SPREADING THE BLAME
AROUND SO NOBODY HAS
TO TAKE RESPONSIBILITY:
Another Political Ploy
Buffett Blames Congress for Romney’s 15% U.S. Tax Rate
February 01, 2012, 8:50 AM EST
By Andrew Frye and Andrea Ludtke
(Updates with comments on debate in the sixth paragraph.)
Jan. 23 (Bloomberg) — Warren Buffett, the billionaire calling for more taxes on the rich, said Mitt Romney’s U.S. rate of about 15 percent reflects poor laws rather than failings by the candidate for the Republican presidential nomination.
“It’s the wrong policy to have,” Buffett told Bloomberg Television’s Betty Liu in an interview today. “He’s not going to pay more than the law requires, and I don’t fault him for that in the least. But I do fault a law that allows him and me earning enormous sums to pay overall federal taxes at a rate that’s about half what the average person in my office pays.”
Buffett, chairman and chief executive officer of Berkshire Hathaway Inc., supports Democratic President Barack Obama and said Congress needs to raise taxes on the wealthiest Americans to close the budget deficit. Romney has agreed to release his 2010 tax return tomorrow, under pressure from Republican opponents, after saying he pays about 15 percent. Romney co- founded Boston-based private-equity firm Bain Capital LLC.
“He makes his money the same way I make my money,” said Buffett, 81. “He makes money by moving around big bucks, not by straining his back or going to work and cleaning toilets or whatever it may be. He makes it shoving around money.”
Romney, a multimillionaire, reversed course and promised to speed up the release his tax disclosures after being dogged by questions during the South Carolina primary campaign. Former House Speaker Newt Gingrich, one of Romney’s rivals for the nomination, earned $3.1 million in 2010 and paid an effective federal tax rate of about 32 percent, returns released by the candidate on Jan. 19 show. In a debate that day, Gingrich called on Romney to be more forthcoming.
Buffett said Romney “hurt himself” in his debate performance before the South Carolina vote and was unable to effectively answer the criticism about his taxes and disclosure. Romney, who won the New Hampshire primary this month, was second to Gingrich in South Carolina on Jan. 21.
“It was more Romney losing ground in the last 10 days than it was Newt gaining, although Newt made the most of it,” Buffett said. Romney “did not have a good answer on taxes and obviously the question was coming.”
“I don’t think that determines who should be president,” Buffett said.
“We just made a mistake in holding off as long as we did,” Romney said yesterday on “Fox News Sunday.”
Romney has also been criticized by rivals for his role at Bain, which made profits by buying and selling companies. Texas Governor Rick Perry, who dropped out of the race this month, said Romney had practiced “vulture capitalism.” Winning Our Future, a political action committee backing Gingrich, depicted Romney as “more ruthless than Wall Street” in a 30-minute film.
“I think that Mitt Romney did things in the private sector that lots of people do, and it’s perfectly legitimate to buy businesses,” Buffett said. “I don’t like buying businesses with lots of debt, but there’s nothing immoral about it or anything of the sort.
“In some businesses, they hired more people, in some they let people go,” Buffett said of Bain. “I don’t believe in businesses having more people than are needed, so I see nothing specific about him.”
Buffett has said his tax rate is the lowest among the about 20 employees at Berkshire’s headquarters in Omaha, Nebraska. Capital gains from most assets held for longer than a year are taxed at a top rate of 15 percent, while wage income is taxed at a top rate of 35 percent. The difference between those two accounts for Buffett’s lower rate.
–Editors: Dan Kraut, William Ahearn
To contact the reporters on this story: Andrew Frye in New York at firstname.lastname@example.org; To contact the reporter on this story: Andrea Ludtke in New York at email@example.com
To contact the editor responsible for this story: Dan Kraut at firstname.lastname@example.org
TABACCO: Did you ever notice how Rich Folks always seem to stand together and protect one another when sh_T hits the fan? With all the Buffet quotes emanating from President Obama’s forked tongue (All Politicos are LIARS, but the Alternative to Obama is another Republican – I think NOT), I bet you thought Buffet was a “GOOD” Rich Guy – NOT! “Good Rich Guy” is an OXYMORON:
· Here are some common examples of oxymoronic expressions: act naturally, random order, original copy, conspicuous absence, found missing, alone together, criminal justice, old news, peace force, even odds, awful good, student teacher, deafening silence, definite possibility, definite maybe, terribly pleased, ill health, turn up missing, jumbo shrimp, loose tights, small crowd, and clearly misunderstood.
