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Economy

Buffett, taxes, and the mandate

National Review has an editorial up on President Obama's "Buffett tax" gambit. As they note it won't generate much income for the government, and most people with $1 million or more in income already pay a roughly 30% tax rate.

If the President really wants to tax Buffett, and if Buffett really thinks he's undertaxed, there's a much better way to go.  Mr. Buffett claims roughly $40 million in income. He has a net worth of roughly $50 billion. That means his return on investment is less than 1%, for officially purposes at least. Why so low?  Buffett pays no dividend in his holding company, and does not take the kind of salary that most people who run large companies take. 

If we really want to raise taxes on Mr. Buffett, we should pay attention to the reason why his income is so low.  Mr. Buffett's refusal to pay a dividend deprives we the people of a greater share of his true income.  And if the failure to buy an item can be taxable--the argument that he supporters of Obamacare make--surely it is also reasonable to force Buffett to pay an "idle capital" penalty. So long as he conspires against the people, and deprives us of tax revenue, by refusing to pay a dividend, he should pay a penalty.

Categories > Economy

Discussions - 4 Comments

A while back, the black/white most intellligent President ever made a huge stink about corporate jets and the rich companies/rich people who owned them and how this type of luxury needed to be taxed in order to take care of the 42 million people on food stamps, oh I forgot to add the Food Stamp President to my description above but I digress. This ad nauseum ranting by the white/black President caused the jitters to a lot of corporations who owned jets. In turn, these corporations decided to off their corporate jets and of course along with this decision many jobs were lost, but hey the Food Stamp President will take care of them!!

Most of the corporations then decided to so something that eventually all local, state and federal government entities are going to have to do and that is contract out the work.

The biggest beneficary of this move by major corporations is a Company called NewJets - here is its description:

NewJet Engine Services, LLC offers engine repair and overhaul, engine sales and leasing, engine parts sales and exchange, and engine piece part and component repair services. The company was founded in 1990 and is based in Miami, Florida. NewJet Engine Services, LLC operates as a subsidiary of Trident Aviation Industries.
13945 SW 139 Court
Miami, FL 33186
United States
Founded in 1990
Phone:
305-256-0678
Fax:
305-256-0878
www.newjet.net

Guess who owns a huge hunk of NewJets:

Warren Buffet's Berkshire Hathaway.


But it is all George Bush's fault and Republicans only care about the rich.

Here we go... Liberalism is a .......

Um, no.

NewJet Engine Services is a subsidiary of Trident Aviation. NetJets is owned by Berkshire Hathaway.

Yes you are right - I got the wrong one - It is Netjets - the article I read refered to it as newjets...

Sorry and thanks for the correction

"Mr. Buffett's refusal to pay a dividend deprives we the people of a greater share of his true income."

Well it deprives the IRS of all sorts of income. Berkshire Hathaway does pay a dividend, it is just that it is not a dividend recognized by the IRS. They do share buybacks which can be adjusted for basis.

All that is needed is a rule that exempts basis deductions for share buybacks. It will have to be legistlative, a long time ago the IRS went to court and lost on this issue of statutory construction.

Everything Buffet says is true, it is just that he has a fiduciary duty to stiff the IRS, by all legal means possible.

"If we really want to raise taxes on Mr. Buffett, we should pay attention to the reason why his income is so low."

True. His income is low because metaphysics is the IRC, revenue rullings and court cases. Income is what the doctrine of statutory construction+judicial supremacy has said Income is. So there is a whole world of market neutral revenue harvesting and all sorts of ways to supress income by offsetting it against basis.

"So long as he conspires against the people, and deprives us of tax revenue, by refusing to pay a dividend, he should pay a penalty."

Exactly, but the penalty should not be applied arbitrarily to Buffet, rather all share buybacks should be treated as dividends, incapable of being offset by basis.

As it is you basically have a whole world of stealth dividends, and the idiot corporations are the ones using conventional ones.

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