Warren Buffett, Hypocrite

[y04185]

Full story

Billionaire investor Warren Buffett triggered a major debate over taxes recently when he wrote in The New York Times that he should be paying more to the federal government. He called on Washington lawmakers to up tax rates on the rich.

But it turns out that Buffett’s own company, Berkshire Hathaway, has had every opportunity to pay more taxes over the last decade. Instead, it’s been mired in a protracted legal battle with the Internal Revenue Service over a bill that one analyst estimates may total $1 billion.

Yes, that’s right: while Warren Buffett complains that the rich aren’t paying their fair share his own company has been fighting tooth and nail to avoid paying a larger share.

The story of Berkshire's years-long tax battle, which is generally known in business circles, took on new life this week when a group called Americans for Limited Government (ALG) reported that, according to Berkshire Hathaway’s own annual report, the company is embroiled in an ongoing standoff over its tax bills.

“Obvious question: If Buffett really thinks he and his 'mega-rich friends' should pay higher taxes, why doesn’t his firm fork over what it already owes under current rates?” the Post opined.

“Likely answer: He cares more about shilling for President Obama -- who’s practically made socking “millionaires and billionaires” his re-election theme song -- than about kicking in more himself.”

Using only publicly-available documents, a certified public accountant (CPA) detailed Berkshire Hathaway’s tax problems to ALG. AlG President Bill Wilson cites the company’s own 2010 annual report, which states at one point that “At December 31, 2010… net unrecognized tax benefits were $1,005 million”, or about $1 billion.”

“Unrecognized tax benefits represent the company’s potential future obligation to the IRS and other taxing authorities,” ALG explained in its report. “They have to be recorded in the company’s financial statements.”

“The notation means that Berkshire Hathaway’s own auditors have probably said that $1 billion is more likely than not owed to the government,” the ALG report explained.

That $1 billion represents about 0.2 percent of the company’s $372 billion in total assets, according to ALG.

As Wilson points out, “On one hand Buffett advocates for paying more taxes, but when it comes to his own company’s taxes, he has gone through great lengths to pay less. That’s rich.”

Here's the key section from Berkshire's report:

“We anticipate that we will resolve all adjustments proposed by the U.S. Internal Revenue Service (‘IRS’) for the 2002 through 2004 tax years at the IRS Appeals Division within the next 12 months," the report states. "The IRS has completed its examination of our consolidated U.S. federal income tax returns for the 2005 and 2006 tax years and the proposed adjustments are currently being reviewed by the IRS Appeals Division process. The IRS is currently auditing our consolidated U.S. federal income tax returns for the 2007 through 2009 tax years.”

Wilson also points to a prior tax fight the company fought. “Apparently, this is not the first time that Berkshire Hathaway has tangled with the IRS. They fought a 14-year battle over the dividends received deduction. That case was just resolved in 2005,” Wilson reports..

“Although the prior case was settled in Buffett’s favor, it demonstrates a decades-long pattern of behavior by Buffett to minimize his taxes. That’s the important part of the story,” Wilson writes.

And Buffett this week is at the center of another tax controversy, according to The Wall Street Journal. His recent decision to invest in Bank of America "represents another tax-avoidance triumph for the Berkshire chief executive," the Journal wrote in an editorial Wednesdy.

It turns out that U.S. corporations are subject to a top federal income tax rate of 35 percent, the second highest in the world. But Berkshire won't pay anything close to that on their investment in BofA preferred shares.

"Berkshire will hold the investment in a property-casualty insurance subsidiary. Such corporations can exclude from taxation 59.5% of the dividends they receive from an investment in another corporation," the Journal reported. "This exclusion is intended to prevent double- or even triple-taxation as money is earned by one company, paid to another company and then ultimately paid out to shareholders. The policy makes sense; we only wonder why the exclusion isn't 100%.

"With the exclusion for Mr. Buffett and his fellow shareholders, Berkshire will enjoy an effective tax rate of 14.175% on the $300 million in dividends it will receive each year from Bank of America," the Journal reported.

[oldsport]

Full story

Billionaire investor Warren Buffett triggered a major debate over taxes recently when he wrote in The New York Times that he should be paying more to the federal government. He called on Washington lawmakers to up tax rates on the rich.

But it turns out that Buffett’s own company, Berkshire Hathaway, has had every opportunity to pay more taxes over the last decade. Instead, it’s been mired in a protracted legal battle with the Internal Revenue Service over a bill that one analyst estimates may total $1 billion.

Yes, that’s right: while Warren Buffett complains that the rich aren’t paying their fair share his own company has been fighting tooth and nail to avoid paying a larger share.

The story of Berkshire's years-long tax battle, which is generally known in business circles, took on new life this week when a group called Americans for Limited Government (ALG) reported that, according to Berkshire Hathaway’s own annual report, the company is embroiled in an ongoing standoff over its tax bills.

