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No tax hypocrisy with Buffett and NetJets

April 25, 2012: 12:31 PM ET


Warren Buffett gets smeared.

FORTUNE -- To most Americans, Warren Buffett is viewed as that old rich guy who wants Congress to raise taxes on fellow millionaires. But to The Wall Street Journal, he's a hypocrite.

Here's their case:

Billionaire investor Warren Buffett has argued that wealthier Americans should pay more to Washington, a rallying cry that has become a centerpiece of President Barack Obama's re-election campaign.

But NetJets Inc., the private-jet company owned by Mr. Buffett's Berkshire Hathaway Inc., spent more than $1 million over the past three years to lobby Congress to cut a user fee, benefiting the company's well-heeled customers, who buy or lease shares in planes. The reduced fee, part of the recent Federal Aviation Administration bill that took effect earlier this month, will save customers of NetJets and other similar companies roughly $83 million over about four years, according to congressional estimates.

The article then goes on to say that Buffett himself never lobbied for the NetJets tax break, which was passed with bi-partisan Congressional support. But the lead's message was already resonating with Buffett critics, judging from the "see, I told you so" emails I've received today from a number of right-wing readers.

Too bad the WSJ piece was a classic red herring.

Warren Buffett's public pronouncements on tax policy have related to taxes paid by individuals, not by corporations. His namesake rule -- defeated via filibuster last week -- would have required that individuals making more than $1 million per year pay at least 30% in federal taxes. It said nothing about corporations.

In fact, when then-candidate Barack Obama proposed a windfall tax on oil companies during the 2008 campaign, Buffett criticized the proposal as misguided: "I don't think that picking anybody that's had a commodity that's increased in price a lot and saying that there's a special tax because of that makes any sense."

What's important to realize here is that Buffett is serving two distinct constituencies.

On the one hand, he has deeply-held economic policy views that he wants heard for (what he believes to be) the greater national good. On the other, he has legal fiduciary obligations to the shareholders of Berkshire Hathaway (BRKA). Fulfilling the latter does not invalidate the former, even if a conflict arises -- which, despite the WSJ's insinuations, didn't really happen in the case of NetJets.

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About This Author
Dan Primack
Dan Primack
Senior Editor, Fortune

Dan Primack joined Fortune.com in September 2010 to cover deals and dealmakers, from Wall Street to Sand Hill Road. Previously, Dan was an editor-at-large with Thomson Reuters, where he launched both peHUB.com and the peHUB Wire email service. In a past journalistic life, Dan ran a community paper in Roxbury, Massachusetts. He currently lives just outside of Boston.

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