I like Warren Buffett, but… his letter on Donald Trump’s taxes is ridiculously misleading. To wit:
- Donald Trump’s tax situation appears to be complicated by the fact that he conducts many of his business dealings in his own name. So if he loses money on a deal, he can claim the loss on his taxes. Buffett says he’s never carried forward a tax loss, but his company Berkshire Hathaway has done so.
- Buffett boasts of donating $2.85 billion dollars to charity which, he says, will never be claimed on his taxes as a charitable deduction. However, Buffett appears to be referring to a stock donation, which is a way for Buffett (or his estate, if he were to hold the stock until his death) to avoid having to sell the stock and pay taxes on the proceeds from the sale. The main reason to donate the stock directly to evade the rule that charitable deductions cannot exceed 50 percent of adjusted gross income. I have no problem with Buffett’s money going to the Gates Foundation rather than the US Treasury, but it’s disingenuous for Buffett to spin that as, “I’m an honest man who pays his taxes, unlike Trump.”
- Buffett says, “I have no problem in releasing my tax information while under audit”, but doesn’t appear to have actually released his tax returns, just a few specific numbers from his 2015 return. While it would certainly be legal for Buffett to release his complete tax return while under audit, I wonder if his lawyer would, or has, advised him against it. (Lawyers like to advise their clients not to talk to the press.)
- Buffett is actually notorious for having Berkshire Hathaway not pay dividends, so that his shareholders don’t have to pay taxes on those dividends. He says he made around $11 million in 2015, but if Berkshire were a more normal company with more normal dividend-paying practices, Buffett would have had hundreds of millions in taxable income. Again, more money for the Gates Foundation, but it further undermines the attempted point-scoring against Trump.
At this point, Trump’s campaign appears to be doomed. There’s no reason to go spreading misinformation about our tax code for the sake of defeating him.