Berkshire Hathaway chairman Warren Buffett hinted in his annual letter to shareholders that the holding company’s nearly 18,000-page tax return may merit the attention of the Guinness Book of World Records.
Warren Buffett
Referring to the people who work with the operating managers, he noted, “Equally important, however, are the 23 men and women who work with me at our corporate office (all on one floor, which is the way we intend to keep it!). This group efficiently deals with a multitude of SEC and other regulatory requirements and files a 17,839-page Federal income tax return—hello, Guinness!—as well as state and foreign returns.”
Even at that length, though, Berkshire's tax return would be dwarfed by General Electric's, which reportedly runs about 57,000 pages, so it probably won't end up in the record books, for this year at least.
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Buffett’s tax policies have generated considerable attention in the past year after he wrote a New York Times editorial calling for changes in the Tax Code to tax the “super-rich” at a higher rate to ensure they don’t pay a lower tax rate than their secretaries (see Buffett Says Tax Code is ‘Coddling the Super-Rich’). The editorial led to the “so-called” Buffett Rule, which President Obama cited in his State of the Union address and included in his 2013 budget plan. However, Buffett has also been criticized for the disputes that his company has gotten into with the Internal Revenue Service over the back taxes that the IRS says it owes.
“Investing is often described as the process of laying out money now in the expectation of receiving more money in the future,” Buffett wrote in his shareholder letter Saturday. “At Berkshire we take a more demanding approach, defining investing as the transfer to others of purchasing power now with the reasoned expectation of receiving more purchasing power—after taxes have been paid on nominal gains—in the future. More succinctly, investing is forgoing consumption now in order to have the ability to consume more at a later date.”
6 Comments
Mr Buffet probably does not realize that he has a wonderful advantage to his situation - he can ELECT to skip on his deductions, both personal and business, to make sure that he pays (a lot) more taxes than his secretary. He would feel good about it and it is totally legal. One big disadvantage of this tax strategy - Obama Administration gets no benefit out of it and will owe no favors to Mr. Buffet. So, what I would REALLY like to know is how Mr Buffet's dispute with the IRS for Berkshire taxes going...
Posted by: Vieta | February 29, 2012 1:22 PM
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72,536 pages of Tax Statutes passed by Congress, lobbied by our super persons created this mess, and what is going to be done about it??
Cynically speaking - nothing. Has any legislation coming out of Congress resulted in less pages?
When you look at the complexity of the code, combined with all the additional legal complexity of the various regulations and court rulings, and the game of audit lottery contained in those 57,000 pages of tax return, it is no wonder that companies like GE with vast resources and a deep tax attorney bench approach each code as a Gordian Knot to be solved.
It is easy to say with pride, "we are a nation that lives by the rule of law," and yet, when you look at the perversion of the system that comes about from the engineering process of the codes, which frankly arises out complexity as much as the unintended consequence of a well meaning statute, you have to reassess the value of this pride.
I am not anti business or anti capitalism, but there is definitely a difference strata of personhood when it comes to this game. Our 'super persons' have the advantage, and now with Citizen's United, they will assure that they have even a stronger voice than mine, a mere mortal person.
1000 years from now, historians will be writing about the legendary lobbying armies of Corporations that captured the law and over threw Congress. Standing back now, this just looks like a festering cancer that exists as a parasite on the body politic and cannot be excised. At some point it kills the host.
Posted by: Just Me | February 28, 2012 5:31 PM
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Don't blame the IRS, blame Congress. No, wait! Blame the people that elect rascals to Congress who vote on bills they never intend to read. If Mr. Buffet or any other super-rich perons feels sufficiently guilty about their unearned wealth and income and want to get rid of their stash of cash and stock portfolios, they can voluntary contributions to the US Treasury. There is already a process in place for them to relieve their burden of guilt. Pub. 526 even gives an example of donating to "the Social Security Trust Fund, not earmarked for a specific account." They under 26 USC 170 they can deduct their generous contributions as Itemized Deductions on Line 16 of their Form 1040 Schedule A and then turn around and donate the income tax benefit of the contribution the following year for yet another deduction. Buffet would not be able to take the same deduction if Congress increases their income tax burden because they are involuntary takings. When donating his Berkshire Hathaway stock, Buffet could just took over the stock so he doesn't have to pay income tax on the gain for an added benefit for future years. Any loser stocks or bonds, should he hold any, should be sold first to capture the capital loss before donating the residual cash. It's all about maximazation. Please don't feel guilty, contribute to the USA today! You'll feel good you did.
Posted by: EnrolledAgent | February 27, 2012 12:15 PM
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I agree with Mooney and the anonymous contributor. 57,000 pages! Is that not sufficient reason alone to take a serious look at the IRS reporting requirements?
I do feel much better about the "large" returns I do that are over 30 pages...
B. Simmons
Posted by: bsimmonscpa | February 27, 2012 11:41 AM
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I agree in that Mr Buffet's opinion of taxes should be kept to himself. Mr Buffet has basically lived in a tax free world through his Berkshire Hathaway Company. He has always been dealing with the dividend exclusion and now a 30% tax credit related to the railroad maintence tax credit. With all necessary business expenses paid by the company, and he personally does not appear to be lavish, he probably does need very little money to live on I suspect. So it becomes easy to see how his secretaries may be in higher bracket. I wonder how much of the wealth that his company has, is the result of a the corporate tax structure as opposed to investing prowess. Frank F.Mooney
Posted by: yankee | February 27, 2012 11:03 AM
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IS THE LITTLE TROLL EVER GOING TO PAY BERKSHIRES BACK TAXES?? HE HAS NO BUSINESS EVEN TALKING ABOUT OTHER PEOPLES TAXES AND THEIR RATES. IF THOSE OF YOU WHO FEEL THAT YOU DON'T PAY ENOUGH IN TAXES AND THINK THE FEDERAL GOVERNMENT IS SPENDING THE MONEY WISELY, GO AHEAD AND GIVE MORE MONEY TO THE BOTTOMLESS PIT KNOWN AS THE FEDERAL GOVERNMENT.
Posted by: tazman1963 | February 27, 2012 9:57 AM
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