The revision was estimated to raise $65 million for the government over a decade.
Split-offs are a mainstay of corporate tax practice, and allowing companies to break apart makes sense as policy, said Lawrence Zelenak, a tax law professor at Duke University in Durham, North Carolina. Liberty Media Corp. used this structure in a 2007 deal to acquire the Atlanta Braves baseball team.
Transactions like the Berkshire-Graham deal don’t push the envelope, Zelenak said.
“It’s more the avoidance of a bad result than getting a wonderful result,” he said. “I don’t think he’s ever suggested that he’s not going to take advantage of things that work under current law because he thinks they’re bad policy.”
Second Richest
Buffett, the second-richest person in the U.S. with a net worth of about $63 billion, has been vocal about tax policy and lent his name to a proposal by President Barack Obama to require a minimum rate on the highest earners. In 2011, Buffett wrote in the New York Times that he paid 17.4 percent of his taxable income to the U.S., the lowest rate in his office.
A year later he said in the newspaper that it was “sickening that a Cayman Islands mail drop can be central to tax maneuvering by wealthy individuals and corporations.”
Buffett’s personal tax bill reflects U.S. policies that provide preferential rates on investment income compared with wages, and his choice to take a $100,000 base salary from Berkshire, a fraction of the compensation received by CEOs of similar-sized companies. He has pledged to donate most of his wealth, which is in Berkshire stock, to charity.
Berkshire slipped 0.5 percent to $183,860 at 4:15 p.m. in New York, lowering its gain to about 21 percent in the past year. Graham Holdings has advanced 62 percent in that period.
Full Ownership