Tags: Buffett | Share | secrets | Tax | Avoidance’

WSJ: Buffett Must Share ‘Secrets of Tax Avoidance’

Tuesday, 27 Sep 2011 01:13 PM

Although billionaire investor and Berkshire Hathaway CEO Warren Buffett has repeatedly said his secretary pays more in taxes than he pays, Buffett has never really come clean about his own taxes, The Wall Street Journal reports.

Using figures from by Buffett's own unverified claims, his federal taxes in 2010 amounted to 17.4 percent of his taxable income, probably because much of his income was from capital gains and dividends. It's also likely that he took significant deductions for charitable donations.

No doubt the millions of Americans who could end up paying more because of this claim would love to see the details.
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Data from the Internal Revenue Service make clear, the vast majority of those earning more than $1 million per year typically pay tax rates two to three times higher than people making less than $100,000.

In 2008, the average tax rate for millionaires and above was 23.3 percent and for those earning between $30,000 and $50,000 it was 7.2 percent.

“But the opportunity to educate the public would be even greater if Mr. Buffett would let everyone else in on his secrets of tax avoidance by releasing his tax returns,” the Journal said in Review & Outlook piece.

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Warren Buffett
(Getty Images photo)
Buffett also wrote in the New York Times that none of the other people in his office paid less than a 33 percent rate, and at least one colleague paid 41 percent, figures that suggest Buffett's staff are the sort President Barack Obama means when he says “rich,” and might even describe as "millionaires and billionaires" if some of them have annual incomes of more than $200,000.

Moreover, Buffett's pleas to increase taxes for high earners evidently don't include taxes on dividends paid by his own company, as The Wall Street Journal reported earlier this year.

Though U.S. corporations are subject to a top federal income tax rate of 35 percent — the second highest in the world — Buffett and the Berkshire investors won't pay anything close to that on their investment in Bank of America preferred shares because corporations can exclude from taxation 70 percent of the dividends they receive from an investment in another corporation.

In fact, they will pay a mere 10.5 percent on the $300 million in dividends Buffett’s company will receive each year from BofA.

The Des Moines Register reports that Buffett’s company is currently involved in legal action with the Internal Revenue Service disputing taxes between the years 2002 and 2009.

The IRS states that Berkshire Hathaway owes approximately $1 billion in taxes.

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Although billionaire investor and Berkshire Hathaway CEO Warren Buffett has repeatedly said his secretary pays more in taxes than he pays, Buffett has never really come clean about his own taxes, The Wall Street Journal reports. Using figures from by Buffett's own...
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2011-13-27
Tuesday, 27 Sep 2011 01:13 PM
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