Warren Buffett's Tax Hypocrisy

http://www.futureofcapitalism.com/2009/11/warren-buffetts-tax-hypocrisy

When Warren Buffett criticized President Bush's tax cuts while plumping for the presidential campaigns of Barack Obama and Hillary Clinton, he garnered prominent, adulatory headlines such as "Buffett blasts system that lets him pay less tax than secretary," (The Times of London) and "Warren Buffett: The Rich Need to Pay More Taxes" (ABC News). Consider that as the context for two pieces of information: First, the observation, amid a column in today's Wall Street Journal, about Berkshire Hathaway's cash mountain:

Mr. Buffett would rather not resort to the simplest way of solving this problem -- paying excess cash out to shareholders in the form of a dividend. Since he owns roughly 26% of Berkshire's shares, a cash dividend would saddle Mr. Buffett with one of the largest personal-income tax bills in American history. That's not the kind of thing at which he likes to excel. Mr. Buffett's reluctance to pay a dividend leaves him with little choice but to buy big companies outright.

Second, the news (again, from the Wall Street Journal) that Mr. Buffett's Berkshire Hathaway is joining in a bid to buy $3 billion in tax credits from Fannie Mae. Reports the Journal: "The credits are virtually worthless to Fannie Mae and require the company to take losses each quarter as their value declines. Companies such as Berkshire Hathaway and Goldman Sachs could use them to offset federal tax expenses."

Neither Journal article places the news in the context of Mr. Buffett's stated support for higher taxes.

For those who are interested in more about the topic of Mr. Buffett and taxes, the New York Sun has some editorials about it that stand up pretty well over time, among them: Buffett's Income, July 2, 2007; Clinton and Buffett, June 4, 2007; Buffett the Benefactor, June 26, 2006; and The World According to Buffett, March 8, 2004.

by Editor  |  Nov 4, 2009 at 8:07 am Related Topics:  Taxes, Warren Buffett receive the latest by email: subscribe to the free futureofcapitalism.com mailing list