Talk about wearing the guy thin.
Moral of the story? Call for an investigation of a wealthy guy – a wealthy Senator – with a wealthier wife and he’ll gladly cut a check to get you to shut the hell up.
Related Posts
Jackson Hewitt Doesn’t Appreciate the Implication That They Suck at Preparing Tax Returns
Call it the discount 1040 wars (or something):
Jackson Hewitt Tax Service Inc sued H&R Block Inc to stop a new advertising campaign that it said misleads customers about tax refund loans and disparages Jackson Hewitt’s competence.
How disparaging? How about “two-thirds of the tax returns are wrong” disparaging:
According to the complaint, H&R Block falsely claimed that its “Second Look Review” program, which reviews past tax returns prepared by rivals, found that two-thirds of prior returns prepared by Jackson Hewitt contained mistakes.
“H&R Block’s 2 out of 3 claim necessarily implies the false claim that two out of three Jackson Hewitt customers who are entitled to refunds have been short-changed due to Jackson Hewitt errors or incompetence,” the complaint said.
Sigur Rós Isn’t a Huge Fan of PwC or Paying Taxes
“We are musicians, we hired the people who we thought were the best in the […]
Berkshire Hathaway: Wall St. Journal Is Wrong About Our Taxes on Bank of America Deal
Last week, folksy octogenarian (81 years today!) billionaire Warren Buffett announced that he was going to invest $5 billion in Bank of America. Some are questioning The Oracle’s intentions with this investment but considering WB came up with the idea in a place where all good ideas originate – the tub – it’s plausible that this investment will turn out okay for Berkshire shareholders (isn’t that the point?).
Regardless, some don’t think a guy who says that he doesn’t want to be “coddled” and needs – nay, WANTS! – to pay higher taxes shouldn’t be throwing around money and should just put his money where his Blizzardhole is. Accordingly, The Wall St. Journal published an editorial today accusing Buffett of being a little dodgy when it comes to Berkshire’s tax liability as it relates to his BofA investment.
Mr. Buffett’s recent decision to invest in Bank of America represents another tax-avoidance triumph for the Berkshire chief executive. U.S. corporations are subject to a top federal income tax rate of 35%, the second highest in the world. But the Journal’s Erik Holm notes [Ed. note: Thanks for linking!] that Mr. Buffett and the Berkshire bunch won’t pay anything close to that on their investment in BofA preferred shares.
That’s because corporations can exclude from taxation 70% of the dividends they receive from an investment in another corporation. This exclusion is intended to prevent double- or even triple-taxation as money is earned by one company, paid to another company and then ultimately paid out to shareholders. The policy makes sense; we only wonder why the exclusion isn’t 100%.
With the 70% exclusion for Mr. Buffett and his fellow shareholders, Berkshire will enjoy an effective tax rate of 10.5% on the $300 million in dividends it will receive each year from Bank of America.
So, a 10.5% effective rate. Not bad, right? Well, Berkshire says it’s wrong and issued a brief press release to rebut the Journal’s op-ed account and not so subtly suggests that they bone up on tax law:
An editorial in today’s Wall Street Journal says that “Berkshire Hathaway will enjoy an effective tax rate of 10.5% on the $300 million in dividends it will receive each year from Bank of America.” That statement is incorrect.
Virtually all of the stocks that Berkshire owns are held in its property-casualty subsidiaries, and that will be the case with the Bank of America preferred.
The tax treatment for dividends paid by U.S. corporations to property-casualty insurance companies was materially changed by a law passed in 1986. The changes were described in detail in the chairman’s letter included in Berkshire’s 1986 annual report.
A minor change in rate was made in 1993. Since that time dividends that insurers receive from U.S. companies incur an effective tax rate of 14.175%. For Berkshire, that rate will apply to dividends it receives from Bank of America.
So, in other words, suck it editorial board. If you know Buffett like you should know him, then you know that if he could save that 3.675%, he would.
Buffett’s Latest Tax Break [WSJ]
Berkshire Hathaway Inc. News Release [Business Wire (a Berkshire Hathaway Compay!)]