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Federal Government Suing Warren Buffett-Owned Company Over Unpaid Taxes


Dancing with himself

Not sure what's funnier here, the underlying story, or the way The New York Times' Andrew Ross Sorkin tries to work through the cognitive dissonance:

The United States government, in a little-followed case in Ohio, filed a lawsuit this month against a unit of Mr. Buffett's Berkshire Hathaway, seeking $366 million in taxes and penalties. The Berkshire division at the center of the suit is NetJets, the private-aircraft company that caters to the nation's wealthiest — the people Mr. Buffett says should pay more in taxes.

It is an odd twist that a company controlled by Mr. Buffett — perhaps the most outspoken businessman in the country in support of raising taxes on the "mega-rich" — is now in a dispute with the government over his company's paying too little in taxes.

Perhaps more important, the case is a remarkable window into the nation's byzantine tax code. It is an arcane dispute that raises questions about the Internal Revenue Service's interpretation and enforcement of its own tax rules. And it shows why even someone like Mr. Buffett would seek to challenge them.

Whole thing here.

Re-read Peter Schweizer's recent but already-classic Reason piece, "Warren Buffett: Baptist and Bootlegger."

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  1. How did the Morning Links thread get locked?

    1. We’ve got a bit of a subthread going on about it on the test-banning thread.

      1. Test-banning thread?

        1. Banning words on tests. The PC craziness.

    2. I was wondering the same thing.

    3. How did the Morning Links thread get locked?

      Presumably, H&R has a webmaster.

    4. She libeled John over and over again, they got sick of deleting it and shut the thread down.

      1. I thought libertarians didn’t believe in libel. I mean, the regulars do it here hundreds of times daily.

        1. It’s different when we do it, you stupid sheep-fucker.

        2. There are a lot of things libertarians prefer did not exist, but as long as they are legal and widely used, some people who don’t like them will still use them.

          For instance, I don’t much like welfare programs (though I’m not currently in favor of total dissolution), but I HAVE been on Food Stamps before. When you’re giving plasma twice a week for money, and STILL having to live off of canned pumpkin (no joke), you feel a lot less picky.

          Man alive though, here in Indiana they give you WAY too much money for food. Ate better on Stamps than my family did with an actual income.

  2. Yeah, Mary stole my handle, and then I noticed it was locked. I guess I should come up with a more unique name.

    1. e-mail me off thread and I’ll tell you what to do.

      (I don’t want to tell you on here in case assface is lurking)

      1. will do at lunch time.

  3. This isn’t hypocritical. Buffett thinks that the government should force people like him to pay more taxes (since he could donate to the government any moment he wants). He’s just making sure the government is doing the force part here.

    1. +internetz

  4. Incidentally, I’m the one who added a paragraph about this to the Netjets Wikipedia page a couple weeks ago.

    The basic point is that the IRS considers Buffett’s time share like “fractional jet ownership” company to be much more like commercial flights (and hence subject to a ticket tax) than actually owning a plane (since you don’t get charged ticket tax for flying your own plane.)

    It’s clearly somewhere on a continuum. Imagine a situation where United, American, or Delta sell “shares” in planes with benefits redeemable for free flights. Or where they sell club memberships good for flights on X days per year.

    1. Agreed. This is the federal government closing a loophole in a law that was allowing people to utilize their private property as they saw fit.

      I hope NetJets wins this one.

      1. I hope NetJets wins this one.

        Yeah but it sucks having to root for Buffett in any scrap!

        1. Then don’t root for him. What he said was irresponsible.

    2. It may be somewhere on a continuum, but it seems far closer to ownership than commercial flight.

      Disclosure: My 2nd cousin’s husband is a fractional jet pilot (not NetJets).

    3. Personally, I think that if the IRS taxes specific transaction types, and you use a legal, common, and non-novel ownership arrangement to avoid undertaking that specific transaction, you should win. And the Congress should pass a law making your new arrangement subject to tax if it wants.

      1. Yeah, but the IRS doesn’t work that way. It actually uses a lot of discretion– see what happens if you claim a lot of business deductions, or declare yourself a corporation.

    4. Slightly OT: that new NetJets terminal at the Columbus Airport had to receive TIF and other government goodies to get off the ground. On the other hand, they would not have had to if the city had not have forced them to pay scale wages.

      So, in other words, the government had to subsidize the NetJets building because government mandates made it too expensive to build without subsidies.

