Art Laffer confirms it: Warren Buffett is a Homespun Humbug on the tax issue

Mr. Buffett has claimed that he pays too little in tax and wants to pay more on his 'income'.  Art Laffer unpacks this claim and compares it to Mr. Buffett's actual behavior which, of course, is tax minimizing.  The Omaha Obamamaniac has followed a brilliant strategy:  yowl class warfare and soak the rich while piling up as many Benjamins as possible.  Along with George Soros, he is the most cynical of speculators.

Mr. Buffett stated in his op-ed that he paid $6,938,744 in total income and payroll taxes in 2010, representing 17.4% of his taxable income, which puts his taxable income just under $40 million. Although certainly a fantastic sum, $40 million actually understates Mr. Buffett's income in 2010 by more than 250-fold.

Mr. Buffett's net worth rose by $10 billion in 2010 to $47 billion, according to Forbes Magazine. That increase, an unrealized capital gain, is part of his total income by any standard definition, including the one used by the Congressional Budget Office. After also including a $1.6 billion gift to the Bill and Melinda Gates Foundation, Mr. Buffett's true income in 2010 was much closer to $11.6 billion than the $40 million figure cited in his op-ed. Hence his true effective tax rate was only 6/100ths of 1% as opposed to 17.4%. And these are just the additions to his income that we know about.





Barack Obama awards the presidential Medal of Freedom to Warren Buffett, February 2011.

The "Buffett Rule" would not tax the vast majority of his shielded income, including either his unrealized capital gains, which are currently taxed at zero percent, or charitable contributions, which are tax deductible. If the "Buffett Rule" were applied as President Obama proposes, then Mr. Buffett's federal tax bill would have been $14.4 million, rather than the $6.9 million he actually paid. As a fraction of his true income, his effective tax rate would only have risen from 6/100ths of 1% to 12/100ths of 1%.

Mr. Buffett's donation to the Gates Foundation goes to the heart of my critique of his public call for higher tax rates on the rich. Just look at the second contractual condition for his ongoing pledge to the Gates Foundation: "The foundation must continue to satisfy the legal requirements qualifying Warren's gift as charitable, exempt from gift or other taxes."

In other words, if his gift weren't tax sheltered he wouldn't give it. So much for "shared sacrifice."