This bit o'drivel deserves a proper Fisking but I don't have time. I will have some comments after the jump.
From American Thinker:
I know that we are all supposed to love Warren Buffett as the Sage of Omaha, businessman and all-around good guy, but I keep reading stories that make me wonder. Here's a story about Warren Buffett, the estate tax, and the life insurance industry.
Did you know that the life insurance lobby is actively lobbying to restore the estate tax?
Why would the life insurance industry care about that? It turns out that ten percent of life insurance industry revenue is related to the estate tax. Wealthy people take out life insurance in order to reduce estate taxes because when you die, your life insurance payout doesn't count as part of your estate.
Did you know that Warren Buffett owns six life insurance companies? Did you know he supports the estate tax? You do now.Warren Buffett isn't just noted as an owner of life insurance companies and a supporter of the estate tax. He's also noted as a buyer of family businesses. As Dick Patten shows, these two business strategies support each other.A family business owner or farmer takes out a large life insurance policy which he sinks tens or hundreds of thousands of dollars into each year. When he finally passes away, the life insurance pays out his policy to his family--tax free...
Even as Mr. Buffett's insurance companies are "protecting" family businesses from the IRS, he is buying companies that are forced to sell themselves to pay the death tax. Mr. Buffett's ability to buy family businesses at bargain basement prices depends on families being desperate to sell-and nothing produces family businesses desperate to sell quickly like a 55% bill from the IRS on all of the businesses' assets.
Estate taxes must be paid to the U.S. Treasury within a year of the testator's death. In cash.
Back in 1931, the liberal son of an immigrant banker knew what to call this kind of business. Matthew Josephson wrote The Robber Barons to argue that the industrial giants of the 19th century had not created wealth in the right way. They had acted like the feudal barons who for centuries had dominated the mountain passes through the Alps. The great corporations of the Gilded Age "monopolized strategic valley roads or mountain passes through which commerce flowed" just like the old barons-of-the-crags.
Hello, Warren? Isn't your business model exactly the one that so offended young Matthew back in the Great Depression after he got back from a decade living la vie bohème as an ex-pat in Paris? Aren't your businesses sitting at an economic choke-point, exploiting the unintended consequences of bad government economic policy, gouging successful family businesses both coming and going, and exploiting grieving widows?
Matthew Josephson inaugurated the arch, knowing style that liberal John Kenneth Galbraith picked up in the 1950s and that Noam Chomsky does so well today. These writers all appeal to the liberal reader who wants to believe that America is unjust and crude but who doesn't want to be enlightened much by actual knowledge about business and the economy.
That's OK. Let our liberal friends spin their fantasies of conspiratorial robber barons and corporate greed. We have Hernando De Soto with The Other Path and The Mystery of Capital. He shows us how the real robber barons are the leaders of "redistributive combines" of special interests competing for privileges from favor-dispensing politicians and bureaucrats....MORE
In the Patten piece that the writer links to we read:
...Mr. Buffett has bought numerous companies who were forced to sell because of the death tax including: Dairy Queen, Jordan’s, Justin Industries, Star Furniture, Borsheim, Ben Bridge Jewelers, U.S. Liability, NetJets, R.C. Wiley, Flight Safety and Nebraska Furniture Mart....
I'm a pretty [you're not pretty -ed] close follower of Berkshire and there are some egregious mistakes in this telling.
According to Roger Lowenstein in chapter 13 of "Buffett: The Making of an American Capitalist" Warren practically hounded Rose Blumkin into selling Nebraska Furniture Mart.
After numerous attempts he finally walked in and asked what price it would take.
After numerous attempts he finally walked in and asked what price it would take.
You can read the story of the Borsheim purchase in chapter 18 of "The Warren Buffett CEO: Secrets from the Berkshire Hathaway Managers", again completely misrepresented by these writers.
In the case of Dairy Queen, it was a publicly held corporation. Jeez.
I'll come back to the others another time.
I'll come back to the others another time.
For now I'll recommend that anyone executing an estate containing a closely held business call a very good tax attorney and go over the pros and cons of a section 6166 election.
As for Warren?
He's an insurance salesman from Omaha.
He knows the rules and pushes them to the limit.
I'll talk about that some other time too.
As for Warren?
He's an insurance salesman from Omaha.
He knows the rules and pushes them to the limit.
I'll talk about that some other time too.
