November 27, 2012
Mankiw on The "Master of Tax Avoidance "
The good professor offers four dents to Warren Buffett's armor as the noble wealthy knight of high taxation:
1. His company Berkshire Hathaway never pays a dividend but instead retains all earnings. So the return on this investment is entirely in the form of capital gains. By not paying dividends, he saves his investors (including himself) from having to immediately pay income tax on this income.
I'd add that he sells financial instruments to aid customers with tax avoidance, and that Berkshire-Hathaway profits on the buy side when families sell out because they cannot afford estate taxes.
Y'know, Warren Buffett starts to make that Dalai Lama fellow look less bad...