First Lady Michelle Obama will jet off to Omaha, Nebraska, where she'll attend an Obama campaign fundraiser. Hosting the Omaha event (attendees who donate $5,000 can meet and take a photo with the First Lady) will be none other than Warren Buffett, the "Oracle of Omaha," an Obama campaign official told Mother Jones. And joining Michelle Obama and Warren Buffett at the Omaha fundraiser will be Susie Buffett, Warren's daughter and a philanthropist herself.
President Obama turned to Warren Buffett when naming his plan to raise taxes on those earning a million dollars or more a year. And in 2012, Obama has used the so-called Buffett Rule—and Republican opposition to it—as a hammer with which to bash Republicans and as a way to highlight Mitt Romney's support for lowering taxes on the rich. Obama only amped up the criticism after the Senate killed the Buffett Rule in mid-April. ...
President Obama, Vice President Joe Biden, the First Lady, and their allies have repeatedly invoked the Buffett name on their travels around the country to raise money ....
And so today's announcement that Buffett will help finance Burger King's tax inversion is both amusing and illuminating:
Mr. Buffett's Berkshire Hathaway Inc. BRKB +0.34% would invest in the deal in the form of preferred shares, some of the people said. Berkshire is expected to provide about 25% of the deal's financing, one of the people said.
As the WSJ wryly observed this am, "Buffett's inversion play looks awkward for the White House."
What can we infer from this? I must admit at the outset that I'm no fan of Buffett's professed politics (or somewhat odd personal life), so I'm biased and I'd be interested to know what a Buffett fan like Larry Cunningham thinks, but here's my take:
- Like a lot of (all?) limousine liberals, Buffett is happy to support tax increases because he knows they won't really affect him. Billionaires can hire as many $1000/hour tax lawyers as they need to run tax avoidance devices--like corporate tax inversions--that are simply unavailable to the middle class. We can't afford their high priced lawyers or their complex strategies, so we get screwed while they get a free pass. Leona Helmsley was right: "We don't pay taxes. Only the little people pay taxes." Buffett's too smart to say so, but ....
- Politics is one thing but profit is another. Buffett was perfectly willing to throw both Obama and Buffett's own tax blathering under the bus when it suited him.
- Obama's going to need a new favorite billionaire until such time as Buffett makes nice by helping to finance Obama's presidential library.
And a question: Will the Occupy Wall Street types calling for a Burger King boycott now try to boycott Berkshire Hathaway? I doubt it, mainly because I doubt whether they're capable of figuring out what Berkshire Hathaway does.
Update: In fairness, I should note that FT.com is reporting that:
Berkshire Hathaway’s taxes, at least, will be higher rather than lower as a result of the inversion. Dividends on its $3bn of preferred stock will be taxed at the 35 per cent rate for foreign dividends, rather than the 14 per cent rate that would prevail in the US, according to people familiar with the arrangements. The company will pay an extra $60m a year to the US Treasury as a result.
On the other hand, FT.com is also reporting that:
Mr Buffett is said to have negotiated for a higher dividend to compensate Berkshire Hathaway for the higher taxes.
Plus, of course, Buffett will also benefit to the extent that Burger King's tax savings increase the value of the BK preferred stock he will own. So I think my point stands.