by John Galt
October 10, 2016 20:55 ET
Today the financial propaganda infomercial media, aka, CNBC, published the following story:
In the story linked above the Orifice of Omaha stated the following:
“I have paid federal income tax every year since 1944, when I was 13. (Though, being a slow starter, I owed only $7 in tax that year.) I have copies of all 72 of my returns and none uses a carryforward,” Buffett said in a statement.
So let’s use Warren’s old friends at Google to find out if he’s completely honest:
(via Barron’s, April 11, 2015)
Warren Buffett has backed higher individual tax rates–while ensuring that his vast wealth in Berkshire Hathaway is almost immune.
Warren Buffett is fond of saying his tax rate is lower than his secretary’s. He does not publicize his tax returns, but for the tax year 2010, he paid $6.9 million on taxable income of $39.8 million, according to partial disclosures he made in 2011.
What is astounding about those numbers is not the 17.3% tax rate, but that Buffett’s $39.8 million of taxable income is only about 0.05% of his reported net worth ($71 billion according to Forbes, which put him third on its list of the 400 wealthiest people in the world for 2015).
Proportionately, that’s like someone with an ever-expanding net worth, currently $10 million, reporting taxable income of only $5,000 and paying a federal tax bill of only $900.
So, how does he do it? Buffett’s principal holding is an economic interest of about 20% of Berkshire Hathaway, the huge conglomerate he has been building since the 1960s. It has a market value of about $350 billion. Berkshire hasn’t paid any cash dividends since 1967. Rather, the company accumulates its prodigious after-tax income ($19.9 billion in 2014) and cash flow ($32 billion in 2014) to get bigger by buying companies, lots of companies. Among its large recent acquisitions were Lubrizol, Burlington Northern Santa Fe, and a shared acquisition of H.J. Heinz.
The final quote from the Barron’s article is a damning indictment of Buffett’s hypocrisy:
The relationship between the Wizard of Wall Street and our president is symbiotic. The two scratch each other’s back at the expense of the commonweal. How nice for our president, who is so eager to spread the wealth around, to have one of our richest citizens militating for higher taxes on the rich. How nice for Buffett to play to an adoring crowd of wealth-spreaders. How strange that it’s not his wealth that they are spreading around.
Thus if Warren Buffett is doing the same thing that Trump is doing by gaming the tax laws, which I have no problem with, then obviously his primary holding, Berkshire Hathaway, must be above board and contributing to the economy as the extremist left wing CNBC network promotes non-stop, right?
From The Motley Fool on May 12, 2016:
Berkshire Hathaway Inc. has a massive $63.2 billion deferred tax liability that Warren Buffett has equated to an interest-free loan from the U.S. government.
Warren Buffett, who has an aversion to issuing debt or equity, has been able to gain advantage from two sources of free financing, as he explains in the Berkshire Hathaway Owner’s Manual:
Berkshire has access to two low-cost, non-perilous sources of leverage that allow us to safely own far more assets than our equity capital alone would permit: deferred taxes and “float,” the funds of others that our insurance business holds because it receives premiums before needing to pay out losses…
Better yet, this funding to date has been cost-free. Deferred tax liabilities bear no interest… Neither item, of course, is equity; these are real liabilities. But they are liabilities without covenants or due dates attached to them. In effect, they give us the benefit of debt-an ability to have more assets working for us-but saddle us with none of its drawbacks.
But if they are akin to debt, then the creditor isn’t just anybody. As Buffett later pointed out, “In economic terms, the [deferred tax] liability resembles an interest-free loan from the U.S. Treasury.”
In other words, Warren Buffett and his defense of his position versus Cheetos Jesus is plain old full of shit.
But to the liberal media and sycophants on CNBC and other radical left wing mainstream media outlets, it’s just more propaganda to shove down the throats of the ignorant. Thank you again Warren for strategically lying to the sheeple and f’ing up Dairy Queen which used to be a great restaurant for greasy junk food until you took it over.
Enjoy your Hunger Games America, it’s going to be a long 4 years.