Views On “Review & Outlook: Warren Buffett’s Tax Dodge”
Todd, thanks. I can understand your argument as it relates to company stock advice investments from a theoretical perspective. However, much of the capital gains earned on stock investment arguably have little to do with a rational calculation of the present value of future income streams. Look at the capital gains made on stock investments during the internet bubble – were they due to reinvestment of profits? No, they were due to speculative price increases. Those companies never paid any tax, as they never made any profits, and yet some investors reaped massive gains on their stock holdings in those companies. So how is this double taxation in practice? Should we be giving speculative profits a free pass, while taxing labor? I think this sense the wrong signal.
The difference with dividends is that the company actually has to earn after-tax profits in order to distribute them. Hence, yes, this is double taxation.
Of course, capital gains on other assets, such as, say Gold or art, are undoubtedly not subject to double taxation as they don’t yield any taxable income stream.