· “Ralph, if you’re gonna be a phony, you might as well be a real phony.”
(Richard Yates, “Saying Goodbye to Sally.” The Collected Stories of Richard Yates. Picador, 2002)
· Josh Parsons: Please, I didn’t kill anyone. I’m an extreme pacifist.
Dr. Temperance ‘Bones’ Brennan: That’s an oxymoron. You’re either extreme, or pacifist. You can’t be both.
(Andrew J. West and Emily Deschanel in “The Tough Man in the Tender Chicken.” Bones, 2009)
When you spread the BLAME onto CONGRESS (not even Democrats or Republicans), nobody gets Public Censure or Blame – particularly NOT MITT ROMNEY! SEE HOW THAT WORKS!
THE INTIMATE DETAILS OF
ROMNEY’S 15% TAX RATE
Or WHY DOESN’T
CONGRESS CHANGE THIS
LAW OR EVEN
TABACCO: The question is NOT, “Why is this man so happy?” – The question is, “At whom is Romney laughing?” If you don’t know the answer, go into the bathroom and check that mirror on your medicine cabinet!
It may sound illegal; it may sound like a tax dodge. But Mitt Romney’s declared tax rate of about 15 percent, well below that of most Americans, is perfectly legal and accepted by the Internal Revenue Service.
How can that be?
When Romney was working for Bain, he would have received his compensation in two ways: First, a fee charged to clients and taxed as regular income, amounting to 2 percent of the value of the assets under management. Then, Romney also would have received 20 percent or more of any gains in an investment as long as Bain’s profit exceeded a pre-set rate of return.
However, Romney and his Bain partners did not put up 20 percent of the capital – that came from the firm’s clients, other investors such as pensions. From their profits, the client investors pay the Bain partners in what is called “carried interest,” which is taxed at the longterm capital gains rate of 15 percent.
What is carried interest?
It is simply a percentage of the profits of the underlying investment. Although it is unclear where the term comes from, Victor Fleischer, an associate professor of law at the University of Colorado, says one possible origin is from the oil and gas business where someone raising money to drill for oil did not put up much money but received a share of the income if oil was discovered. “Their interest is carried by other investors,” explains Mr. Fleischer.
How does this work?
Bain Capital made a lot of investments in companies. If they bought one company for $100 million and sold it three years later for $200 million, they would have a $100 million capital gain. Out of that gain, Bain could have received as much as $20 million to $25 million, says Fleischer. Bain would then divide its share among the partners who worked on the purchase and sale. Perhaps Romney got $2 million even though he never invested much of his own money. In other words, his interest was carried by the other investors and he is taxed at the longterm capital gains rate for his share of their profits.
Is this widespread?
Fleischer says other well-to-do investors who use this method to get their money are real estate partnerships, oil-and-gas partnerships, and publicly traded investment partnerships. Although hedge-fund managers make large sums of money, much of this money is short-term capital gains, which is taxed at 35 percent.
The Joint Committee on Taxation has estimated that taxing carried interest as regular wage and salary income would generate about $21 billion in additional revenues over ten years.
Has been there any effort by Congress to change the law?
Yes, the House of Representatives has passed legislation sponsored by Rep. Sander Levin (D) of Mich. to tax the money differently. President Obama has indicated he would support a change. But, the US Senate has not done anything, says Roberton Williams, a senior fellow at the Tax Policy Center in Washington.
TABACCO: Can you say “REPUBLICANS”!
“The question is how should it be taxed?” asks Mr. Williams. “Since it’s not all regular income, there must be some middle ground that makes logical sense.”
Isn’t it unfair for plumbers and policemen to pay a higher tax rate than investors such as Romney?
Fleischer says the law was originally enacted in 1954 to try to be flexible with small businesses. Now, he says, “it’s used by billionaire investment partners. That’s not what Congress had in mind.”
TABACCO: Congress is NOT STUPID and NEVER HAS BEEN! When Congress creates Legislation with LOOPHOLES, Congress knows exactly what it is doing! At least the Republicans in Congress know what they are doing – I’m not too sure about the Democrats! That’s why I love them so! Don’t you just love Mr. Magoo? How about Elmer Fudd!
