More Warren Buffett Hypocrisy; Restructures Deal To Avoid $400 Million In Taxes

Tyler Durden's picture

Submitted by Mike Krieger of Liberty Blitzkrieg blog,

Warren Buffett epitomizes everything that is wrong with the global economy, and the U.S. economy specifically. He is the consummate crony capitalist, a brilliant yet conniving oligarch who intentionally plays on the gullibility of the masses to portray himself as one thing, when in reality he is something else entirely.

He publicly talks about how rich people need to pay more in taxes, then turns around and pioneers new ways for his company Berkshire Hathaway to avoid hundreds of millions in taxes. He thinks that by going on television stuffing ice cream cones and hamburgers in his mouth and acting all grandfatherly that no one will notice who he is really is and the incredible hypocrisy of his actions.

I’ve pointed out “Uncle” Warren’s hypocrisy previously on these pages, most recently in my post from last March titled: Crony Capitalist “Uncle” Warren Buffett Drives Company Profits Using Derivatives.

While that was pretty blatant hypocrisy, Buffett’s latest elaborate scheme to avoid $400 million in capital gains taxes from the disposition of a large chunk of Berkshire Hathaway’s Washington Post stake (which was acquired in the 1970s for $11 million) absolutely takes the cake.

The Street published an excellent article on the topic. Their conclusion at the end of the piece says it all:

Bottom Line: Warren Buffett is pioneering new ways to avoid capital gains tax, even as he is President Obama’s richest spokesperson for progressive income tax policy. 

More from The Street:

NEW YORK (TheStreet) - Berkshire Hathaway may have avoided about $400 million in taxes by exiting its long-time stake in Graham Holdings - formerly known as The Washington Post Company - through an asset swap with the company that will add Miami-based TV station WPLG and hundreds of millions in cash to Berkshire’s coffers. Wednesday’s transaction also may also break new ground in how large investors structure deals to avoid taxes on their investment gains.


Berkshire’s deal with Graham Holdings is structured in a way that may allow the Warren Buffett-run conglomerate to exit a multi-decade investment in Graham Holdings without paying any capital gains tax, Robert Willens, an independent tax expert, said in a Friday telephone interview.


The cost-basis for Berkshire’s 1,727,765 million shares was $11 million, Warren Buffett said in Berkshire’s 2000 annual letter to shareholders. Now, Berkshire is seeking to exit Graham Holdings at a value in excess of $1.1 billion.


Applying a 38 percent tax rate (federal plus state and local taxes) would bring Berkshire to about $400 million in tax liability, Willens said. The swap orchestrated between Berkshire and Graham Holdings, however, is likely to reduce Berkshire’s tax liability to $0.


The mechanics of Berkshire’s maneuvering are arcane, especially since both Berkshire and Graham Holdings hold large investment gains on each other company’s shares. Berkshire holds 1,727,765 Graham Holdings shares, while Graham Holdings owns 2,214 shares in Berkshire’s Class A stock.


To unwind each other’s investment, Berkshire and Graham Holdings devised what amounts to a stock swap, although not a direct swap that would have locked in capital gains on both companies’ respective investments.


Normally, both corporations and investors must recognize taxable gains on appreciated assets, even if they transfer shares for assets such as cash or business lines.

But Berkshire isn’t directly taking the TV station from Graham, and Graham isn’t taking Berkshire’s stock. NewSub is doing all of the stock, TV station and cash swapping. As such, the swap may meet Sec. 355 of the federal tax code that exempts capital gains.


“This particular cash-rich split-off breaks new ground since, to our knowledge, it is the only one in which the investment assets of the distributed subsidiary consist, at least in part, of the stock of the very shareholder to whom the subsidiary’s stock is being distributed,” Willens wrote on Thursday.


Berkshire’s swap deal with Graham Holdings and similar moves the investment conglomerate has made in exiting large investments in Phillips 66  and White Mountain Insurance indicate that Warren Buffett isn’t interested in paying taxes on Berkshire’s investment gains when cutting deals on behalf of the company’s shareholders.


That comes as Buffett has placed himself front-and-center in a debate over taxation that has simmered in Washington for decades.

