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Dear Mr. Buffett: Put Up Or Shut Up On Taxes

Warren Buffett speaking to a group of students...

Image via Wikipedia

Warren Buffett says the rich should pay more taxes, but what he really means is he should pay more taxes and stop ripping off the American taxpayer because he feels guilty. He hasn’t paid half his net worth in taxes, as most Americans have. He’s probably paid less than $10 million in taxes, a tiny percentage of his $50 billion net worth.

Exploiting the tax code
How does Buffett manage to exploit the tax code? He donates appreciated Berkshire Hathaway stock — which costs him pennies on the dollar — to charity, and receives a fat, juicy tax deduction at the appreciated price without having to pay a capital gains tax on the appreciation. (And, note that the money actually sits in his own charitable organization.) He’s saving income taxes with the ordinary deduction so it’s essentially a tax shelter.

He builds up his massive net worth and doesn’t have to sell stock while deferring capital gains. When he does take a capital gain, it’s at a 15% rate, and he lives in a low-tax state.

A call for change


If these changes are made, it will cause them to sell shares on their holdings, and you’ll see more and more shares sell off.

Bottom line
Why should the upper income let Buffett preach about paying higher taxes, when we’re already paying over 50% when you add it all up, and he’s probably paying less than 5%? The billionaires who want to talk about raising taxes in the public domain need to put their money where their mouth is and publish their tax returns. Let’s take a look behind the curtain and see what these people are paying in taxes.

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