Warren Buffett Doesn't Tell You About How He's A Master Of Tax Avoidance

[Revmitchell]

In a NYT Op-Ed today, Warren Buffett argued that the rich should pay a certain minimum tax, and he explained to activist Grover Norquist that it's preposterous to think that businessmen would forgo profitable deals merely because the rate of tax on the profits would go up.

But why do people listen to Buffett on taxes?

Basically because he's a rich, successful guy (which is why a lot of people are listened to on a lot of subjects).

To that end, economist and former Romney advisor Greg Mankiw has a short post talking about Buffett as a master of "tax avoidance," wherein he lists four things Buffett does to avoid paying taxes.

Berkshire never pays a dividend (so the jump in dividend tax hikes don't effect him).
Berkshire only trades long-term (so short-term cap gains, which are taxed at income tax rates don't effect him).
He's giving most of his money away to charity.
His children won't pay income taxes on any assets that are bequeathed to them, so an income tax hike doesn't affect them.



Read more: http://www.businessinsider.com/greg-mankiw-on-warren-buffett-2012-11#ixzz2DV3V93aB

 

[InTheLight]

What's the point of this article? So Buffett avoids paying taxes. Big deal. Everybody avoids paying taxes. Apparently Buffett thinks he should pay more.

Here is Buffett's proposal:

Additionally, we need Congress, right now, to enact a minimum tax on high incomes. I would suggest 30 percent of taxable income between $1 million and $10 million, and 35 percent on amounts above that.

Now, Buffett could avoid his tax proposal if his taxable income (wages, dividends, capital gains, etc.) did not top $1 million a year. Do you think Buffett's income is not over $1 million a year?

I think it is. He's 72 years old and he is required by law to take distributions from his IRA's, which must be substantial.

Mitt Romney made $13 million last year, mostly on investment income, and it is likely that his portfolios are set up to produce as little income as possible for him. Buffett probably has his set up the same way. Mitt Romney's net worth is $250 million. Warren Buffett's net worth is $46 billion. I think it is safe to say that Buffett had income above $1 million last year.

So what is the point of the article?