“Obvious question: If Buffett really thinks he and his 'mega-rich friends' should pay higher taxes, why doesn’t his firm fork over what it already owes under current rates?” the Post opined.

“Likely answer: He cares more about shilling for President Obama -- who’s practically made socking “millionaires and billionaires” his re-election theme song -- than about kicking in more himself.”

Using only publicly-available documents, a certified public accountant (CPA) detailed Berkshire Hathaway’s tax problems to ALG. AlG President Bill Wilson cites the company’s own 2010 annual report, which states at one point that “At December 31, 2010… net unrecognized tax benefits were $1,005 million”, or about $1 billion.”

“Unrecognized tax benefits represent the company’s potential future obligation to the IRS and other taxing authorities,” ALG explained in its report. “They have to be recorded in the company’s financial statements.”

“The notation means that Berkshire Hathaway’s own auditors have probably said that $1 billion is more likely than not owed to the government,” the ALG report explained.

That $1 billion represents about 0.2 percent of the company’s $372 billion in total assets, according to ALG.

As Wilson points out, “On one hand Buffett advocates for paying more taxes, but when it comes to his own company’s taxes, he has gone through great lengths to pay less. That’s rich.”

Here's the key section from Berkshire's report:

“We anticipate that we will resolve all adjustments proposed by the U.S. Internal Revenue Service (‘IRS’) for the 2002 through 2004 tax years at the IRS Appeals Division within the next 12 months," the report states. "The IRS has completed its examination of our consolidated U.S. federal income tax returns for the 2005 and 2006 tax years and the proposed adjustments are currently being reviewed by the IRS Appeals Division process. The IRS is currently auditing our consolidated U.S. federal income tax returns for the 2007 through 2009 tax years.”

Wilson also points to a prior tax fight the company fought. “Apparently, this is not the first time that Berkshire Hathaway has tangled with the IRS. They fought a 14-year battle over the dividends received deduction. That case was just resolved in 2005,” Wilson reports..

“Although the prior case was settled in Buffett’s favor, it demonstrates a decades-long pattern of behavior by Buffett to minimize his taxes. That’s the important part of the story,” Wilson writes.

And Buffett this week is at the center of another tax controversy, according to The Wall Street Journal. His recent decision to invest in Bank of America "represents another tax-avoidance triumph for the Berkshire chief executive," the Journal wrote in an editorial Wednesdy.

It turns out that U.S. corporations are subject to a top federal income tax rate of 35 percent, the second highest in the world. But Berkshire won't pay anything close to that on their investment in BofA preferred shares.

"Berkshire will hold the investment in a property-casualty insurance subsidiary. Such corporations can exclude from taxation 59.5% of the dividends they receive from an investment in another corporation," the Journal reported. "This exclusion is intended to prevent double- or even triple-taxation as money is earned by one company, paid to another company and then ultimately paid out to shareholders. The policy makes sense; we only wonder why the exclusion isn't 100%.

"With the exclusion for Mr. Buffett and his fellow shareholders, Berkshire will enjoy an effective tax rate of 14.175% on the $300 million in dividends it will receive each year from Bank of America," the Journal reported.

y, this story was out several days ago too.

[y04185]

oldsport, I know.  I gave the democratic and liberal posters time to get their talking points.  It looks like they don't have the guts to defend this hypocrite.  That's so typical of those people.

[‘87 Alum]

Dude you vacated a thread you created days ago after we clearly exposed your a solute miseducation on President Bush and 9/11.

Talking about someone else being a hypocrit!  You should wash your mouth out with lye, no pun intended, coz that's mainly what you do here most days......

[Wildman78]

Here is my talking point y04185.

Buffett’s Berkshire Hathaway Disputes IRS Tax Assessment

August 26th, 2011 · 1 Comment

The suggestion that a company should pay taxes it doesn’t believe it rightly owes merely to show solidarity with its majority shareholder and support for his pronouncement that he should pay more taxes is downright silly.


Yet, that is precisely what Netright Daily has done in a post titled Warren Buffett’s Taxing Hypocrisy:

[Warren Buffett] wrote of the so-called “super-rich,” which he apparently defines as  households earning $1 million or more a year: “Most wouldn’t mind being  told to pay more in taxes as well, particularly when so many of their  fellow citizens are truly suffering.” Isn’t that nice of Mr. Buffett?

But if he were truly sincere, perhaps he might simply try paying the  taxes the IRS says his company owes? According to Berkshire Hathaway’s own annual report — see Note 15 on pp. 54-56 — the company has been in a years-long dispute over its federal tax bills.

