The Billionaire and His Secretary

An excerpt from an excellent editorial from National Review:

Mr. Obama and his favorite campaign underwriter, billionaire investor Warren Buffett, have tried to bring in a bumper crop of political hay out of the fact that Mr. Buffett alleges that he pays taxes at a lower effective rate than does his secretary. There’s rather less to that than meets the eye: Mr. Buffett, the third-wealthiest man currently walking the earth, pays himself a salary of only $100,000 a year, and says his secretary earns around $60,000. ... Mr. Buffett pays no taxes on dividends accruing to the many shares of stock he holds in his company, Berkshire Hathaway, simply because the firm does not pay a dividend, while most of his personal wealth has been put into a trust. Each of those facts — the relatively low salary, the lack of dividend payments on Berkshire Hathaway shares, the trust — is part of a calculated strategy to avoid paying taxes. While we do begrudge Mr. Buffett his ridiculous moral posturing, we do not begrudge him the benefit of such allowances as the tax code affords: Mr. Buffett, after all, did not write the tax laws. And he shouldn’t start writing them now.