About Me 0015: Who's Making Money

Every so often Warren Buffett goes on TV and calls for higher taxes. This from the guy who’s paid, according to Forbes, perhaps less than $10 million in taxes, a tiny percentage of his $50 billion net worth. I say perhaps because, to the best of my knowledge, Buffett has never made his tax returns public.

Buffett is big-business, with his Berkshire Hathaway holding company stock selling (today) at $119,675.00 per share. Berkshire Hathaway has 1 million shares, which means that Buffett heads a company worth more that the gross national product of a few small Latin American countries.

How does Buffett manage to pay so little in taxes? For one, Buffett, who wants everybody to pay for big-spending big government, donates sizable amounts to tax-exempt philanthropies, such as the Gates Foundation. Forbes, again,

He donates appreciated Berkshire Hathaway stock — which costs him pennies on the dollar — to charity, and receives a fat, juicy tax deduction at the appreciated price without having to pay a capital gains tax on the appreciation. (And, note that the money actually sits in his own charitable organization.) He’s saving income taxes with the ordinary deduction so it’s essentially a tax shelter.

He builds up his massive net worth and doesn’t have to sell stock while deferring capital gains. When he does take a capital gain, it’s at a 15% rate, and he lives in a low-tax state.

Buffett has been known to complain that he paid taxes on the lower-rated capital gains rate rather than the higher income-tax rate. Well, play me the world’s smallest violin, Warren.

Mind you, I’m all for capitalism. America is the greatest country in the world because historically it afforded its citizens the ability to legally prosper and live in abundance. What I object to is billionaires who got their own aiming to prevent anyone else from attaining the same, or more, as they.

This latest time around Buffett was on ABC’s This Week, and told Christiane Amanpour that “People at the high end, people like myself, should be paying more taxes”,

OK, so there’s this Democratic president who’s really good on spending. Meaning, he does it a lot. Among the most ever, in fact.

For more than 18 months he spent like there was no midterm.

He authorized the government takeover of a car company. When in doubt — or not — get the government involved. Something about saving jobs, union jobs.

But now the government’s getting out by selling stock. And it looks to be making money. Which is an unknown thing in government but in private business usually involves getting back more money than was put it. It’s called a profit. He couldn’t bring himself to say the word. But that’s what it is, a profit for taxpayers.

So do you think that profit will be returned to taxpaying shareholders whose money saved the day?

Here’s how that president put it:

THE PRESIDENT: Hello, everybody. Good afternoon. Today, one of the toughest tales of the recession took another big step towards becoming a success story.

General Motors relaunched itself as a public company, cutting the government’s stake in the company by nearly half. What’s more, American taxpayers are now positioned to recover more than my administration invested in GM.

And that’s a very good thing. Last year, we told GM’s management and workers that if they made the tough decisions necessary to make themselves more competitive in the 21st century — decisions requiring real leadership, fresh thinking and also some shared sacrifice –- then we would stand by them.

And because they did, the American auto industry -– an industry that’s been the proud symbol of America’s manufacturing might for a century; an industry that helped to build our middle class -– is once again on the rise.

Our automakers are in the midst of their strongest period of job growth in more than a decade. Since GM and Chrysler emerged from bankruptcy, the industry has created more than 75,000 new jobs. For the first time in six years, Ford, GM and Chrysler are all operating at a profit.

In fact, last week, GM announced its best quarter in over 11 years. And most importantly, American workers are back at the assembly line manufacturing the high-quality, fuel-efficient, American-made cars of tomorrow, capable of going toe to toe with any other manufacturer in the world.

Just two years ago, this seemed impossible. In fact, there were plenty of doubters and naysayers who said it couldn’t be done, who were prepared to throw in the towel and read the American auto industry last rites.

Independent estimates suggested, however, that had we taken that step, had we given up, we would have lost more than 1 million jobs across all 50 states. It would have also resulted in economic chaos, devastating communities across the country and costing governments tens of billions of dollars in additional social safety net benefits and lost revenue.

That wasn’t an acceptable option –- to throw up our hands and to quit. That’s not what we do. This is a country of optimistic and determined people who don’t give up when times are tough. We do what’s necessary to move forward.

So these last two years haven’t been easy on anybody. They haven’t been without pain or sacrifice, as the tough restructuring of GM reminds us.

And obviously we’ve still got a long road ahead and a lot of work to do -– to rebuild this economy, to put people back to work, to make America more competitive for the future and to secure the American Dream for our children and our grandchildren.

But we are finally beginning to see some of these tough decisions that we made in the midst of crisis pay off. And I’m absolutely confident that we’re going to keep on making progress. I believe we’re going to get through this tougher and stronger than we were before. Because just as I had faith in the ability of our autoworkers to persevere and succeed, I have faith in the American people’s ability to persevere and succeed. And I have faith that America’s best days and America’s — and American manufacturing’s best days are still ahead of us.

Finally, I just want to embarrass a couple of people. Ron Bloom and Brian Deese are key members of the team that helped to engineer this rescue of GM and Chrysler. So it had not been for these two gentlemen, a whole lot of people might be out of work right now. We are very proud of them and I figured that I’d go ahead — you can see they’re all looking sheepish — point them out to you. So thank you very much, everybody.

(Malcolm is the Top of the Ticket blogger at latimes.com/ticket )

Update (AP): Here’s the clip. The good news? We’ve only lost $4.5 billion on share sales thus far.

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Wednesday 8 December 2010

Who's Making Money

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