Guest view – The Opinion of Marty Richman

A better way to impress me, Mr. Buffet
Warren Buffett, one of the richest men in the country, recently
called on the government to raise the income taxes substantially on
Americans earning more than $1 million a year.
This was greeted with applause from those supporting
tax-and-spend as the solution to our ballooning $15 trillion debt
even though it would mean no more than a 1 percent reduction.
Provided, that is, we get our annual deficits under control,
something we have not been able to do.
A better way to impress me, Mr. Buffet

Warren Buffett, one of the richest men in the country, recently called on the government to raise the income taxes substantially on Americans earning more than $1 million a year.

This was greeted with applause from those supporting tax-and-spend as the solution to our ballooning $15 trillion debt even though it would mean no more than a 1 percent reduction. Provided, that is, we get our annual deficits under control, something we have not been able to do.

Just for the record Mr. Buffett has an estimated worth of more than $47 billion, that’s 47,000 times someone earning a ‘mere’ $1 million.

If Buffett wants to send more money to the U.S. Treasury, who’s stopping him? The Bureau of the Public Debt accepts donations; he can write a check or even charge it to a credit card. Last fiscal year the public donated only $2 million to reduce the debt; donations have been running $2 million to $3 million a year for several years.

If Mr. Buffet donated $4.7 million, it would equal one penny per $100, or 0.01 percent of his reported worth. It does not appear that Buffett made any donations, but we can’t be sure.

It turns out that it’s almost impossible to evaluate what anyone is doing with taxes. A recent article in the NY Post pointed out that Buffett’s multi-billion dollar investment company, Berkshire Hathaway, was working with the IRS because it hadn’t paid all the taxes it owed from years before. The company admitted that it owed back taxes from as long ago as 2002, according to the firm’s annual report.

The story also cites outstanding tax issues for years 2005 through 2009. Although Berkshire Hathaway still owes the IRS, they paid too. They had a 2010 pretax income of $19 billion, made provision for $5.6 billion in income taxes, a tax rate of 29 percent.

Berkshire Hathaway bought a chunk of General Electric stock in 2008; they still had 7.8 million shares worth about $124.7 million in August 2011. GE reported global profits of $14.2 billion in 2010, $5.1 billion of which came from the U.S. Using a combination of offshore accounts and aggressive lobbying for tax breaks, GE managed to not only pay no taxes, but also get a benefit of $3.2 billion in credits, according to the New York Times.

While GE paid none, other Berkshire Hathaway investments paid hefty taxes. They own $2 billion worth of Wal-Mart shares. Wal-Mart had a pretax income of about $22 billion, made provision for $7.1 billion in income taxes for a tax rate of 32 percent.

Just to add to the confusion, many of Warren Buffett’s dividends are taxed twice, once as corporate earnings and again when they are distributed to the shareholders – the owners. Some dividends are taxed at reduced rates; others are not.

Forbes said that the companies in Warren Buffett’s empire filed 14,097 pages of tax returns last year. I’m sure they employ a huge number of lobbyists, accountants, and tax lawyers – not to mention former IRS agents, but they still make serious mistakes and there are enormous inequities. The point is that the rates are not the problem – the code is the problem. Multibillion-dollar companies with the best lawyers and accountants sometimes pay plenty, sometimes pay nothing, and constantly make errors. 

Mr. Buffett, if you really want to impress me, don’t pay any additional taxes into this senseless system; use your influence to get the mess fixed.