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Warren Buffett calls out Trump on taxes

Oct 10 2016 22:35
Noah Buhayar and Lynnley Browning

Seattle - Warren Buffett just fact checked Donald Trump.

In a debate on Sunday, Trump acknowledged using a nine-figure loss in 1995 to reduce tax obligations and sought to liken the move to strategies used by some of Democratic presidential nominee Hillary Clinton’s wealthy supporters, including Buffett.

On Monday, the billionaire Berkshire Hathaway chairperson released information from his personal taxes and challenged the Republican presidential candidate to do the same.

“He has not seen my income tax returns. But I am happy to give him the facts,” Buffett said in a statement. “I have paid federal income tax every year since 1944, when I was 13.”

(See the full statement by Buffett in a tweet at the end of the story).

Buffett has been clashing for months with Trump, who has refused to release his tax returns, citing an audit. At a campaign event for Clinton in Omaha, Nebraska, in August, the Berkshire chairperson challenged the Republican candidate to meet him “any place, any time” to swap returns and answer questions from the public.

That never came to pass. On Monday, Buffett said he paid $1.85m in federal income taxes in 2015 on adjusted gross income of $11.6m.

That would mean he paid an effective federal income tax rate of about 16%. In 2013, the most recent year for which data are available, the top 1% of earners paid 27%, according to an analysis of Internal Revenue Service data by the Tax Foundation.

Republican nominee Donald Trump poses with members of the audience after the second presidential debate at Washington University in St Louis, Missouri on Sunday evening. (Photo: AFP)

‘No problem’

Buffett said his $5.5m in deductions are mostly for allowable charitable contributions and state income taxes. He has committed most of his Berkshire shares to philanthropy and said he made more than $2.8bn of donations in the year. The law “properly” limits what can be deducted, Buffett wrote.

He again dismissed the contention that Trump can’t release his own return because of an audit by the Internal Revenue Service.

“I have been audited by the IRS multiple times and am currently being audited,” Buffett wrote. “I have no problem in releasing my tax information while under audit. Neither would Mr Trump - at least he would have no legal problem.”

Trump, who has departed from roughly 40 years of tradition for presidential nominees by declining to release his returns or any tax information, has said he’ll make them public once the audit is complete and that returns wouldn’t give voters very much information.

Tax strategies

Releasing full tax returns and schedules would disclose Trump’s income sources, charitable contributions and possible glimpses of his tax-minimizing strategies. Income reported from assets could provide at least some partial clues about the nature of those holdings, though not about their value or inner workings. His returns would also reveal any foreign income or foreign bank accounts.

Even if he didn’t release full returns, Trump could give voters at least some information - that is, how much he made and how much he paid - by releasing the sort of figures Buffett did, particularly if Trump provided several years’ worth of data.

During Sunday’s debate, Trump acknowledged for the first time that he had used a business loss of $916m to avoid federal income income taxes - though he didn’t say for how long, and he said such tax avoidance is common practice among wealthy businessmen.

Buffett’s 72 returns

Under rules in place at the time, Trump could have used the loss to avoid taxes on as much as $50m in income a year - for three years prior to the loss and 15 years after. Using old losses to reduce taxes on income in future years is known as a carryforward.

“I have copies of all 72 of my returns,” Buffett wrote Monday. “And none uses a carryforward.”

While Berkshire has been a sophisticated user of the tax code to limit its liabilities, Buffett has been outspoken for years about how the wealthiest people in the US don’t pay enough income tax. He frequently points out how his secretary pays a higher rate than he does.

The billionaire was the inspiration of the so-called Buffett Rule, proposed by President Barack Obama and backed by Clinton, which would tax incomes exceeding $1m at a minimum rate of 30%. The Democratic candidate reiterated her support for that plan on Sunday.

Buffett's full statement:

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warren buffett  |  donald trump  |  tax  |  tax evasion


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