If you believe in the flat tax

[kraft-t]

Not correct!  The democrat position is that favorable tax advantage should not be bestowed on the affluent. Why should the income of working people be taxed at one rate and capital gains at another. And why should capital gains be exempt from SS taxes. Why should  income over and above $110 K be exempt from further SS taxes.

There is class warfare, but the general thought process is all wrong. There is a concerted effort to give higher earners favorable treatment while exposing lower earnings to  higher tax rates. Which defines the existance of favorable tax treatment for the affluent.

Secondly while the affluent are trying to avoid taxes, they strive to weaken the safety net for those less fortunate.

[Husker-J]

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@kraft-t wrote:

You do such a nice job of separating the income between the personal and corporate level until you get to the last part of your post and then you assert that Warren owes a billion in taxes when infact the supposed tax responsibility belongs at the corporate level.

Warren was using the corporation, as a tax shelter, so he wouldn't have to pay as much in taxes.   The IRS, is saying that his corporation is doing that imporoperly, and that he should owe the taxes.  
Either way, the taxes owed, are Warren's responsiblity.   He is chairman of the board, CEO, and President of the company, as well as the majority stockholder.

It would not be any different, than if I formed a 'Husker Farms' corporation, and used it to improperly shelter income, so as not to pay taxes on it.   Well, I guess it would be different, because I would not be able to put off the amount owed, for something like 10 years, like Buffet has done.

There remains some confusion over capital gains. That you can sell one farm and reinvest it in another and not triggering a taxable event if done in a proper sequence. Is Berkshire claiming the same option when it sells one company and buys another. Like you trading in your old tractor for anew on e and not having to declare the procceds from the sale of the old unit as income. Perhaps that is the reason their is some disparity about what is legit and what isn't.

The difference is, if you or I sold Pepsi stock, at a profit of $10 a share, and used the money to buy Coke stock, you or I would have to pay capital gains on the profit from selling the Pepsi stock.   Your tractor analogy would only apply, if you bought your old tractor for $5000, and then got $20,000 when you sold it.   Would you not have to pay taxes on the $15,000 capital gains?   Buffet ran his transactions through a dummy corporation, where the $15,000 gains from selling the old 'tractor' could be cancelled out when he bought the new, as if he sold it for the same price he paid for it.

That is why the IRS is saying he owes over $1 Billion in taxes.

To place the blame on Warren for tax issues that have bnot been clearly defined is a bit unreasonable. That is why they have trials  to decide these issues and often new tax law is decided via court decisions. Thus Berkshires legal standing is not yet decided and will be through litigation.

As I said before, who else does the IRS say owes back taxes for 10+ years, who is still in 'negotiations'?   Anyone I know of, long ago would have had asset siezures, etc, yet Buffet goes along, as if nothing happened.   Do you really think that you or I would get that long, without the IRS attatching leins to our operations?  Here is a news blurb, if you are interested, read the highlighted part at the end twice, so it has a chance to sink in.

According to Berkshire’s 2010 annual report, the company has been in a near decade-long struggle with the IRS over its own taxes. Using public documents, a certified public accountant detailed Berkshire’s tax problems to Americans for Limited Government researcher Richard McCarty, revealing the damage could be close to $1 billion. Netright Daily adds:

According to page 56 of the company report, “At December 31, 2010… net unrecognized tax benefits were $1,005 million”, or about $1 billion. McCarty explained, “Unrecognized tax benefits represent the company’s potential future obligation to the IRS and other taxing authorities.  They have to be recorded in the company’s financial statements.”

He added, “The notation means that Berkshire Hathaway’s own auditors have probably said that $1 billion is more likely than not owed to the government.”

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[farawayguy]

Berkshire has a market cap of $260 Billion. A Billion in contested taxes isn't quite what it seems. Pretty sure they can afford .4% of their value, if they lose the case. It's equal to the amount the company gains or loses in value each day.

