Buffet’s company sued for back taxes

Slipping under the radar last month was news that the federal government sued NetJets, a company owned by Warren Buffet’s Berkshire Hathaway, for some $366 million in unpaid taxes and penalties.  The legal question, as with most tax cases, is complex.

NetJets basically manages private jets that are owned by others.

At the heart of the tax battle is whether NetJets and a sister division should have collected a special transportation tax — often called a “ticket tax” — from the fractional owners of its fleet. (Fractional owners own a stake in a private jet, entitling them to a certain number of flight hours a year, in a way that’s similar to someone owning a time-share vacation property.)

You and I — the rest of us who fly commercial — pay a federal excise tax when we fly (7.5 percent of the ticket price plus $3.80 for each leg of travel.) People who own an entire plane outright have not been subject to the same tax since, ostensibly, there is no ticket to buy.

The air gets a lot foggier when it comes to fractional owners.

And thus, the dispute. 

Our tax code is a Gargantuan collection of of oftentimes incoherent and inconsistent laws.  Lawyers and accountants reap large incomes from proclaiming to understand it.  Congress and the President reap large campaign donations from creating even more incoherent and inconsistent tax loop holes.

But, Warren Buffet taking advantage of a tax loop hole is most disturbing. 

Today, President Obama is in South Florida speaking to yet another group of college students and once again trying to sell what he calls the Buffet Rule.  This rule, in the interest of “fairness”, will make sure that millionaires, inspite of the language in our tax code, will pay a specified “effective tax rate”, which, according to Mr. Buffet, must be higher than the “effective tax rate” paid by his secretary.

Has anyone ever asked Mr. Buffet how he knows what his secretary’s “effective tax rate” is?  Do you even know what your “effective tax rate” is?

My Mom always says that a woman who would tell her age would tell anything.  Can the same now be said about revealing one’s “effective tax rate”?

 

21 replies
  1. Eric
    Eric says:

    So the Buffet Rule is more like the Timothy Geithner Rule, which is “Don’t Pay Your Taxes Until You Get Caught.” ?I don’t see how this is going to bring more money into the Treasury though. ?Certainly Mr. Geithner would have to agree!

  2. stinkfoot
    stinkfoot says:

    My sense is that the idea behind the so-called “Buffet Rule” is to make us placidly sit by as our own taxes go up on the premise that straw-men millionaires and billionaires are being made to pay more.? It seems to me that there’s something not right about cultivating rabid hatred for the very class of people who might be furnishing jobs that the country so desperately needs in order to put a real end to the recession.
    ?
    I think it’s funny that the very person who wants us to actually believe that he wants to pay more taxes isn’t paying the ones he owes now…. yeah, let’s bump his tax rate up so he can evade it as well.

  3. ricbee
    ricbee says:

    Every business uses every loophole they can to maximize profits. Those loopholes were designed for a specific company or industry & others try to fit themselves in. Buffet just buys,he don’t run.

  4. sammy22
    sammy22 says:

    If you use TurboTax, you know what your effective tax rate is. Presumably, any tax software will be able to calculate it and spit it out. As for Mr. Buffet, he pays taxes on what his “taxable” is. If the NetJets flunkies took advantage of the tax code, they were simply doing what everybody is always told to do: “Take advantage of what the IRS lets you get away with”.?

  5. essneff
    essneff says:

    This whole “Buffet Rule” is such BS………. so Uncle Warren, now that he has $56 billion in assets NOW thinks his yearly tax rate should be higher!! then write a check you miserable hypocrite……If you pay?federal & state tax on your income, why in hell would you risk an additonal 30% tax rate on your investments that produce or could lose money…… brillant economic strategy?President Divider… a true prescription for job growth….. Dios Mios, this guy has to be defeated??

    • Dimsdale
      Dimsdale says:

      How about the “Buffet Syndrome” (BS), where you complain about how you aren’t paying enough taxes while taking every opportunity to not pay any…

  6. JBS
    JBS says:

    I guess that I see things in B&W. You take a nice ride on a plane yous own or got part of, yous gotta have a ticket. Yous can afford to have a nice jet for a toy, then pay the tax. Simple as that.
    Ultimately, this only points up the need for a flat tax and a much more simplified tax code.

  7. sammy22
    sammy22 says:

    Lynn, I have always been in favor of working together (that’s the WE), including reforming the Tax Laws.

    • Lynn
      Lynn says:

      Yup, the WE is people from all parties who want to repair this country. We decline to play to divide game and work for real change. Obamacare is the first and the Tax Laws Second.

  8. teeoff55
    teeoff55 says:

    For months, on the tax payer?s dime, we have listened to President Obama campaign on the premise of what is ?fair?.
    ?He talks about everyone paying their fair share.
    ?He talks about everyone doing their fair share.
    ?What strikes me as odd is that on his daily campaign trail he consistently defines ?paying? one’s fair share but has never defined the term ?doing? one’s fair share.
    ?Oh yes, he loves to cite the ?Buffett Rule? where a man supposedly pays less in taxes than his secretary.? What a crock!? Warren Buffett pays taxes on dividends which are taxed at a lower rate than regular income, regular income upon which he has already paid a much higher tax rate than his secretary who pays taxes based on her regular income.
    ?The nasty little secret in all of Obama?s puffery regarding the Buffett Rule is the fact that Warren Buffet is currently contesting a multi-million dollar tax bill having to do with his ownership in the company NetJets.?
    Yes! Believe it or not, the IRS is…

  9. teeoff55
    teeoff55 says:

    ?
    Yes! Believe it or not, the IRS is demanding back taxes of almost $1Billion dollars from Mr. Buffet.? And, on top of it all, can this possibly be true? ?Buffett is suing the government on this very issue!? I?m willing to bet his over taxed secretary is helping to type, file and fax the documents necessary to file this very law suit.? In her spare time she is probably also in charge of the shredding machine.
    This is the example Obama?s portrays as everyone needing their fair share?
    ?How ridiculous!?In reality the top 1% of income earners pays 37% of the entire federal taxes collected.?The top10% of income earners pay over 70% of the federal taxes collected.?The bottom 50% pays only 3% of the Federal taxes.
    ?Mr. Obama, who is paying their fair share?
    Regarding who is doing their fair share, this it seems is an extremely difficult term for our illustrious President to define.? He has yet to define the term ?doing ones fair share??Unless of course doing means paying taxes
    The defining moment for President Obama?s…

  10. teeoff55
    teeoff55 says:

    The defining moment for President Obama?s idea of doing one?s fair share could simple be declared if only he was asked the following question by our gutless press:
    ?Mr. Obama, with the top 25% of the private sector tax payers creating 75% of the new private sector jobs in the economy and paying the majority of federal income taxes, it would appear that they?re both paying and doing their fair share. How are your welfare receiving, Section 8 rent-free receiving, government cheese receiving, Food Stamp receiving constituents paying or doing their fair share??
    I?m sure that without a teleprompter, the question would be followed by a minute and a half of ?Um?, ?Er?, ?Yeah But? and finally, ?The previous Bush administration is responsible for what you just asked about?.

  11. Tim-in-Alabama
    Tim-in-Alabama says:

    It is important to say everyone should pay his fair share than to actually pay one’s taxes.

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