Warren Buffett rebuffs Donald Trump's tax loophole claim
Countering Donald Trump's claims in the second presidential debate, investor Warren Buffett stated that he has never taken advantage of the 'carry forward' loophole when paying taxes.
Berkshire Hathaway Chairman and CEO Warren Buffett speaks during an interview with Liz Claman on the Fox Business Network in Omaha, Neb., on May 2, 2016.
John Peterson/AP/File
Donald Trump had been fielding questions about his tax returns for months prior to Sunday night鈥檚 presidential debate. He has for the most part kept mum about his taxes, claiming to be unable to release returns due to an IRS audit. But on Sunday, he called in the big guns.
When asked about his use of the 鈥渃arry forward鈥� provision that allows business owners to avoid paying federal income taxes in the years after a big loss, Mr. Trump told viewers that "all ... or most" of Hillary Clinton's donors use that provision. Even third richest American Warren Buffett, Trump said, uses carryforwards.
Mr. Buffett responded on Monday, revealing that not only has he never used a carryforward, but his charitable contributions in 2015 totaled about two thirds of Trump鈥檚 net worth.
鈥淚 have paid federal income tax every year since 1944, when I was 13,鈥� wrote Buffett in , adding, 鈥淭hough, being a slow starter, I owed only $7 in tax that year.鈥�
鈥淚 have copies of all 72 of my returns and none uses a carryforward,鈥� he said.
In 1995, Trump , which he claimed on his tax returns. During Sunday鈥檚 debate, moderator Anderson Cooper asked the Republican candidate whether or not he had used the carryforward provision to justify not paying federal income taxes for 15 years after his 1995 loss.
鈥淥f course I do. Of course I do, and so do all of her donors, or most of her donors,鈥� , referring to Democratic candidate Hillary Clinton鈥檚 donors, including George Soros and Warren Buffett.
In general, carryforwards can benefit investors and entrepreneurs by allowing them to take risks, and are frequently used by the investing community.
Yet, Buffett鈥檚 Monday statement reveals that although Trump may know about his own taxes, he certainly was wrong about Buffett. The Berkshire Hathaway CEO is in a different legal category than Trump, anyway, since he is a shareholder in the company, and so company losses and gains do not count as personal income.
Buffett says that his tax returns show an adjusted gross income of $11,563,931 of which $5,477,964 was taken out in deductions. Although Buffett鈥檚 tax returns indicate more than $3 million of the total deductions were in allowable charitable contributions, the billionaire says that his actual charitable contributions totaled $2.9 billion, a figure close to , as estimated by Forbes.
鈥淭he total charitable contributions I made during the year were $2,858,057,970, of which more than $2.85 billion were not taken as deductions and never will be,鈥� wrote Buffett. 鈥淭ax law properly limits charitable deductions.鈥�
As to Trump鈥檚 decision to withhold his tax returns due to an audit, Buffett says that due to the 2010 creation of the IRS鈥� 鈥淲ealth Squad,鈥� many high earners are audited each year. But that presents no legal barrier to sharing tax returns, he says.
鈥淚 have been audited by the IRS multiple times and am currently being audited. I have no problem in releasing my tax information while under audit,鈥� said Buffett.
鈥淣either would Mr. Trump 鈥� at least he would have no legal problem.鈥