      Somedays I hate waking up.

      1. Right now there’s a big fight over the Dulles Metro because the Washington airport authority wants to give 10% bonuses to contractors who agree to sign a project labor agreement (in other words, pay union wages plus allow collective bargaining, use union work rules, etc.), whereas Virginia and Loudoun County don’t want to go along with that, and are threatening not to give their money if that’s part.

  5. I thought I saw that Buffet/NetJets was behind a special “adjustment” to the tax code on jet timeshares. Maybe this is for taxes before they got their sweetheart deal, or maybe they botched the drafting.

    Whatever. Fuck Buffet. I can’t get my Libertarian Tax Righteousness on over a hypertechnical sweetheart deal, especially for rentseeking scum like Buffet.

    1. I re-learned the term “rent-seeker” here. It means “I don’t like his politics”.

      Because ANY active billionaire can be labeled a “rent-seeker” by the traditional definition.

      1. Exactly what is the “traditional definition” in your view? The phrase “rent-seeker” has a very specific history that originated with Anne Krueger and the ideas of GMU economist and spiritual forefather Gordon Tullock (of public choice theory fame.)

        Economic rent is a far older term than “rent-seeking,” and goes back to Adam Smith. Are you confusing “rent-seeking” with any attempt to obtain economic rent?

        Because that’s not the “traditional definition.” The traditional definition of the term “rent-seeking,” as opposed to merely discussing economic rent, definitely seeks to make a libertarian distinction about using politics to gain rent, as R C Dean is doing here.

        1. By my figures Koch Industries spent 100x more lobbying and influence peddling to government than Berkshire has since 2004.

          Which is the bigger rent-seeker?

          1. And those figures are…. where exactly?

          2. Depends on why they are lobbying, anyway.

            Lobbying to gain special advantage is rent-seeking.

            “Defensive” lobbying to block regulations or whatever that give others special advantage, is not.

      2. The amount of government cock sucking that Buffet does is as bad as the average Russian billionaire oligarch, he is a rent seeker, not matter how much you want to redefine the word. Can you name a billionaire that partakes in more anal sex with government than Buffet ?

        1. Bullshit. The Kochs do far more government lobbying for Koch Industries than Buffett does for Berkshire. Their business model involves pollution and resource extraction. Its par for the course in those businesses as others do it as well.

          Berkshire is a holding company that lets its businesses run themselves.

          1. OK. The Kochs are rent-seeking douchebags, too. Do we really need to argue about the degrees of rent-seeking the Kochs and Buffett do?

            Once again shrike, many of your arguments come down to, “well your guy does it to.” The funny thing is, this is a libertarian website, and 95% of the commenters here will call bullshit on both R’s and D’s.

            Please develop more thoughtful arguments, so we can try to raise the discourse of this site.

          2. We already have laws that deals with pollution. It is not legal or smart, to violate other people’s private property.

    2. Buffet/NetJets right now are paying lobbyists to get Congress to clarify the tax code on this situation, in their favor obviously.

  6. The 9-pound Gambian rat has invaded the Florida Keys, having been released there by an exotic animal breeder about 10 years ago. They are thriving, one of many species that are transforming south Florida, destroying the native wildlife and turning the swamps and islands of the region into scientific experiments of what happens when you release large predators (and a 9 pound rat is a large predator to many animals) into an environment with a climate that it thrives in and no natural predators of its own.

    1. (Cont.)

      Can we please crack down on exotic animal breeding in the United States? There is no good reason for it. It is a multimillion dollar industry with an active lobbying wing and supporters in Congress (mostly Republicans). So often, either breeders or buyers can’t handle these animals, leading to pythons, rats, etc., decimating ecosystems, not to mention the weird guy in Ohio late last year that let lions and tigers go free in the Ohio wilds before killing himself.

      That rat is going to give me nightmares tonight.

      1. There is no good reason for it.

        Sure there is. Because freedom rocks. Of course, with that, they should be held responsible for damage done by escaped animals.

        1. Pretty much. Don’t tell me I can’t own an exotic because some other guy didn’t realize that his iguana was going to be too large to keep in a one bedroom apartment.

      2. Why do you assume that an ecosystem has to remain exactly the way it is? Why do some people have such a stasis fetish?

        1. Maybe those other animals should man up and compete.

        2. ‘Cause it’s the way the mud-momma made it!