According to the report, “We anticipate that we will resolve all  adjustments proposed by the IRS for  the 2002 through 2004 tax years at the IRS Appeals Division within the  next 12 months. The IRS has completed its examination of our  consolidated U.S. federal income tax returns for the 2005 and 2006 tax  years and the proposed adjustments are currently being reviewed by the  IRS Appeals Division process. The IRS is currently auditing our  consolidated U.S. federal income tax returns for the 2007 through 2009  tax years.”


Although I disagree with Buffett’s claim that he and other multi-millionaires are under-taxed, his personal hypocrisy is not proven by the fact that his company continues to dispute an IRS assessment. Berkshire Hathaway’s IRS dispute has nothing whatsoever to do with Warren Buffett’s claim that he is personally under-taxed.

If Berkshire Hathaway’s Board of Directors and Officers believe that the IRS assessment is incorrect and that the company does not owe the taxes the IRS claims it owes, they would be breaching their fiduciary duty to the shareholders if they did not dispute it.

And remember, just because the IRS says you owe a tax doesn’t make it true.

http://blog.pappastax.com/index.php/2011/08/26/buffetts-berkshire-hathaway-is-disputing-irs-tax-assessment/

[y04185]

Wildman, your talking point has no facts.  You are spreading someone's opinion.  The fact is Warren Buffett is a hypocrite. 

[Wildman78]

Wildman, your talking point has no facts.  You are spreading someone's opinion.  The fact is Warren Buffett is a hypocrite.  

It's your opinion that Warren Buffett is an hypocrite. Just cause you say it's a fact doesn't make it so.

The writer of the piece I posted took the same facts you posted and reached a conclusion that was different than the conclusion reached by you and Newsmax. You know, sometimes that happens.

The writer of the piece I posted does not share your opinion and in my opinion, he makes a valid point. In Buffett's New York Times Op-ed, he was arguing that wealthy individuals and  wealthy households should pay more in taxes.

See for yourself: http://www.nytimes.com/2011/08/15/opinion/stop-coddling-the-super-rich.html

In his New York Times Piece, Buffett said nothing about raising taxes on corporations.

But the author of the piece I posted goes even further, he points out that Buffett is the major shareholder of Berkshire who is in a tax dispute with the IRS.  Berkshire's Board of Directors have a fiduciary duty to their shareholders not to pay taxes they rightfully feel they don't owe.

I'll try and make it plain. I don't think it's hypocritical for an individual business owner to say, my personal tax rate should be higher while at the same time arguing that the IRS is over-taxing his business.

[JBROB]

They need to lock up Buffet.  North Carolina just aressted a teacher in Guilford County that makes $39,000 for not paying her taxes over a period of years.  Put him in jail until he pays.

[JBROB]

Take his money!!! If we don't pay they will go to the bank and take ours!!!

[Wildman78]

They need to lock up Buffet.  North Carolina just aressted a teacher in Guilford County that makes $39,000 for not paying her taxes over a period of years.  Put him in jail until he pays.

I am guessing the teacher pled guilty or was found guilty of tax evasion or tax fraud?

In the case of Buffet's company, Berkshire,  there is an on going dispute with IRS about how much tax the company owes. A person or company is has a right to challenge the IRS's tax assessment in U.S. Tax Court  As of yet, there has been no finding of any criminality on part of Berkshire.

Corporations and Companies generally don't go to jail. They are fined.

[JBROB]

They need to lock up Buffet.  North Carolina just aressted a teacher in Guilford County that makes $39,000 for not paying her taxes over a period of years.  Put him in jail until he pays.

I am guessing the teacher pled guilty or was found guilty of tax evasion or tax fraud?

In the case of Buffet's company, Berkshire,  there is an on going dispute with IRS about how much tax the company owes. A person or company is has a right to challenge the IRS's tax assessment in U.S. Tax Court  As of yet, there has been no finding of any criminality on part of Berkshire.

Corporations and Companies generally don't go to jail. They are fined.

She just went to court.

http://www.news-record.com/content/2011/08/31/article/a_guilford_county_teacher_faces_tax_evasion_charges

[Wildman78]

They need to lock up Buffet.  North Carolina just aressted a teacher in Guilford County that makes $39,000 for not paying her taxes over a period of years.  Put him in jail until he pays.

I am guessing the teacher pled guilty or was found guilty of tax evasion or tax fraud?

In the case of Buffet's company, Berkshire,  there is an on going dispute with IRS about how much tax the company owes. A person or company is has a right to challenge the IRS's tax assessment in U.S. Tax Court  As of yet, there has been no finding of any criminality on part of Berkshire.

Corporations and Companies generally don't go to jail. They are fined.

She just went to court.

http://www.news-record.com/content/2011/08/31/article/a_guilford_county_teacher_faces_tax_evasion_charges

My bad. I realize now that  you only said she was arrested.  She is being accused of criminal tax evasion.  Who knows.... she may be acquitted.

