Warren Buffet speaks common sense; alarms most Republicans

[Asher]

What is "high" if there is no benchmark?

[DanS]

The comparison, as stated by Buffett, was the tax rates that his employees pay on their salaries versus what an investor pays on his investment income.

[BlackCat]

This is tedious. Wouldn't you admit that if the taxes went down on the corporate tax, the income of the investor would go up, all else equal?

Sure, but what has that to do about how taxation is done ? You have company taxes and investor taxes and both have to be paid.

[BlackCat]

I wasn't making a comparative argument. Who cares about other countries? We are talking about the US and Buffett's comments re the US.

That, I think all are aware of - still doesn't make the american way sane.

[Ben Kenobi]

GE has paid either no income tax, got tax benefits, or paid income tax well under the posted rate for many years before Obama came to power. Obama did not change the tax laws for GE in his first year in office.

And it just so happened that their CEO is friends with the administration? Gosh, no sale.

Additionally, GE is just but one example. You cannot even point me to a single large US company that paid 35% tax.

Then the rate ought to be dropped.

[DanS]

Yes, both have to be paid, but it's one income stream from which both are paid. That's double taxation.

[Aeson]

It's a very simple calculation -- no mystery involved. You have earnings before tax and earnings after tax. The earnings after tax accrue to the investor one way or another. Reduce the tax and the earnings after tax will go up.

I don't agree that it will be a 1:1 as per the reasoning in the last post. All else is not equal in reality unless we are talking about only reducing Berkshire's tax rate and not their competitors.

[BlackCat]

The comparison, as stated by Buffett, was the tax rates that his employees pay on their salaries versus what an investor pays on his investment income.

Yep, and won't you admit that the investors taxation is way too low compared to what a worker has to pay ?

[BlackCat]

Yes, both have to be paid, but it's one income stream from which both are paid. That's double taxation.

No, that is two different taxes that has to be paid - it is no way some kind of double taxation.

[Asher]

And it just so happened that their CEO is friends with the administration? Gosh, no sale.

Identify which changes Obama made in his first year in office to benefit GE.

[Ben Kenobi]

Uh, let's see, a tax holiday, that for some strange reason begins with the Obama administration. Obamacare waivers.

[Asher]

Moron.

http://money.cnn.com/2010/04/16/news/companies/ge_7000_tax_returns/

GE: 7,000 tax returns, $0 U.S. tax bill

NEW YORK (CNNMoney.com) -- General Electric filed more than 7,000 income tax returns in hundreds of global jurisdictions last year, but when push came to shove, the company owed the U.S. government a whopping bill of $0.

How'd it pull off that trick? By losing lots of money.

GE had plenty of earnings last year -- just not in the United States. For tax purposes, the company's U.S. operations lost $408 million, while its international businesses netted a $10.8 billion profit.

That left GE (GE, Fortune 500) with no U.S. profit left for Uncle Sam to tax. Corporations typically face a 35% federal income tax on their earnings. Thanks to its deductions and adjustments, GE reported an actual U.S. federal income tax rate of negative 10.5%. It got to add a "tax benefit" of $1.1 billion back into its reported earnings.

"This is the first time in at least decades that GE has reported negative U.S. pretax income and it reflects the worst economy since the Great Depression," Anne Eisele, GE's director of financial communications, said via e-mail.

But what about the $10.8 billion profit overseas? GE is "indefinitely" deferring income tax payments on those profits, Eisele said.

It may seem like accounting magic, but it's completely legit.

GE isn't the only "Top 5" company on this year's Fortune 500 list that owed no income taxes. Bank of America (BAC, Fortune 500), which suffered major losses in 2009, included a tax benefit of $1.9 billion in its annual profit.

"That's one way of escaping taxes," said Scott Hodge, president of the Tax Foundation. "Companies get to deduct their losses, so if there's no earnings, then they pay no income tax."

But GE isn't exactly escaping all tax-related pain: The company paid almost $23 billion in taxes to governments around the world from 2000 to 2009, Eisele said.

Plus, paying the accountants to crank out 7,000 tax returns can't be cheap.

And then there's all the lawyers needed to defend those returns. GE filed tax paperwork in more than 250 jurisdictions around the world last year. "We are under examination or engaged in tax litigation in many of these jurisdictions," the company dryly notes in its annual report.

GE may not owe the IRS, but it still has to file -- and its filings are epic.

In 2006, as the IRS ramped up its corporate e-filing program, the tax agency actually issued a celebratory press release when it processed GE's tax return. On paper, the return -- the nation's largest -- would have totaled a massive 24,000 pages. But instead, the IRS was able to upload the 237 MB document in under an hour.

Reading it, though, is apparently taking a bit longer. The IRS is currently auditing GE's tax returns for 2003-2007.

And Obamacare waivers in 2009? Really?

You're so ****ing stupid.

[snoopy369]

Dan, if the company I worked with paid less in (say, employment) taxes, they could afford to pay me more. How is that any different?

Double taxation is the price that corporations pay for the right to be a corporate 'person'. You don't have to incorporate, if you want to avoid paying taxes twice; you can personally employ people and personally collect income, and pay taxes on it once. Odd, isn't it, that almost everyone chooses double taxation

In any event, double taxation is not that straightforward. Money is taxed every time it accrues to a new person - I get income, it's taxed. I give that money to Jewel-Osco, they're taxed on the profit there. They give that money to Farmer Dan for some apples, he's taxed on that income. The difference between taxing B-H and then taxing Buffett for his profit is not all that large; he provided a good or service to B-H (startup capital) and receives income from that startup capital (both in direct income [salary, dividends] and the increase in value of the stock). It feels more like an unfair double taxation when it's a company that is identified directly with a single person, but that doesn't make a difference as opposed to, say, GE or Citibank...

[KrazyHorse]

You're really not very smart, Aeson. Please just stop.

This.

[KrazyHorse]

Do you have a specific criticism?

My criticism is that you didn't include the personal income taxes which were already paid on earnings invested...