Thursday, November 10, 2011

More about Warren Buffet and this claim he only pays 17% in taxes

I hear this "the billionaire only pays 17% in taxes, which is less than his secretary" crap all of the time, it comes from an article that Warren Buffett wrote claiming as much, only he lied and now the left uses that as some sort of rallying call. The truth is that Buffett pays more than he said in his article. First off he is not subject to income taxes because he takes no income (to be more accurate he takes an income of 100k, which is tiny compared to his billions in net worth) so when he needs money he sells BH (Berkshire-Hathaway) stock and only pays the 15% capital gains tax and 2.4% in other taxes I assume he is referring to the capped social security taxes and the income tax on his salary), so that is where he gets this 17% figure that gets cited over and over again.

The problem is that he owns the majority of BH and the corporate taxes they pay, really comes out of his profits and pockets. Some companies pay almost nothing in corporate taxes because they award the CEO huge amounts of pay and the CEO then pays high personal income taxes, with BH they pay corporate taxes on the profits other companies might have paid their CEO and then written off their bottom line. Buffett indirectly pays the corporate taxes, and then also pays the capital gains tax when he sells his stock. He is really paying a much higher tax rate than he claims, and I don't believe he is too stupid to understand this, so I can only assume he is lying for some political reason.

It is hard to know how much BH pays in corporate taxes since it seems they owe back taxes, but if they were paying the taxes it would be a corporate rate of 29% so add that to the 17% Buffett is paying in capital gains and he is paying closer to 50% in taxes.

The thing that really irks me about the whole thing is that he is looked at as a hero of the left for claiming he supports higher taxes for the rich, all while being a tax dodger himself and the left eats it up like candy. He has also benefited from the bailouts, owning major shares in Goldman Sachs, Wells Fargo, US Bancorp, and American Express. In the Peter Schiff goes to Occupy Wall Street video he is confronted with some protester who throws out this idea that “the rich pay 17% in taxes”, this comes from Buffett's article, but they are also down there protesting against bailouts and the rich, but still they will hold up his article as if it was written by god himself.

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