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Anything about unsound investments which are nevertheless likely to be bailed out and so have a great expected ROI? Tax evasion by taking companies off the stoc
by yosefk 9y ago
Anything about unsound investments which are nevertheless likely to be bailed out and so have a great expected ROI? Tax evasion by taking companies off the stock market and canceling dividends?
That Berkshire's code of ethics is linked here is an amazing PR achievement, rivaling such jewels as the one-time potent "Don't be evil" (actually beating this one hands down as it has worn out even though Google didn't get $billions of bailout money.)
- tc313 9y agoHow does acquiring a public company evade taxes?
- lefstathiou 9y agoHa, I believe I know what the parent meant. Technically by not distributing a dividend that would otherwise been paid the government does not collect on the taxes that would have been due had the dividend been paid. I see how one could stretch this to consider it "evasion" As the government has not collected taxes by there are a zillion obvious offsets to factor in here that make this a bit of a silly point to make.
- 11thEarlOfMar 9y agoTaxes are paid by the corporation before they pay dividends. Paying dividends does not reduce a corporations tax liability.
- rileymat2 9y agoAre acquisitions pre or post tax. I Don't know. If they are pretax - You very well could evade taxes by spending excess money on acquisitions, allowing the stock price to increase based on future earnings. Then use step up capital gains when you die to avoid capital gains when transferring wealth to offspring.
- gibybo 9y agoAcquisitions are a capital asset and do not offset your tax liability. If a corporation earns $100 million and buys another company for $60 million, they still owe taxes on the full $100 million.
- lefstathiou 9y agoCorrect - apologies for not being clear... if I own a business and receive a dividend, I pay taxes. So that same income was taxed first at the corporate level and second at the personal level. THe evasion - which I consider to be a stretch here - is that by not paying a dividend it becomes trapped in retained earnings and the government doesn't receive its second piece. I'm not saying I agree with the view here but the point is technically correct. A $100 of profit for Apple in the us is taxed 40% at corporate level to become $60 and by the time it gets to me it is worth 32
- walshemj 9y agoBut it probably ought to
- aczerepinski 9y agoSilly indeed. Over the decades when Berkshire has elected to retain earnings vs distributing to shareholders, the capital has been compounded at Warren Buffett rates of return (and taxed when it hits the books as profit). If it were distributed the treasury would get a one-time dividend payment, but then the individual shareholders would be unlikely to compound that money at ~20%.
- mcrad 9y ago> That Berkshire's code of ethics is linked here is an amazing PR achievement PR achievement? How about the tendency for hacker enthusiasts to know nothing (and care less) about business ethics?
- valuearb 9y agoBerkshire wholly owned subsidiaries continue to pay dividends, and Berkshire itself has to pay taxes on those dividends. How can we make ethical declarations if we don't get our facts straight?