Just a Gimmick
Recently, President Obama has been running around the country promoting the “Buffett Rule.” This is a class warfare gimmick that has nothing to do with the national debt, which has exploded during the Obama administration and which threatens the financial viability of our country (think Greece).
Setting aside the matter of the proposed rule itself, I think what it says about its namesake, Warren Buffett, is very interesting.
Mr. Buffett’s company is Berkshire Hathaway, and his secretary is an employee of that company. As such, her pay is subject to IRS rules governing “ordinary income.”
On the other hand, Mr. Buffett chooses to be an investor in, rather than an employee of, Berkshire Hathaway. As such, his considerable income is subject to IRS rules governing capital gains, which are taxed at a lower rate than ordinary income. If he made himself an employee of that company, his income would be automatically taxed at a higher rate than his secretary. All he needs to do is make himself an employee of his own company.
Why would he choose not to do this if he really thinks he should pay a higher tax rate than his secretary? The answer is that, in spite of what he says, he really wants to pay lower taxes, not higher. I guess what he really wants is for “other people” to pay a higher tax rate, not himself.
I’ve been a past admirer of Warren Buffett, but this conundrum makes him a hypocrite. Maybe that’s why he and our president are such pals.
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