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Taxes and Reputation: Warren Buffett vs. Donald Trump

buffett-vs-trump

Warren Buffett once said: “It takes 20 years to build a reputation and five minutes to ruin it.”

Well, Buffett’s been building a stellar reputation for 86 years, and in Monday’s second presidential debate Donald Trump attempted to ruin it in five seconds.

During the debate, Donald Trump tried to defend his personal income tax strategies by saying:

Now, the taxes are a very simple thing. As soon as I have — first of all, I pay hundreds of millions of dollars in taxes. Many of her [Clinton’s] friends took bigger deductions. Warren Buffett took a massive deduction.

Buffett had already previously spoken out against Trump and offered to release his tax returns if Trump released his. But clearly Buffett couldn’t let this personal attack by Trump (on a national stage watched by nearly 67 million Americans no less) stand.

Some Tax Facts for Donald Trump

So on Monday, Warren Buffett issued this press release, titled “Some Tax Facts for Donald Trump“:

Answering a question last night about his $916 million income tax loss carryforward in 1995, Donald Trump stated that “Warren Buffett took a massive deduction.” Mr. Trump says he knows more about taxes than any other human. He has not seen my income tax returns. But I am happy to give him the facts.

My 2015 return shows adjusted gross income of $11,563,931. My deductions totaled $5,477,694, of which allowable charitable contributions were $3,469,179. All but $36,037 of the remainder was for state income taxes.

The total charitable contributions I made during the year were $2,858,057,970, of which more than $2.85 billion were not taken as deductions and never will be. Tax law properly limits charitable deductions.

My federal income tax for the year was $1,845,557. Returns for previous years are of a similar nature in respect to contributions, deductions and tax rates.

I have paid federal income tax every year since 1944, when I was 13. (Though, being a slow starter, I owed only $7 in tax that year.) I have copies of all 72 of my returns and none uses a carryforward.

Finally, I have been audited by the IRS multiple times and am currently being audited. I have no problem in releasing my tax information while under audit. Neither would Mr. Trump – at least he would have no legal problem.

This is Warren Buffett, in his typical concise and straightforward manner, simply calling B.S. on Trump.

And that $2,858,057,970 number is NOT a typo! As Forbes points out, Buffett’s charitable donations in 2015 amounted to 75% more than Donald Trump’s total net worth.

Trump-v-Buffett_Post

The Buffett Rule

Taxes have always been a big issue for Warren. As Janet Novack from Forbes notes, Buffett has long campaigned for higher taxes on the ultra-rich, pointing out that he pays a lower effective tax rate than his secretary.

In October 2011, in response to a challenge from the WSJ, Buffett disclosed that his effective tax rate was just 11.06%, as it was reduced by his heavy reliance on lower taxed long term capital gains and large deductions for his charitable giving. Back then, he also offered to release his full tax return if billionaire Rupert Murdoch, the chairman and CEO of News Corp., whose holdings include the WSJ and Fox News, would do so.

President Obama even created the “Buffett rule” – a 30% minimum tax on those with adjusted gross income above $2 million – which was part of his 2011 tax plan – but was blocked after a Rebuplican filibuster in the Senate. Clinton has also embraced the Buffett Rule in her tax plan; according to an analysis by the Tax Policy Center, Clinton’s proposed tax rate for the richest 0.1% is nearly double the rate Trump has proposed.

There Are Only Two Certain Things in Life…

In the end, there are only two certain things in life: death and taxes.

But when it comes to Warren Buffett, only one thing is certain: if you try to attack Buffett’s reputation (the thing he holds most dear, second only to Berkshire Hathaway), then you’re going to be in for trouble.

Be sure to take a look at The Essays of Warren Buffett.

The Essays of Warren Buffett: Lessons for Corporate America

by Warren E. Buffett, edited by Lawrence A. Cunningham

Buffett, the Bard of Omaha, is a genuine American folk hero, if folk heroes are allowed to build fortunes worth upward of $15 billion. He’s great at homespun metaphor, but behind those catchy phrases is a reservoir of financial acumen that’s generally considered the best of his generation.

And want to learn more about Trump? Try Trump: The Art of the Deal.

Trump: The Art of the Deal

by Donald J. Trump and Tony Schwartz

Republican presidential nominee Donald J. Trump lays out his professional and personal worldview in this classic work—a firsthand account of the rise of America’s foremost deal-maker.

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