I have always been impressed by Warren Buffett. Generally, I find wealthy people to be narcissistic, boorish snobs … not that I have known all that many wealthy people. But Buffett always seemed different, more down-to-earth. And, while I did not know very much about him, I was vaguely aware that he was, in addition to being wealthy, quite a philanthropist. Let us look at just a few pertinent facts about Mr. Buffett before getting into his role in today’s post:
- Named 3rd wealthiest person in the world by Forbes Magazine in 2015
- Chairman, CEO and largest shareholder of Berkshire Hathaway, a multi-national conglomerate that wholly owns GEICO, BNSF, Lubrizol, Dairy Queen, Fruit of the Loom, Helzberg Diamonds, , and also owns 26% of the Kraft Heinz Company, to name but a few
- Is noted for his adherence to value investing and for his personal frugality despite his immense wealth
- His children will not inherit a significant proportion of his wealth; he announced a plan to give 83% of his wealth to the Bill & Melinda Gates Foundation
Now why is he on my radar today, you ask? During Sunday night’s presidential debate, when Donald Trump was being questioned by Anderson Cooper about his refusal to release his tax returns, he admitted that he had used a number of tax ‘loopholes’, including the loss carry-forward provision, to avoid paying federal income taxes for many years. He followed this admission with “And so did Warren Buffett and so did George Soros and so did many of the other people that Hillary is getting money from. Warren Buffett took a massive deduction.”
The following morning, Mr. Buffett released the following letter:
Some Tax Facts for Donald Trump
Answering a question last night about his $916 million income tax loss carryforward in 1995, Donald Trump stated that “Warren Buffett took a massive deduction.” Mr. Trump says he knows more about taxes than any other human. He has not seen my income tax returns. But I am happy to give him the facts.
My 2015 return shows adjusted gross income of $11,563,931. My deductions totaled $5,477,694, of which allowable charitable contributions were $3,469,179. All but $36,037 of the remainder was for state income taxes.
The total charitable contributions I made during the year were $2,858,057,970, of which more than $2.85 billion were not taken as deductions and never will be. Tax law properly limits charitable deductions.
My federal income tax for the year was $1,845,557. Returns for previous years are of a similar nature in respect to contributions, deductions and tax rates.
I have paid federal income tax every year since 1944, when I was 13. (Though, being a slow starter, I owed only $7 in tax that year.) I have copies of all 72 of my returns and none uses a carryforward.
Finally, I have been audited by the IRS multiple times and am currently being audited. I have no problem in releasing my tax information while under audit. Neither would Mr. Trump – at least he would have no legal problem.
Warren E. Buffett, 402-346-1400
Mr. Buffett has class. This man donated nearly $2.6 billion to charitable causes last year alone! AND he paid federal income taxes! This, folks, is the supreme antithesis of Donald Trump. Warren Buffet is the man who should be running for President of the United States! He is a Democrat and is supporting Hillary Clinton, but frankly, even if he ran on the Republican ticket I would probably vote for him. In the words of one commenter, “Warren Buffett does business as an honest man. Trump is not familiar with the word honest.” I think that sums it up nicely.
Sadly, Warren Buffett is not the one running for president, Donald Trump is. And Trump is not so transparent, not so forthcoming as Mr. Buffett. While I have no doubt that Mr. Buffett has legally used the tax law to his advantage whenever possible, it appears that there was no subterfuge, as there is with Trump. While Mr. Buffett was giving $2.85+ billion, Donald Trump has not even contributed to his own foundation since 2008, and that was a lowly $30,000. He is also currently under investigation for a number of irregularities:
- Spent more than a quarter-million dollars from his charitable foundation to settle lawsuits that involved his for-profit businesses
- Used $5,000 from the foundation to buy advertisements touting his chain of hotels
- Spent $10,000 of the foundation’s money on a portrait of himself bought at a charity fundraiser in 2014
- Used $20,000 from the Trump Foundation to buy a different, six-foot-tall portrait in 2007
- Gave $25,000 to a political group supporting Florida Attorney General Pam Bondi. That gift was made about the same time that Bondi’s office was considering whether to investigate fraud allegations against Trump University. It didn’t.
- Spent $12,000 of the foundation’s money to buy a football helmet signed by then-NFL quarterback Tim Tebow in 2012
And the list goes on. The most recent development surrounding the Trump Foundation, however, is that it has never obtained the certification that New York requires before charities can solicit money from the public. As a result, if New York Attorney General Eric Schneiderman finds that Trump’s foundation raised money in violation of the law, he could order the charity to stop raising money immediately. With a court’s permission, Schneiderman could also force Trump to return money that his foundation has already raised.
Add to the above irregularities the fact that Trump is still facing lawsuits over Trump University that will go to trial beginning next month, and we can see that this presidential wanna-be is a walking liability! One question that comes to mind: If Trump is not beneath using his ‘charitable’ foundation’s money for his own personal use, would he think twice before using our tax dollars to pay his legal fees, or shore up his businesses? Perhaps buy Melania a fur coat for Christmas? Where, if anywhere, does he draw the line? Think about it.