President Obama’s favorite billionaire, Warren “Tax Me More” Buffett, likes to portray himself as a hard-charging capitalist who made his bundle on Wall Street and now just wants to give something back to the country that helped him become one of the world’s richest men.
But Buffett didn’t get where he is by ignoring the federal government, the 800-pound gorilla overshadowing every American boardroom.
As economist Susanne Trimbath points out, “We may not want to look too closely at where [Buffett’s] money comes from – like the 15 percent return he’s earning on the $5 billion investment he made in Goldman Sachs the week before they got a $10 billion bailout; or the fact that Berkshire Hathaway was the largest shareholder in American Express Co. when they received $3.4 billion from Uncle Sam.”
Sen. Ben Nelson, D-Neb., a Berkshire Hathaway investor, “bragged at a Chamber of Commerce meeting that he took advice from Warren before he voted for the Wall Street Bailout. He completely ignored the irony: a Senator asks a banker for advice on a bank bailout, the banker encourages the senator to pay out $750 billion of taxpayer money to banks. This is something much less benign than drinkin’ likker on Saturday night and singin’ in the choir on Sunday morning.”
The bank bailout, Trimbath adds, provided Buffett with a “ten percent rate of return with zero risk.” A blind dog could make money under those conditions.
Buffett is now launching a new venture to finance low-income housing for seniors on Medicaid in Chicago, Obama’s adioted hometown. But there’s plenty in it for him.
According to Crain’s Chicago Business, Affordable Housing Partners, Inc., a subsidiary of Buffett's Berkshire Hathaway, will “invest in projects by buying up federal tax credits to encourage investment in low-income housing. Proceeds from the sale of the tax credits provide equity to help fund construction. The buyers, typically large banks and major corporations, use the tax credits to lower their tax bills.”
Buffett’s investment in a proposed 125-unit development will be $5.4 million, according to an application submitted to the Illinois Finance Authority. The rest of the project will be financed with $18.6 million in tax-exempt bonds.
“Omaha, Neb.-based Berkshire, which had net income after taxes of $10.7 billion, would seemingly have reason to lessen the company's tax burden while providing financing for badly needed affordable housing,” Crain’s reporter Anthe Mitrakos noted.
Tax credits, tax-exempt bonds, lessening his company’s tax burden. This doesn’t sound like somebody who really wants to pay more taxes.