Still don't understand why you say Buffet be locked up. He isn't being accused of criminal tax evasion.  Berkshire and the IRS are arguing it out in Tax Court.

[JBROB]

They need to lock up Buffet.  North Carolina just aressted a teacher in Guilford County that makes $39,000 for not paying her taxes over a period of years.  Put him in jail until he pays.

I am guessing the teacher pled guilty or was found guilty of tax evasion or tax fraud?

In the case of Buffet's company, Berkshire,  there is an on going dispute with IRS about how much tax the company owes. A person or company is has a right to challenge the IRS's tax assessment in U.S. Tax Court  As of yet, there has been no finding of any criminality on part of Berkshire.

Corporations and Companies generally don't go to jail. They are fined.

She just went to court.

http://www.news-record.com/content/2011/08/31/article/a_guilford_county_teacher_faces_tax_evasion_charges

My bad. I realize now that  you only said she was arrested.  She is being accused of criminal tax evasion.  Who knows.... she may be acquitted.

Still don't understand why you say Buffet be locked up. He isn't being accused of criminal tax evasion.  Berkshire and the IRS are arguing it out in Tax Court.

If Berkshire owes the IRS.  The IRS should make them pay.  They make everyone else pay, make him pay.  If Warren is the CEO, he should be held responsible.  How long have they been in court?  Make a decision and keep moving.

[Wildman78]

They need to lock up Buffet.  North Carolina just aressted a teacher in Guilford County that makes $39,000 for not paying her taxes over a period of years.  Put him in jail until he pays.

I am guessing the teacher pled guilty or was found guilty of tax evasion or tax fraud?

In the case of Buffet's company, Berkshire,  there is an on going dispute with IRS about how much tax the company owes. A person or company is has a right to challenge the IRS's tax assessment in U.S. Tax Court  As of yet, there has been no finding of any criminality on part of Berkshire.

Corporations and Companies generally don't go to jail. They are fined.

She just went to court.

http://www.news-record.com/content/2011/08/31/article/a_guilford_county_teacher_faces_tax_evasion_charges

My bad. I realize now that  you only said she was arrested.  She is being accused of criminal tax evasion.  Who knows.... she may be acquitted.

Still don't understand why you say Buffet be locked up. He isn't being accused of criminal tax evasion.  Berkshire and the IRS are arguing it out in Tax Court.

If Berkshire owes the IRS.  The IRS should make them pay.  They make everyone else pay, make him pay.  If Warren is the CEO, he should be held responsible.  How long have they been in court?  Make a decision and keep moving.

That's why they are in Tax Court to determine whether Berkshire owes the IRS.     They way I understand it is that Berkshire Hathaway has been disputing their tax bill in Court, and they intend to have it resolved within the next 12 months.  

Berkshire not the only company or individual that disputes it's tax bills.   It seems your problem is with the slow pace at which these cases are resolved.

Took this comment from a blog:

Warren Buffett said that the rich should pay more taxes.  Warren Buffett did not say that no one has the right to dispute their tax bill.  That's the right of any American.  That doesn't change his point.  It is legal to pay as small amount in taxes as you can - legally.  He hasn't done anything illegal, nor has he done anything hypocritical.

More facts about the Berkshire's battle with the IRS

Here's the skinny:

Berkshire, in its 2010 annual report, said it has settled on the taxes it owes the IRS, and state, local and foreign tax agencies, for all years up to 2002. In addition, Berkshire does "anticipate that we will resolve all adjustments proposed by the U.S. Internal Revenue Service for the 2002 through 2004 tax years at the IRS Appeals Division within the next 12 months."

Berkshire's 2005 and 2006 income tax returns are now being reviewed by the IRS Appeals Division, and returns from 2007 through 2009 are now being audited.

Berkshire's squabbles with the IRS and the agency's continued audits date to a 2002 lawsuit the company filed against the U.S. tax authority in federal court. In the lawsuit, Berkshire said the IRS owed the company millions in tax deductions that weren't initially honored in 1989 through 1991.

Berkshire argued the IRS made an "erroneous, wrongful and illegal" interpretation of the U.S. Tax Code.


U.S. District Judge Lyle Strom, who presided over a three-day nonjury trial, ruled that the IRS mistakenly rejected the deductions because an agent used faulty methods to deny the deductions, resulting in the company paying an excess of $23 million in taxes and interest.

An appeal by the IRS was denied by the court in 2006.

It looks like Berkshire has beaten them at least once which tends to support the point made by the Tax Lawyer I cited earlier---just because the IRS says you owe a tax doesn’t make it true.


Also, that lady in North Carolina was arrested for not paying North Carolina Income Taxes.  

[JBROB]

The little man dosen't stand a chance.  I understand the issues but it seems like the government takes advantage of working people ... the little people.