{"id":29143,"date":"2012-04-18T10:21:26","date_gmt":"2012-04-18T14:21:26","guid":{"rendered":"http:\/\/countingpips.com\/forex-news\/2012\/04\/the-buffett-rule-do-as-warren-buffett-says-not-as-he-does\/"},"modified":"2012-04-18T10:21:26","modified_gmt":"2012-04-18T14:21:26","slug":"the-buffett-rule-do-as-warren-buffett-says-not-as-he-does","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex-news\/2012\/04\/18\/the-buffett-rule-do-as-warren-buffett-says-not-as-he-does\/","title":{"rendered":"The Buffett Rule: Do As Warren Buffett Says, Not As He Does"},"content":{"rendered":"

Article by Investment U<\/a> <\/p>\n

\"The<\/p>\n

Naturally, when Warren Buffett speaks, the rest of us listen. Unfortunately in this case, his words don\u2019t appear to be matching his actions\u2026<\/p>\n<\/div>\n

Just about everybody has heard of the \u201cBuffett Tax\u201d by now. Also known as the \u201cBillionaire\u2019s Tax\u201d or the \u201cBuffett Rule,\u201d it seeks to establish a minimum 30% tax rate on Americans whose household income equals $1 million or more.<\/p>\n

On Monday evening, the Democrat-controlled Senate struck the proposition down 51-45. Despite the majority in favor, the \u201cBuffett Rule\u201d failed to gain the 60 votes it needed to pass, and that was even with Maine\u2019s Susan Collins, a Republican, approving it.<\/p>\n

According to a recent Gallup poll, approximately 60% of Americans supported the added tax against \u201cthe rich,\u201d which means that a majority of Americans are disappointed with Tuesday morning\u2019s news. That includes The Christian Science Monitor<\/em>\u2019s Brad Knickerbocker, who recently praised the Buffet Rule as:<\/p>\n

\u201c\u2026 a wonderful political device \u2013 a call to even out the tax burden in a way that picks the pockets of those \u2018millionaires and billionaires\u2019 President Obama keeps talking about while evening things out for the vast American middle class. It\u2019s very easy to understand, especially in contrast to a tax code requiring battalions of lawyers to navigate. And it has this wonderfully avuncular fellow for whom it\u2019s named.\u201d<\/p>\n

That \u201cavuncular fellow\u201d is of course the legendary investor Warren Buffett<\/a>. Nicknamed the \u201cOracle of Omaha,\u201d Buffett runs a supremely successful business buying up undervalued companies and turning them into real moneymakers.<\/p>\n

If his accumulated billions don\u2019t testify to his accomplishments enough, his Berkshire Hathaway stock \u2013 which is valued at over $119,000 \u2013 certainly does. Over the last few decades, that holding company has returned more than 1,000%, and Buffett\u2019s personal $105,000 investment is now worth tens of billions.<\/p>\n

Naturally, when Warren Buffett speaks, the rest of us listen. Unfortunately in this case, his words don\u2019t appear to be matching his actions\u2026<\/p>\n

Buffett Says He Supports Higher Taxes for the Rich<\/strong><\/h2>\n

Last year, Warren Buffett did a lot of speechmaking, mainly about the tax proposal that quickly came to bear his name.<\/p>\n

It all started with a piece published by The New York Times<\/em>, where he aired his thoughts on how rich people like him weren\u2019t paying nearly as much in taxes as they should be, especially when the middle and lower classes were struggling so badly.<\/p>\n

Many people construed his initial message and subsequent crusade as noble and selfless. But actions speak a lot louder than words, and the truth is that Buffett\u2019s actual business decisions simply don\u2019t match up with his verbal declarations.<\/p>\n

Now part of what makes Buffett such an excellent businessman is that he knows how to read the signs, both when it comes to the economy and public sentiment. (It also doesn\u2019t hurt that, according to Peter Schweizer in his book, Throw Them All Out<\/em>, Buffett also has powerful crony capitalist ties to Congress.)<\/p>\n

So he was very well aware that the Occupy Wall Street<\/a> movement was making the news every other day in 2011, while the remaining space went to the struggling economy and national deficit. As one of the wealthiest men in the world, he could have easily come under public condemnation in that overarching outcry for excessive spending.<\/p>\n

He therefore simply took the necessary steps to protect himself from that possibility. Yet for all of his talk about greater taxation, Buffett and the IRS are anything but the best of friends, as evidenced by their legal history of butting heads.<\/p>\n

Buffett\u2019s Battle With the IRS<\/strong><\/h2>\n

Over the decades, Warren Buffett has tangled with the IRS more than once.<\/p>\n

AIG President Bill Wilson easily remembers \u201ca 14-year battle over the dividends received deduction.\u201d The case was resolved in 2005 in Buffett\u2019s favor, but that wasn\u2019t the end of his disagreements with the IRS.<\/p>\n

There\u2019s also the approximate $1 billion in taxes the government says he owes them. That seemingly large sum represents a mere 0.2% of Berkshire Hathaway\u2019s $372 billion total assets, yet Buffett isn\u2019t budging on that lawsuit, either.<\/p>\n

The same goes for another tax controversy exposed by The Wall Street Journal<\/em>, this one involving his decision to invest in Bank of America<\/a> as a legal \u2013 but frowned upon \u2013 loophole that allows him to keep even more of this money.<\/p>\n

None of that behavior at all matches Buffett\u2019s well-publicized advice on the subject. As the aforementioned Wilson pointed out, \u201cOn one hand Buffett advocates for paying more taxes, but when it comes to his own company\u2019s taxes, he has gone through great lengths to pay less.\u201d<\/p>\n

That reality discounts him as a credible expert on the subject, at least when it comes to supporting his namesake legislative proposal. It also doesn\u2019t help his case that even the Obama administration and bipartisan panels arranged by the Tax Policy Center in Washington agree that the Buffett Rule wouldn\u2019t do much to change the nation\u2019s economic woes.<\/p>\n

As White House National Economic Council Deputy Director Jason Furman explained, the tax \u201cwas never our plan to bring the deficit down and get the debt under control.\u201d<\/p>\n

That means it was all but worthless. And, despite public sentiment on the subject, Monday\u2019s vote was worthwhile after all.<\/p>\n

Good Investing,<\/p>\n

Jeanette Di Louie<\/p>\n

\n<\/img><\/a> <\/img><\/a> <\/img><\/a> <\/img><\/a> <\/img><\/a>\n<\/div>\n

<\/p>\n

Article by Investment U<\/a> <\/p>\n","protected":false},"excerpt":{"rendered":"

Article by Investment U Naturally, when Warren Buffett speaks, the rest of us listen. Unfortunately in this case, his words don\u2019t appear to be matching his actions\u2026 Just about everybody has heard of the \u201cBuffett Tax\u201d by now. Also known as the \u201cBillionaire\u2019s Tax\u201d or the \u201cBuffett Rule,\u201d it seeks to establish a minimum 30% … <\/p>\n

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