As I pointed out in another thread, the tax-related demagoguery engaged in by and on behalf of Warren Buffett is disingenuous and completely misses the big picture. The imposition of the so-called "Buffett Rule" -- or any similar measure -- would not materially affect Buffett's wealth, and in fact would place him at a competitive advantage vis-a-vis most other very wealthy investors because of the particular type of tax shelter vehicle he utilizes.
Berkshire Hathaway (BRK-B) takes full advantage of the holding company corporate tax exclusion for dividend income upstreamed from partially or wholly-owned subsidiaries.
The issue was explained in some detail several months ago:
http://www.eccie.net/showthread.php?t=274906
(It's a
very long thread. For the full explanation, jump forward to posts #156 and 164-168.)
Since Buffett rarely sells anything, and since he plans to leave almost all of his estate to foundations, he will be affected very little by the capital gains tax. And since BRK-B manages to shelter most of its dividend income with the corporate holding company exclusion, he is able to amass fantastic wealth while neither he nor his holding company pay more than a tiny percentage of aggregate wealth accumulation to the Treasury. Nice work if you can get it!
This fantastic "compounding machine" known as Berkshire Hathaway is one of the best tax shelters around. Obviously, if Buffett really wanted to pay more tax, he could simply own about $50 billion in dividend-paying common stock directly, in which case he would have to send the Treasury many times more than the paltry $7 million he says he pays now.
I don't blame Buffett one bit. He's simply taking advantage of perfectly legal provisions of the code, just like everyone else, and he has said in interviews that he will be choosing a "better set of beneficiaries" than the federal government. I agree with him there, too.
It's just that I believe that everyone should know the real story, and not buy all the media's fatuous claims that Warren Buffett is eager to "do his fair share" and pay a lot more tax. It's pure B.S.
