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YOUNG: Warren Buffett’s liberal display of tax-increase hypocrisy
Obama’s favorite tycoon lobbies for higher rates while minimizing his own
Question of the Day
While liberalism’s terminus is failure, its first stop is hypocrisy. Higher-tax advocate Warren Buffett recently illustrated this with his reported use of a tax strategy to avoid — you guessed it — higher taxes.
There is nothing new in the tax strategy or in Mr. Buffett’s use of it; it’s just an ample example of liberal hypocrisy.
As reported in Bloomberg BNA’s Daily Tax Report on March 20, Mr. Buffett’s Berkshire Hathaway Inc. “plans to limit taxes on more than $1 billion of gains in Graham Holdings Co. stock by swapping the shares for assets owned by the former Washington Post publisher, according to a March 12 regulatory filing outlining terms.”
The tax-avoidance swap transaction is known as a “cash-rich split-off.” Assets are swapped between two parties, in order to avoid the sale of the original property, which would trigger a large tax bill. It is not daring: Mr. Buffett used it last year and earlier in 2008.
Should Mr. Buffett be taken to task for seeking to legally lower his taxes? No. That is what his shareholders expect and deserve. He would be putting his company at a competitive disadvantage to unnecessarily pay higher taxes than required.
Should Mr. Buffett be taken to task for expressing his opinion of support for higher taxes? No. He is free both to speak his mind and to be wrong. He has spoken freely — and contradictorily — over the past couple of years about the need for the “rich and ultrarich” to pay more in taxes.
In the first of two New York Times opinion pieces on the topic, he stated in 2011 that “for those making more than $1 million I would raise rates immediately on taxable income in excess of $1 million, including of course, dividends and capital gains. And for those who make $10 million or more I would suggest an additional increase in rate.”
Reporting on two Buffett television interviews a month later, ABC News noted a change: “It isn’t [my idea] to have the rich pay more taxes. It’s to have the ultra-rich pay more.” According to ABC News: “Later on CNBC, Buffett said if it were up to him, people earning $50 million would not see any tax increases, only people who ‘make a lot of money and pay a very low tax rate, like me.’”
In his second New York Times piece in 2012, Mr. Buffett was back where he started: ” 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.”
Mr. Buffett is free to make his argument that higher taxes are needed on investment income. Notwithstanding is the fact that an attempt was made decades ago to institute a minimum tax on the wealthy, but it failed miserably, and Washington undertook annual exercises of undoing its effects on the middle class. Nor is he obliged to acknowledge the fact that taxing something produces less of it, and that in our lackluster economy, higher taxes mean less investment and fewer jobs.
Mr. Buffett’s failing is in preaching one thing and practicing another. It has the quality of a tippler supporting Prohibition in order to overcome his own drinking. In that, he is not alone — especially on the left.
Hypocrisy is a mainstay of liberalism. From their demand for Obamacare waivers unavailable to others to choosing private school for their progeny while denying the same choice to children assigned to subpar public schools, the left habitually rallies to a double standard. It is an “our rules for you people” approach.
Mr. Buffett has gone out of his way to obtain the tax rate he wants — both for himself and his business — rather than accept the higher tax rate he would have otherwise. Similarly, he has gone out of his way to call out others for doing the same thing.
Without batting an eye, he has not simply allowed himself to become the poster boy for soaking the rich, he could not have cultivated the role better with a hoe and spade.
He has been lionized by the left in its quest for higher taxes on “the rich,” with neither hint nor qualm of inconsistency in message or messenger. The president has regularly cited the “Buffett Rule,” including it on his list of tax hikes in this year’s budget — to the tune of $53 billion over the next decade.
Insulated from high taxes by shrewd planning, Mr. Buffett has mounted a high-profile campaign for high — or even higher — taxes. The left has taken it and run with it.
In all this, there is no small hint of the image of Marie Antoinette at Versailles. When informed of the general population’s lack of bread, her response: “Let them eat cake.” Mr. Buffett and liberals are having their cake and eating it, too.
J.T. Young served in the Treasury Department and the Office of Management and Budget from 2001 to 2004 and as a congressional staff member from 1987 to 2000.
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