

its not illegal....but lets just all understand that he's getting a lot out of the deal....he gets to act all superior and elitist while he dodges taxes..

21 posted on 11/27/2012 1:12:22 AM PST by cherry
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To: StAnDeliver
I think that extending SS tax to ALL the income before tax deductions/credits to ALL zillionaires would be a good start....

make it progressive so the more money they make the more they pay....

you want to hear screaming and threats?...try making the limousine liberals pay for their beloved social programs/SS without exception....

22 posted on 11/27/2012 9:20:06 AM PST by cherry
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To: SeekAndFind

Ok, here’s just ONE little, actually rather large example of subsidy buffett/berkshire gets.

Burlington Northern Santa Fe railway is a major freight line owned outright by Berkshire Hathaway.

Some of us may recall how legally(buffett lobbyists) blocking the canadian shale oil pipeline buildout is a bigtime boost in freight revenue, since BNSF oil tankers are transporting this crude (a la the rockefeller/railroad trust back when, with the exception being that canadian oil producers haven’t been able to take over the railroad like rockefellers did with transport rebates such that they had NO transportation costs). BNSF is paid VERY WELL by US buyers and canadian producers to transport oil all the way down to our refineries to make-—whatever (jet fuel,gas, kerosene diesel). BTW this cost is borne by, US in gas prices. A pipeline would blow those costs away.

But here’s the icing: BNSF is the host railway for major Amtrak routes. Amtrak has to lease those, with a contract that includes supposed maintenance (BNSF probably does this OK but if NOT if damage is untimely to passenger service, Amtrak has to PAY them to maintain). Additionally, amtrak fares are subsidized by US as well, so he gets a piece of that indirectly.

So,Buffett gets US subsidy dollars for his private rails, as well as other cushy govt. cash. Sweet, and damned expensive to taxpayers. Say nothing about his other bizes that get other subsidies (let’s not forget BizJet, using US airports and subsidized FBO air centers). Sweet again.

All that and sheltered non-taxed wealth— and Buffett says the “rich” should pay a fixed rate. He SURE won’t be paying it. The “Ratschild of the Plains” a sage— part of the problem and deceitful farce.


23 posted on 11/27/2012 9:39:28 AM PST by John S Mosby (Sic Semper Tyrannis)
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To: John S Mosby

I wish he would just go away and hang around a bingo parlor or a buffet line at 4:00 PM.


24 posted on 11/27/2012 2:45:36 PM PST by crusty old prospector
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To: crusty old prospector

The North Koreans probably have a shop where it is done. Old world craftmanship and such.


25 posted on 11/27/2012 2:53:33 PM PST by crusty old prospector
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