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Milton J. Madison - An American Refugee Now Living in China, Where Liberty is Ascending

Federalism, Free Markets and the Liberty To Let One's Mind Wander. I Am Very Worried About the Fate of Liberty in the USA, Where Government is Taking people's Lives ____________________________________________________________________________________________ "Extremism in defense of liberty is no vice. Tolerance in the face of tyranny is no virtue." -Barry Goldwater-

Tuesday, May 06, 2014

Warren Buffett captures in one line what is wrong with America.....

And I think that he is part of the problem...
"American business, I will tell you, whether it's Berkshire Hathaway or Pfizer or Apple, are doing wonderfully under this tax code." -Warren Buffett, 2014-
i happen to be flicking through the TV and came accross him speaking and heard the previous tidbit of 'wisdom.' So, lets actually look at some of these tax rates; Pfizer's effective tax rate was 27.4% in 2013 and Apple's was 26.15%. Or one of the annual favorites is GE at measly 4.19% and also, Verizon, drugmaker Bristol-Myers Squibb and power management firm Eaton, all reported effective tax rates of 0% during recent previous years. These rates also includes, as I understand it, not just the Federal tax but also taxes from states and other jurisdictions including foreign ones where they operate. But as we see that actual tax rates do not mean actual taxes paid...
Earlier this year, the Government Accountability Office, a federal agency, examined corporate tax returns to determine the taxes corporations actually pay. It found that in 2010, profitable corporations based in the United States had an effective federal tax rate of 13 percent on their worldwide income, 17 percent including state and local taxes.
From here. And we also see this from Wikipedia....
At 35%, the United States has the highest nominal corporate tax in any of the world's developed economies. However, the average corporate tax rate in 2011 dipped to 12.1%, its lowest level since before World War I, largely due to the great recession and a bonus depreciation tax break.
So, for the biggest companies, taxes are not a problem! But this is the problem with mega industrialist Warren Buffett, large corporations have the tools and the global operations to shelter, reduce and avoid taxes. Most companies, companies that employ most of American workers, do not have this capacity and generally are hit by much higher tax rates effectively ceding competitive advantages to the giants that pay lower rates that give them a competitive advantage. Its a game that is played just for the big guys and stifles competitiveness and efficiency. These kinds of advantages granted to the biggest of industrialists hurt not just the smaller competitors but also hurt them competitively from companies overseas. Higher tax rates impact the cost of capital, increase business risk and reduce advantages associated with scalability. So Warren Buffett is being either dishonest or stupid when he makes these kinds of statements. I think that he is being dishonest but I bet no one at CNBC slobbering all over this man would ever actually question anything he says.


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