Flat Tax is just a rate, not the most important part of the tax change the folks propose. The important part would be the deductions that are going to be disallowed. Unless they're spelled out, pretty hard to judge. Obviously mortgage interest and charitable deductions would be eliminated. But rich people don't have much in the way of mortgages. Tax theory has always been based on the idea that we tax the amount above what we need to live, and the flat tax proposals I've seen retain this, which is why usually it exempts the first $20,000 or so, not unlike today's system. All told, I can tell you, I'd personally love this system for myself, and if we get there it'll feel pretty good. Just don't think the country can afford it. 

Flat Tax is sold as simplification, but again, the tax rate has nothing to do with that, unless your problem is coming up with the tax amount after you've added and subtracted everything. I recommend a computer or calculator if that's your problem. If simplification is your goal, then spell out how you'd do it. Why not argue for "tax simplification", spell out details and then let the number crunchers fight out what the tax rates need to be to raise necessary revenues. 

I'll start first. Let's eliminate 1031 transactions. (Hang on a second, calculating some things..... ) Oops, never mind. 

This all reminds me of Romney proposing specific lower tax rates during the election, then saying they'll figure out the deductions they'll eliminate after the election. 

[kraft-t]

I didn't know Warren owned 100% of the company. My Son in law owns some stock but he has probably been lying to me.

If you were chairman of the local coop and owed the IRS $1M would you be responsible for the taxes or would you share responsibility with the stockhlders?   The truth is you're desparating trying to find Warren guilty of wrong doing. Do you not think he has CPAs employed and a legal team advising him?

[kraft-t]

You can do that> Sell all your assets and move to Costa Rica. Until then you will be subject to the taxation imposed by the elected body of the United States.

However, you might be confronted with a tax system in costa Rica that offends you. Other than that your only choice is to become dictator so that everyone must agree with you.

I do hope you find comfort and satisfaction somewhere.

[kraft-t]

The middle class is already paying 15 % in SS and fica taxes plus their income tax responsibility.

[clayton58]

I hear  Buffet and others complain about their tax rate being too low.  But I don't hear anyone voluntarily paying more than required.  Come on, how about you put your money where your mouth is?

[Husker-J]

This is the business section, not the ag section, so I'm going to bow out with one last comment.

If a business, like the co-op you mentioned, or any other business for that matter, didn't pay thier proper bills, who would you blame?

Would you blame the President?  Look up who's Pres of BKH, if you need help

Would you blame the Chairman of the Board?  Chek out that one (same person)

Would you blame the CEO?   (Wonder who that would be).

How about the majority stockholder?  (hint - initials are WB)

[Husker-J]

sarcasm on - if a Billion is no big deal to BKH, why don't they just pay it when the IRS says it is owed? - sarcasm off.   Now, on to what I hope can be a serious discussion of how a flat tax works:

There are different proposals of the flat tax floating around, but the one I hear the most often goes something like this:

Single person gets a living deduction, for sake of argument, let's say $25K

Married couples get double that, (no marriage penalty), for a total of $50K

They then get another $5k per dependant, so two kids would up that to $60K of income, tax free.

The way it helps the lower class would be this way:  Let's say the tax rate was 15%.  ( I have heard 13% to 20% floated around)

A family of 4, making $60K (or less) would owe nothing.

A family of 4 making $75K, would owe $2250, or 3% of their income.

A family of 4, making 200k, would owe $21,000, or 8.4% of their income

A family of 4, making 1,060,000, would owe $150,000, or a hair over 14%

See how progressive the tax gets, as income goes up?  Note how someone with a salary of $60k or less, married with two kids, would get a 100% tax reduction.

As for deductions, all you get are the direct business expenses (a farmer could expense their seed, fertilizer, fuel, etc, but not their new pickup, tractor, or combine).  There would be no special deductions, for anything.  Capital purchases would be made from the 85% you get to keep.  No special deductions, no loopholes for the super rich to get out of paying their fair tax.  It would seem to me, that those who do not want the rich to have special favors, would be for the flat tax, more than against it.

[clayton58]

If there is no deduction for capital purchases??  Then what?? Will it drive all capital items to be leased??  Or will the leasing business be able to deduct their costs?  IMO capital items should be depreciated over a reasonable lifetime using a straight line method.  Can't imagine what a wreck would occur to the michinery industry without some kind of depreciation.