        3. The trees are the right height

        4. I agree that people are way too obsessed with keepign everything just as it is these days. But some introduced species really do cause harm. I’m not sure what the appropriate solution would be, though. “Get your pythons and giant rats spayed or neutered”, I guess.

          1. Then take them to court and stop bothering me.

            Aside from that, have some limited environmental regulations for public property. But leave the rest of us US citizens alone.

        5. It’s human arrogance. They talk about how were all part of the ecosystem while at the same time ignoring the fact that since that is the case our actions are just as “natural” as any other species’. There is no difference between us bringing rats over as pets or a storm carrying them to a new island. Life adapts, some lose some win. There is no moral value to one species winning and another losing.

          1. “There is no moral value to one species winning and another losing.”

            That is quite true. But sometimes there is practical value or harm caused by one species winning and another losing.

      3. Just wait until you see the rodents of unusual size.

        1. Rodents of unusual size? I don’t think they exist.

      4. Why can’t they be eaten by the anaconda’s that have also escaped?

    2. I wonder whether they are python prey? Or vice versa?

      1. We eat large mammals. A rat, even a 9 pound one, is like a tasty snack between meals.

    3. 9 pound rats sound really yummy.

  7. even someone like Mr. Buffett


    Sorkin is one of the main reasons I stopped watching CNBC the MSNBC Business Channel.

    Buffet likes to talk about how he does his own taxes with a number two pencil, and he just fills in the blanks without worrying too much about it. If Berkshire was doing their due diligence on an acquisition and the CFO said, “I don’t really devote a lot of energy to thinking about the tax consequences of our business investments” that guy would be escorted from the building by security before the ink on the contract was dry.

    1. I must admit, he’s passed himself of as a folksy, reg’lar ol’ guy pretty well. He might have even trapped himself in that reality distortion field.

      But at the end of the day he’s a (hell of a) hedge fund manager, not a farmer. He identifies tax-advantaged investments, undervalued equities and hell, even struggling broker-dealers. It’s a little amazing that people don’t realize that.

      1. He’s a hell of a microeconomist, not a macroeconomist. He hasn’t run an entire country nor does he understand Keynes.

    2. Yeah, Buffett is as completely full of shit as his good buddy Block Yomomma.

    3. “he just fills in the blanks without worrying too much about it.”

      I’m sure this happens. After his legal staff goes over the numbers with a fine-toothed comb and tells him what exact number to pencil into each space.

  8. If pythons are such a problem on public lands, the landowner should just open the lands up to hunters and pay $50 for every snake head a hunter brings in.

    It worked for the buffalo, it will work for pythons too.

    1. I’ve often thought that too. Why isn’t python hunting the #1 sport in Florida right now?
      On the other hand, it is a lot easier to hide a bunch of giant snakes in an enormous swamp than it is to hide a cow like creature on an open plane.

  9. Perhaps more important, the case is a remarkable window into the nation’s byzantine tax code. It is an arcane dispute that raises questions about the Internal Revenue Service’s interpretation and enforcement of its own tax rules. And it shows why even someone like Mr. Buffett would seek to challenge them.

    You know what this reminds me of? Gun control-favoring politicians with armed bodyguards.

    1. Well, if the peasants didn’t have access to guns, he wouldn’t NEED to defend himself with guns! It’s you NRA types that are driving this conflict!

  10. Buffet/NetJets right now are paying lobbyists to get Congress to clarify the tax code on this situation, in their favor obviously.

    Because this is what passes for “business investment” these days.

    People whine about the decline of R&D, but why throw your money away on product development when you can get the government to put their thumb on the scale to your benefit?

  11. Don’t fight it, Warren. You know you want to pay those taxes!

  12. Berkshire-Hathaway already owes close to $1Billion in back taxes dating back to 2002…

    For a guy who says we shoudl all pay more taxes, he sure doesn’t like paying up himself does he?

    1. Nuh-uh. Shrike told me that was a big fat right-wing christfag lie.

      1. “Hate to nitpick, but no you didn’t say that.”

        Yes moron, I did.

        “Nope. Despite you trying to threaten me.”


        How fucking stupid are you that you choose to “nitpick” something and totally make an idiot of yourself in doing so?

        1. Are you sure you’re in the right thread?

          It might help to provide a link dude. No such post exists in this thread.

  13. Are you thinking what we’re thinking?

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