Warren Buffett's Berkshire Hathaway Owes Taxes Going Back To 2002
A little over two weeks ago, Berkshire Hathaway CEO Warren Buffett, the third-richest person in the world, penned an op-ed critical of the low tax rates for the superrich. It would seem his own company hasn't prioritized paying its rightful share in a timely fashion either.
Berkshire Hathaway, the eighth-largest public company in the world according to Forbes, openly admits to still owing taxes for years 2002 through 2004 and 2005 through 2009, according to the New York Post. The company says it expects to "resolve all adjustments proposed by the US Internal Revenue Service" within the next year.
But The Post doesn't focus on the issue of a major corporation not paying its correct amount in taxes in a timely manner. Instead, the newspaper criticizes Buffett's position that America's rich should be taxed at a higher rate, taking issue with Buffett's claim that he gave 17 percent of his income to the government in 2010. The Post contends that since the majority of his income comes from dividends and capital games -- taxed indirectly through the corporate income tax -- "his effective rate would really be well north of 40 percent for a big chunk of his income."
"And if [Buffett's] firm wants to keep its tax bill low, well, that’s its right," The Post editors write. "But it would be nice if this 'pro-tax-hike' tycoon were a bit more honest about it."
This isn't the first conservative criticism of Buffett since his Op-Ed. Jon Stewart recently singled out one Fox News commentator who asked if Buffett was "completely a socialist?" Yes, the same man who last week dreamt up a $5 billion BofA deal in the bathtub
What The Post hence assumes is that Berkshire Hathaway pays taxes at the top marginal rate of 35 percent. The corporation's effective tax rate was last put at 29 percent, according to Forbes. More generally, due to a variety of breaks and loopholes, many U.S. corporations don't pay the top marginal rate. Over one-fourth of the U.S. corporations comprising the S&P 500 paid a corporate tax rate below 20 percent over the last half-decade, The New York Times recently reported.
At a minimum, "United States corporations pay only slightly more on average than their counterparts in other industrial countries," according to The New York Times. Indeed, corporate tax revenues are now nearing historic lows as a percentage of GDP.
Even historically, corporate tax rates and capital gains are low. From the 1950s to mid-1980s, the top marginal corporate tax rate hovered around 50 percent, according to Visualizing Economics. The capital gains tax, lowered to 15 percent in 2003, previously hadn't been that low since the Great Depression.
It's not only rich corporations that are legally able to avoid paying taxes either. Some 1,400 millionaires paid no income taxes whatsoever in 2009, according to tax data from the Internal Revenue Service.
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First Posted: 08/29/11 09:26 PM ET Updated: 10/29/11 06:12 AM ET