If you haven’t thrown up yet, I suggest you read my most popular post ever on our favorite crony oligarch from back in August 2011: A Wolf in Sheep’s Clothing.

Full article from The Street here.

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Arius's picture

still everyone in america .... guess what ... WANTS TO BE ... a little Warren.


so, how about that?  everyone envy him and the rich ... so what he doesnt care, he is still an average Joe living in a small town and going to play with his compadres

lordylord's picture

It's funny how rich people pretend to be socialists as long as they never have to give up their millions/billions.    They espouse the "kumbaya" type socialism meanwhile the socialist/fascist type policies they advocate just redistribute money from the working poor and middle class to them.  The "occupy" people and libtards fall hard for this shit.

kchrisc's picture

And here is "thief at the right place and time" Gates exclaiming that more taxes and immigration is the answer to unemployment.

Man, I wonder what they have on this guy? Bestiality, pedophilia...


"I stole other people's work and got rich so listen to me."

eatthebanksters's picture

So Buffet is a disingenous bozo...he's hired the best attorneys to maneuver around existing law.  In the end he's not really doing anything wrong and he is making his investors more money.  If you want to bash him for being a hypocrite I'm all for it, but what we really need to do is change the fucking laws so pieces of shit like him cannot continue this behavior....Barry, do you hear me?  Of course you don't...

lordylord's picture

I partially agree.  I believe taxation is theft.  Good for those who can avoid it and get away with it. BUT...Buffet advocates socialist policies and crony capitalism.  ALL his gains are ill-gotten.  

imaginalis's picture

Buffet must have bust a gut laughing when Wesley Snipes was convicted for tax evasion.

A Nanny Moose's picture

What exactly to you suppose is the precise purpose of "The Law?" It is not going to change for the better without some sort of game chaning event. Uber plague, Meteor strike, or peaceful parenting ought to do.

lordylord's picture

ALL of Gates' solutions to poverty involve big government and small minded socialists and liberals eat this stuff up.   Bill Gates likes to pretend to be one of the elites, but is probably more like their lap dog. You know, old money vs new money sort of thing.

Canadian Dirtlump's picture

That Satanic pedophile has been eating children as long as many of us have been alive so turn about is fair play. You woudn't even need to know about his involvement in the Franklin Cover up scandal in Nebraska ( satanic pedophile ring ) in the 80s and a history in penn state ( sandusky anyone? ) to figure it out but knowing it lays it bare.


Thing is I'd rather feast on dog shit than him or munger.

DavrosoftheDaleks's picture

I don't get how swapping one asset for another isn't taxed.  I know there's a real estate scenario, but c'mon man.  I can't go to a car dealer and swap my car for a new car and not pay the car tax.

Never One Roach's picture
One-third of Americans only have $1,000 saved for retirement


Gap grows wider every day.

kchrisc's picture

"One-third of Americans only have $1,000 saved for retirement"

And unbeknownst to them, the banksters have stolen that.

See "fraudulent-reserve banking" and "bail-in" for reference.

eatthebanksters's picture

I once had about $5m but I made the mistake of trusting Barney Frank and our government...all is fine, nothing to see here!

I won't make that mistake again if i ever earn it back.

Catflappo's picture

Can't believe its possible to write an article about Buffett without using the word "cunt"?

PlusTic's picture

typical hypocrite scumbag...schucks, oh gollie, i fukked'em good

101 years and counting's picture

is he still nailing becky quick?

skwid vacuous's picture

Uncle Warren molested me in his bathtub 40 years ago, I have total recall now... pervert !! 

LawsofPhysics's picture

It's a club, always has been...


Miffed Microbiologist's picture

Soros, Warren. Damn, why don't they just DIE. God, I can't stand to look at their corpse-like maggoty bodies with out bile in my throat. God, I will take back all my requests if you just grant this and please hurry before they come up with the technology to keep their disgusting heads alive in a jar.


eatthebanksters's picture

Buffet may be disingenuous but he is a saint next to Soros...that guy is a piece of rotten turd IMHO.

fonzannoon's picture

why is the market ripping higher with the Yen under 102? 

PlusTic's picture

if it's open, it goes of the land

skwid vacuous's picture

cash on the sidelines...they missed 500 handles but might as well pile in now...?