I’d rather Magoo ran the country than Simon Legree or Cruella DeVille!
However, opponents of making changes say Mr. Buffet should just write a check if he wants to pay higher taxes.
TABACCO: How snide, spiteful and pejorative Rich Folks can betoward their own kind if that kind attempts to do the right thing, which might cost those Rich Folks some ill-gotten gain.
Fleischer says it strikes him as important to change the law, which he says is utilized by sophisticated, knowledgeable people who can afford expensive lawyers. “The rest of us don’t get this kind of treatment,” he says.
However, in testimony before Congress in 2007, Adam Ifshin, then the chairman of the International Council of Shopping Centers Economic Policy Committee, argued that changing the law to increase taxes on carried interest would hurt real estate investment in economically distressed areas.
In addition, he argued that the general partners in real estate partnerships took on heavy risks that their deals would fail. “The general partner is taking risks beyond their investment in any given real estate project, and the carried interest is earned, in part, for taking that entrepreneurial risk,” he said.
Proponents of the current law argue the carried interest is not compensation. “It is a feature of an ownership interest,” said Bruce Rosenblum, managing director of the Carlyle Group, a private equity group, in testimony before Congress in 2007. “Its tax status is well settled and it is anything but a loophole.”
Tabacco: Conservative Republican Apologists are very clever at asking the WRONG QUESTION to solicit an IRRELEVANT, SELF-SERVING ANSWER!
“Why does President Obama deserve a 2nd term in view of the minimal increase in Jobs and GDP?” Another Scurrilous, Prejudicial Question posed by Conservative Talking Heads! Why? What is the ALTERNATIVE to a 2nd Obama term? Another Pro-Business, Supply-side, Conservative Republican like George W. Bush, whose Economic Policies created our Economic Crisis in the first place – that’s what!
Note that all Republicans want to defeat Obama! But that means electing another Republican! Which is better?
A) Minimal Economic Growth under a Democrat or
B) Maximal Economic Decline under a Republican?
You tell me!
The relevant, utilitarian, valid, rational, logical, justifiable, credible, alternative question is,
“What would a Republican
in the White House,
instead of Obama,
mean to the country?”
The question is, “WHAT WILL A REPUBLICAN DO, not what the Nominee says he will do, but what will he do? We have over 100-years of historical precedent to analyze since Theodore Roosevelt. If you need a little help, here’s the GOP list:
William Howard Taft
Warren G. Harding
Dwight D. Eisenhower
Richard M. Nixon
Gerald R. Ford
George H. W. Bush
George W. Bush
Now name 1, who helped the working man, the Middle Class or the disenfranchised instead of Corporations & Have-Mores – go ahead, I dare you! Which 1 would be better for the Average American than Democrat, Barack Obama!
“We must get out of the frying pan!” means
“JUMPING INTO THAT FIRE UNDERNEATH!”
Perhaps the “frying pan” is not all that bad afterall! Before you jump, maybe you should ask the RIGHT QUESTION FIRST – but quietly please because that’s one question No Republican wants to hear!
“Yes, Minister”, British Sitcom, Episode ‘The National Education Service’ – Conversation between 2 Civil Servants in British government regarding the Minister they both serve.
Sir Humphrey: Bernard, what did you think of the Minister’s Washington speech that Peter wrote? “The British government administration is a model of loyalty, integrity and efficiency. It’s a ruthless war on waste; we’re cutting bureaucracy to the bone, a lesson that Britain could teach the world”.
Bernard: But is it true? Can we prove it?
Sir Humphrey: Oh, Bernard! A good speech isn’t one where we can prove the Minister is telling the truth. It’s one in which nobody else can prove that he’s lying.
Tabacco: I consider myself both a funnel and a filter. I funnel information, not readily available on the Mass Media, which is ignored and/or suppressed. I filter out the irrelevancies and trivialities to save both the time and effort of my Readers and bring consternation to the enemies of Truth & Fairness! When you read Tabacco, if you don’t learn something NEW, I’ve wasted your time.
Tabacco is not a blogger, who thinks; I am a Thinker, who blogs. Speaking Truth to Power!
In 1981′s ‘Body Heat’, Kathleen Turner said, “Knowledge is power”.