The suggestion that a company should pay taxes it doesn’t believe it rightly owes merely to show solidarity with its majority shareholder and support for his pronouncement that he should pay more taxes is downright silly.
Yet, that is precisely what Netright Daily has done in a post titled Warren Buffett’s Taxing Hypocrisy:
[Warren Buffett] wrote of the so-called “super-rich,” which he apparently defines as households earning $1 million or more a year: “Most wouldn’t mind being told to pay more in taxes as well, particularly when so many of their fellow citizens are truly suffering.” Isn’t that nice of Mr. Buffett?
But if he were truly sincere, perhaps he might simply try paying the taxes the IRS says his company owes? According to Berkshire Hathaway’s own annual report — see Note 15 on pp. 54-56 — the company has been in a years-long dispute over its federal tax bills.
According to the report, “We anticipate that we will resolve all adjustments proposed by the IRS for the 2002 through 2004 tax years at the IRS Appeals Division within the next 12 months. The IRS has completed its examination of our consolidated U.S. federal income tax returns for the 2005 and 2006 tax years and the proposed adjustments are currently being reviewed by the IRS Appeals Division process. The IRS is currently auditing our consolidated U.S. federal income tax returns for the 2007 through 2009 tax years.”
Although I disagree with Buffett’s claim that he and other multi-millionaires are under-taxed, his personal hypocrisy is not proven by the fact that his company continues to dispute an IRS assessment. Berkshire Hathaway’s IRS dispute has nothing whatsoever to do with Warren Buffett’s claim that he is personally under-taxed.
If Berkshire Hathaway’s Board of Directors and Officers believe that the IRS assessment is incorrect and that the company does not owe the taxes the IRS claims it owes, they would be breaching their fiduciary duty to the shareholders if they did not dispute it.
And remember, just because the IRS says you owe a tax doesn’t make it true.
(Hat Tip: Paul Caron)