Buffett is rent seeking

[I Love America]

Those of you who think that Warren Buffett is looking out for you when calling for higher taxes on himself are seriously deluded, uninformed and borderline stupid.

You see Warren didn't get rich or stay rich by pissing his money away. Frst of all, he puts his wealth into a foundaton that doesn't get taxed, then he fights a propsed tax increase that would affect his Netjets business. Lastly he has been disputing $1 billion of taxes the IRS says he owes. If he really thought he should pay more he would end the dispute.

But, the real dastardly thing he is doing is using this position to enrich himself even further. NownI know what some of the ignorant less evolved minds (liberals) will ask "how can that be? How can Buffett get richer by asking the government to tax him more?"

Well, it is simple. Buffett knows that if the gobblement increases taxes on capital gains, individuals immediate reaction will be to look for ways to shield their money from taxation. Remember, this money was already taxed once at the corporate level. There are a couple of ways the rich get tax free income. One is tax free muni's which are out of the reach of common folk. But, with the state, citty and local finances so shitty, those aren't such safe investments anymore even with the tax free advantages.

The next way to shield money is to buy variable life insurance that can act as an investment vehicle and grow tax free.

Now how does this positively impact ole Waeren you may ask? Simple, he owns something like 8 insurance companies that stand to make a fortune if taxes go up. The added bonus is that he knows he will never have to pay the increased taxes he calls.

If you believe Buffetts calls for higher taxes on himself are noble, then you are a sucker of the highest order who probably thinis social security is just fine and has plenty of money.

 

[ThisIsYorCaptnSpkng]

Take a gander at the "Owners Manual" of Buffets Berkshire Hathaway...

"...Berkshire has access to two low-cost, non-perilous sources of leverage that allow us to safely own far more assets than our equity capital alone would permit: deferred taxes and “float,” the funds of others that our insurance business holds because it receives premiums before needing to pay out losses. Both of these funding sources have grown rapidly and now total about $100 billion."


BTW, this was updated February 26, 2011.

Buffett is an absolute master at AVOIDING taxes and profiting from it.

http://www.berkshirehathaway.com/ownman.pdf

 

[Vagitarian]

I've never thought he was noble and can't imagine who would. I think he's done pretty well in the market and listen to what he has to say though. Usualy his advice pans out in the long run so it'll be interesting to see what happens in the B of A deal. He announced he was putting in $5 billion when the stock was seven fiddy. Now it's closing in on 6 fiddy. Wonder what he paid for it by buying a shitload?

 

[ThisIsYorCaptnSpkng]

I've never thought he was noble and can't imagine who would. I think he's done pretty well in the market and listen to what he has to say though. Usualy his advice pans out in the long run so it'll be interesting to see what happens in the B of A deal. He announced he was putting in $5 billion when the stock was seven fiddy. Now it's closing in on 6 fiddy. Wonder what he paid for it by buying a shitload?

It is important to differentiate between Buffett the individual, and Buffett the CEO of BRK. He can be as foolish as he wishes in the former, but the latter comes with a responsibility to the shareholders to grow value. Buffett has done more than "pretty well". Buffett is the best at the game, and has more imitators and critics than one could count. I'd love to have a dollar for every time over the past 25 years that I read that BRK was overpriced or for every money manager that bragged to be a Buffett-style manager.

In his purchase of BAC, Buffett got perpetual commutative preferred shares with a guarantee of 6% per year. Meanwhile, the common shares are paying a dividend of less than 1%. He's done this before, and it's a good deal as long as BAC survives. This is a deal that you and I could get as well, assuming we had a few billion to put up. (I'll have to leave that part up to you.)

 

[Pale Horse]

The next way to shield money is to buy variable life insurance that can act as an investment vehicle and grow tax free.

Now how does this positively impact ole Waeren you may ask? Simple, he owns something like 8 insurance companies that stand to make a fortune if taxes go up. The added bonus is that he knows he will never have to pay the increased taxes he calls.

This is actually correct. The VUL and the UL have increasingly been used to replace mutual funds and fixed annuities. The fixed have an interest rate close to 4%. However, it's not totally tax free in the variable in some instances if it has had very good growth years. These investment vehicles act as a Roth IRA basically. They are also good for asset protection as a judge tends to not want to bust one up.

Doctors and lawyers use them because they get the most divorces. A doctor says he will keep the 1 million dollar policy beneficiary as his wife and kids. Who can argue w/ that? Then years down the road the doctor busts it and at that point nobody really knows until he's dead.

You must avoid the policy from becoming a MEC (Modified Endowment Contract) or you lose all of the tax advantages.