President Obama, Democrats in Congress, and Obama’s billioinaire fundraiser Warren Buffett are talking this week about a tax hike proposal that is mostly about politics, but meanwhile, the IRS just issued guidance on changing tax law in a way that is mostly about increasing profits for corporate-jet owners and Obama’s billionaire fundraiser Warren Buffett, who owns a corporate-jet company.
Berkshire Hathaway, Buffett’s holding company, owns NetJets. NetJets is a company millionaires use in order to arrange fractional ownership of private jets — time shares, of sorts. NetJets lobbied like crazy, as Ryan Grim and Ariel Edwards-Levy at Huffington Post explained last month, to change the treatment under the tax code of flights on fractionally owned jets.
Recommended Stories
It’s complicated, but basically it’s about whether to charge a per-passenger tax as Washington charges commercial flights or a per-gallon tax as Washington charges the operators of private jets that are owned by one party. The latter treatment results in lower taxes.
Congress — mostly Ohio Republicans Pat Tiberi and Rob Portman, according to media accounts — stuck the NetJets provision into the transportation bill. The result is a “a much-reduced tax liability” for NetJets customers, and thus much higher profits for Warren Buffett. And earlier this month, the IRS began implementing this tax-law change.
I don’t know which tax treatment of fractionally owned jets makes the most sense, but I know that this episode reveals Buffett’s I-want-to-pay-more-taxes act as a political fraud. When conservatives shot back, “so cut a check, Warren,” the liberal response was “he plays by the current rules.”
Well, when it comes to private-jet owners, Buffett’s company does a pretty good job of writing the rules, in a way that makes Buffett richer, at the expense of the U.S. Treasury.
