Warren Buffett is famous for being one of the greatest philanthropists in modern times. As well as this, he has also become famous for being in favour of a higher minimum wage in the USA. But recently he has been making headlines for helping Burger king to dodge taxes by moving their corporate base from the USA to Canada. Despite is philanthropic efforts; it seems as one of the richest and greatest investors in the world his primary focus will always be on making money for his investment company Berkshire Hathaway. The question is can he be a champion of the people and a billionaire business man at the same time?
No one can deny that Warren Buffett is an amazing philanthropist. Even though he has amassed a huge fortune through his ownership of Berkshire Hathaway, estimated at roughly $66.9 Billion Dollars, he is also responsible, along with Bill Gates, for creating the Giving Pledge which encourages Billionaires to give the majority of their wealth to charity over the course of their life. Mr Buffett himself, said of the Giving Pledge, “They come from different backgrounds, but share a common desire to see positive change in our world." Despite already giving away billions to charity he too has pledged to give away more than half of his own wealth before or after his death. It is clear from his philanthropic actions that he has a desire to change the world for the better and is taking an active role.
Even more telling perhaps is what he wrote of his own wealth, he told Fortune Magazine “I’ve worked in an economy that rewards someone who saves the lives of others on a battlefield with a medal, rewards a great teacher with thank-you notes from parents, but rewards those who can detect the mispricing of securities with sums reaching into the billions. In short, fate’s distribution of long straws is wildly capricious.”
The Earned Income Tax Credit
As the third richest man in the world and widely regarded as the greatest investor of the twentieth century he is also greatly loved by the political left and an adviser to President Barack Obama. This is not just because of his philanthropic work, but because despite his immense wealth, he is not viewed as trying to squeeze money from the average citizen. In fact he is a major advocate for a minimum tax for millionaires.
Buffett has also come out as a proponent of an increase in the minimum wage. But ever the shrewd money man, only if it makes sense for the American Workers. As Buffett said, “You do lose some employment as you increase the minimum wage, if you didn’t I would be for having it $15 an hour.” Instead Buffett proposed the use of an Earned income tax credit. In theory it adds credits onto wages and so it would decrease poverty, encourage people to work and not lead unemployment, as it has no downside for employers. If Warren Buffett is such a great philanthropist and also a beloved champion of the people, then it does beg the question why is he being linked with Burger King and Tax Dodging?
Burger Kings Tax Dodging
Burger Kings $11 Billion Dollar buy out of Canadian coffee-and-doughnut chain Tim Hortons is largely viewed as a way for Burger King to move their corporate office from Miami to Canada. This will reduce the amount of tax they pay from 35% to 26.5%. This kind of deal known as a tax inversion is not looked at favourably in the U.S. as it denies the government much needed taxes. During a time of global financial difficulty people are even more annoyed by this kind of tax avoidance. Democrat Senator for Ohio said, “To help business grow in America, taxpayers have funded public infrastructure, workforce training and incentives to encourage [research and development] and capital investment. Runaway corporations benefited from those policies but want US companies to pay their share of the tab.”
Warren Buffett has offered to provide $3 Billion Dollars to Burger King in order to facilitate the buyout. People are asking how such a wonderful philanthropist who is in favour of a millionaire minimum tax can be associated with such dubious practices, but they are forgetting some important points. Above all other things Warren Buffett is a business man and as previously mentioned probably the greatest investor of the twentieth century. In the end his goal is to make money for Berkshire Hathaway, which is exactly why he is investing $3 Billion dollars in the Burger King deal.
Can Warren Buffett be a champion of the people, advocate of the millionaire tax, philanthropist and at the same time be involved with tax avoidance scandals. The simple answer is of course, because apart from all of those wonderful things, he also has a day job making money as an investor. Put simply if he didn’t make money through investments then there would be none to give away to charity.