Dr. Engali's picture

Who needs the Yen carry trade when we have the Putin put?

Skin666's picture






youngman's picture

Liberals ALWAYS want someone else to pay higher taxes..never themselves

HardAssets's picture

He's no 'liberal'.

Thomas Jefferson was a true liberal . . . believing in the rights of individuals, and that they should not be ruled by kings.

The language has been distorted over the last two centuries.

notmymoney's picture

"The language has been distorted over the last two centuries."


Why yes it has, glad someone else notices this.  While most just watch sit-calms as the woners of language tell us what to buy and what words mean.

ILLILLILLI's picture

"Even the Party slogans are changing. How will you say "Freedom is Slavery" when freedom doesn't exist...?" - Syme, 1984

kchrisc's picture

"1984," the best non-fiction, fiction book.

Combine it with the non-fiction book, "Road to Serfdom," and one has the complete playbook of the sociopaths.


"I prefer guillotines to end all my stories on pols, crats and banksters."

Grinder74's picture

Wait, you mean when I said I was a gay fellow it didn't mean "happy and joyous, spirited" ????

mercy's picture

Not by kings but by white, landowning males. Right?

Akrunner907's picture

As a shareholder, I welcome the work to limit the taxes paid that affect shareholder value.  Buffet can pay all the taxes on his personal wealth he wants.  I am a greedy capitalist and have no desire to fund the sheeple's welfare and subsidized living.  


Maybe that is lost on most you who never attended business school - first rule: maximize shareholder wealth.  And this manuveur did just that.

Chupacabra-322's picture

Yes, "shareholder wealth" that doesn't produce not a Goddammed thing.

manofthenorth's picture

I look forward to the ending of ALL corporate charters. Shareholders should be financially and legally liable for ALL losses and criminal activities as well as gains. Where in business school was it stated that individuals should keep the gains while losses are stacked on to the taxpayers by the Government ??? I must have missed the chapter on TOO big to fail. When there are NO subsidies , NO bailouts you can keep your "gains".

AsIseeIt's picture

My B School education didn't change my belief business should be operated in a moral and ethical manner and in spirit with the law that granted it the right to exist. Sorry no psyhcopath here.

teslaberry's picture

the ideology of business school dressed up in ridiculous flowery language. 


yes, i attended classes at columbia business scchool. 

plenty of sheep there as everywhere. 


the ideology of shifting the tax burden onto the poor and working classes------is simply an ideology of kleptocracy and feudalism, not of capitalism. 

capitalism ends when money is filtered into the process of lobbying money to government in order to shift the burden of paying taxes. more and more money gets invested into this very profiteabile endeavor of bribing officialls to shift taxes to the poor and working class. less and less capital then remains available to invest in productive pursuits. while more and more go to the government class of beauracrats who then bid up the prices of good and products at the expense of those who aren't gate keepers collecting bribes. 


finally-----i don't understand why it is readily apparent to general business school types that while communist redistribution and government monopolization of resources destroys incentives to produce and save-----by stealing from the wealthy---------why it is any different when govenrmnet steals from the poor and working class?


the real thing they teach you in busienss school is that ideological allegiance to the upper classes requires thoughtless obedience .  what they don't teach you is that the sort of communism for the corporatacy will also lead to the destruction of the upper middle class as less and less is left for even the newly rich to fight over. 


the kids of oligarchs don't bother attending business school bitches. its a waste of their time. nuveauriche however , don't yet understand the canibbalistic nature of communism for the corporations. 

HardAssets's picture

One thing they don't teach in B school  . . . . . is that the 'isms' are bullshit.

Nothing but a smokescreen used to confuse the victims.

Seasmoke's picture

Maybe he figured a way to take Billions with him when he dies in the near future. 

Spastica Rex's picture

Were an American to recognize another's hypocrisy, they might also have to acknowledge their own.

jon dough's picture

That explains our hypocrite-ic oath.

Whee Duh Peep Oh

skwid vacuous's picture

POS can he die soon so I can piss on his grave?

LoneStarHog's picture

He is cognizant of the number of people who want to do the exact same thing.  His grave will have an admission fee with an additional charge for pissing.  A crony capitalist even in death.