As noted in this post, last month Warren Buffett made a horse’s hind end of himself on “The Today Show” by insulting those of us who aren’t infected with the class-envy disease that Barack Obama and his fellow community organizers have spent their lives spreading.
It’s not enough that he has become the poster clown for confiscating ing more of our hard-earned money so that it can be thrown down our Sham WOW (Walks on Water) chief executive’s social welfare rathole. Now, this fool is employing tax avoidance techniques to–wait for it–avoid taxes! From Economic Policy Journal:
This summer, Seeking Alpha explained the tax advantages of such programs and how the programs work:
With the Bush-era tax cuts possibly ending this year, now is the time to start preparing for an eventual rise in investment tax rates. Currently, the long-term capital gains and stock dividend tax rates are capped at 15%, but all investors — especially those in the upper income tax brackets — should prepare now for higher rates…
One way…to avoid taxes is to invest in companies that buy back stock instead of paying out huge dividends. Instead of paying taxes on those dividends every year, investors instead delay any tax payments until years down the road when or if they ever sell the stock. The investor can control when he or she pays the taxes.
Instead of getting that dividend payment, the investor obtains a larger share of the companies earnings with every net share bought by the company. These buybacks can add up over time to 10%, 20%, or even more gains in earnings per share — all without the investor having to pay any taxes in the process.
Got that? Find companies that are using their cash to buyback stock instead of paying dividends. It’s a nice tax dodge against the increase in taxes that Warren Buffet has been advocating. So who is launching such programs? This announcement was just released this morning:
Berkshire Hathaway has purchased 9,200 of its Class A shares at $131,000 per share from the estate of a long-time shareholder. The Board of Directors authorized this purchase coincident with raising the price limit for repurchases to 120% of book value. Berkshire may purchase additional shares in the market or through direct offerings at no more than 120% of book value.
Berkshire is Warren Buffett’s public investment vehicle and that buyback was for $1.2 billion.