The call by Warren Buffett to make the rich like him pay more is pretty funny considering that according to Money News he himself takes pains to shield his fortune from the IRS:
For many years now Buffett has pointed out that he pays less tax than his secretary. How could the country’s most well-known billionaire, worth $50 billion, get away with that?Buffett gives a lot of his fortune to charity which is certainly to his credit but for him to call for higher taxes on the rich when he shields his own money from taxation is pretty disingenuous.
Here’s the significant reason — one that Buffett omits from his Op-Ed: He has traditionally drawn a tiny salary from his company Berkshire Hathaway and gives no dividends to shareholders like himself.
So, even if ... income tax rates were raised on the wealthy, he might not pay significantly more in taxes. By keeping his wealth in his company, Buffett has discovered one of the best tax avoidance schemes ever invented. And Buffett never suggests that corporate loopholes that he has personally taken advantage of for decades should be closed.
For example, his Berkshire Hathaway company has acted as an effective holding company for his vast investment portfolio. Last I checked, Berkshire Hathaway was generating over $7 billion in dividend income each year from stocks the company owned.
Due to a special exemption (read: loophole) Buffett enjoys, his company benefits from the fact that nearly 90 percent of the dividend income is exempt from any corporate tax! (I do too, as I am a shareholder as well.)
Buffett is then able to take these wads of tax-free cash and re-invest them, buying more stocks or whole companies — a strategy he’s been employing for decades as part of his wealth-creating money machine.
So Buffett knows that even if tax rates were raised on the income of the so-called “wealthy,” it would have little or no effect on the “super-rich” like himself who put a corporate shell around their assets and never disburse much cash to themselves in the form of income or dividends.
It's also disingenuous of President Obama to keep referring to his desire to raise taxes on millionaires and billionaires. His tax proposals would raise taxes on every individual making more than $200,000 and every couple making more than $250,000. According to the Wall Street Journal the vast number of people who would be paying more taxes under Obama's Jobs Bill are not millionaires and billionaires. Many of them are small business owners who we're counting on to hire people to get us out of the recession:
Almost 4 million people reported income above $200,000 in 2009, and they paid $434 billion in taxes. To put it another way, roughly 90% of the tax filers who would pay more under Mr. Obama's plan aren't millionaires, and 99.99% aren't billionaires.Four hundred and thirty four billion seems like a "fair share", especially when 47% of Americans pay nothing in federal income taxes.
Raising taxes on people you hope will employ those who're looking for work is a lousy way to get out of a recession. Why doesn't the White House understand this?