The UK Guardian reports a very strange statement by decabillionaire investor Warren Buffett that cannot be true, except in a narrow and misleading sense:

I have no tax planning; I don’t have an accountant or use tax shelters.

Question: was the Susan Thompson Buffett Foundation set up without the assistance of professionals in law and accounting? Do not such foundations function in a tax free or tax sheltered environment? Is it not a 501(c)(3)? Here’s how the foundation describes itself:

The Susan Thompson Buffett Foundation is a private grantmaking foundation based in Omaha, Nebraska. With assets projected to exceed $2 billion by the end of this year we are among the largest foundations in the U.S.

The “largest foundations in the U.S.” typically do tax planning of various sorts. As evidence of this, let’s take a look at what Mr. Buffett said in his letter outlining a gift to the foundation:

The only condition to this commitment is that STB must continue to satisfy legal requirements qualifying my gifts as charitable and not subject to gift or other taxes.

Thus Mr. Buffett charged the foundation with the responsibility to ensure that his gifts were not subject to certain taxes. Is that not tax planning and tax sheltering? Furthermore, Mr. Buffett clearly uses tax planning and seeks to minimize taxes at the corporate level of the assets he controls, as reported in SEC filings via BOTW:

Berkshire’s consolidated Federal income tax return liabilities have been settled with the Internal Revenue Service (”IRS”) through 1998. The IRS has completed its audits of the 1999 through 2004 tax returns and has proposed adjustments to increase Berkshire’s tax liabilities which Berkshire has protested.

Mr. Buffett’s corporation is protesting proposed IRS adjustments to its taxes. Surely that requires legions of lawyers and accountants, and surely the value of Berkshire Hathaway is affected by the amount of taxes it pays.

Mr Buffett said: “I have no tax planning; I don’t have an accountant or use tax shelters.” That might be true in a technical sense, but it is clearly not true in a substantive sense, since he obviously utilizes the resources of corporations and foundations, including lawyers and accountants, to do extensive tax sheltering and tax planning. How very odd for a billionaire to claim that he does no tax planning and uses no accountants, when such a thing cannot possibly be true.

This entry was posted on Tuesday, November 6th, 2007 at 8:16 pm and is filed under General, business. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.