Remember the Warren Buffet Rule

[leftWNYbecauseofBS]

The whole idea of people paying their 'fair share' in taxes was a progressive chant just a few years ago and the poster boy was the Oracle Of Omaha Warren Buffet.

The problem with all of this is it was complete and utter bullsh*t. Just going to repost...

Burger King tax-avoiding deal is classic Buffett

Warren Buffett’s bid to finance Burger King’s move to low-tax Canada presents President Barack Obama with a tough political Whopper to swallow, but it’s business as usual for the tax-avoiding billionaire.


Washington was buzzing Tuesday after Berkshire Hathaway, Buffett’s investment vehicle, said it will finance $3 billion of Burger King’s $11 billion purchase of Tim Hortons, a profitable coffee-and-doughnut chain based in Canada.


This news has several savory ironies. The first is the decision by Burger King’s owner, a Brazil-U.S. private equity firm called 3G Capital, to move the fast-food franchise’s official headquarters to Canada.


Outrage has been building for weeks in Washington over so-called “inversion” deals, in which a U.S. company buys a foreign one and then moves its headquarters abroad to reduce tax bills.


At 15 percent, Canada charges among the world’s lowest federal corporate tax rates. At 35 percent, America has one of the highest.


For 3G and Berkshire, the cost-saving, wealth-accumulating arithmetic doesn't get much easier than this.


But isn't Buffett the folksy billionaire who occasionally lectures politicians about tax fairness?


In 2003, he said California’s Proposition 13 was “wildly capricious,” using his homes in Laguna Beach and Omaha as examples.


Because he bought his Laguna Beach vacation home in the 1970s, his property taxes were just $2,264 a year, despite its $4 million market value at the time.


In contrast, his second Laguna house, right next door and worth half as much, cost $12,002 in property taxes, because Buffett bought it in the 1990s. Meanwhile, he paid $14,401 in annual taxes on his main home in Omaha, Neb., worth $500,000.


Then, in 2011, Buffett criticized the nation’s personal income tax, saying his effective rate was less than his secretary’s.


His point was that people who rely on salaries are treated worse by Washington than billionaires, who typically earn most of their money from capital gains and dividends, which receive favorable tax rates.


Ever since, Obama has promoted his Buffett Rule, which would tax the rich at a minimum 30 percent effective rate.


Now the Burger King deal may leave egg on his poster boy’s face.


This comes at a bad time for the president, who recently ordered Treasury Secretary Jacob Lew to invent administrative rules to stop corporate inversion deals. No matter that inversion ostensibly cost the Treasury just $2 billion last year, not even a droplet in the $3 trillion federal tax receipts bucket.


In just one of thousands of quirks in the American tax code, inversions are actually good for the economy (and thus raise government revenues), because they encourage newly expatriate companies to return cash to the U.S. for investment.


Of course, Congress could do much more for the nation’s workers by cutting the corporate rate to global norms, and ending double-taxation of overseas profits. But this is an election year. It’s easier to demonize business than risk voting on legislation.


This brings us back to good old Warren. In making him a symbol for progressive tax reform, politicians have conveniently ignored his long track record of legally dodging them.


Buffett has been refreshingly candid on this point over his 50-year career.


His favorite tactic is to buy shares in great companies and then never sell them, preferring to let their value grow without incurring taxes on a stock sale. For example, most of his estimated $66.8 billion in personal wealth consists of Berkshire Hathaway stock held since the 1960s and never directly taxed.


Even Buffett's pledge to give away 85 percent of his fortune to charity can be viewed as history’s biggest tax-avoidance tactic.


On a more prosaic level, Buffett is a master of arcane tax strategies. For example, a recent deal to divest Berkshire of its longtime investment in The Washington Post was structured to deliver no tax bill, saving a reported $675 million.


And The Wall Street Journal reports that Buffett drove a particularly hard bargain for his Burger King investment, which is in the form of preferred equity paying a 9 percent dividend, to compensate Berkshire for $50 million a year in higher taxes it will pay as a U.S. financier.


Mindful of the political heat, Burger King executives said the Tim Hortons deal won't substantially change tax costs for the burger chain’s revenues. Moving headquarters north was designed mostly to win Canadian government approval, they say.


While there’s no reason to doubt the diplomatic considerations, downplaying the tax angle amounts to pure spin.


Executives want to rapidly expand both chains around the world. All that cash will flow through a nation with a 46 percent tax advantage over the U.S., according to KPMG.


Meanwhile, Buffett is shedding more light on why one study found him to be the best investor in U.S. history.


Without question, America’s tax system is goofy, preposterous and unfair. That’s why he has worked for 50 years to understand and legally avoid it.

[4248]

President Obama does this all the time - he cried about these tax dodging fusion deals - his next rant was we need to enlarge corporate tax breaks.

The difference between him and Clinton is Clinton argued word interpretations after the fact.

President Obama makes his speech and its your fault if you misunderstood the "Change" to come.

But he can honestly say, "I told you I would change how America does business with the world." (Not a word for word quote - maybe I misunderstood what I heard or was he using satirical references - or was I - not sure)

[steven]

Business as usual