June 16, 2012
Taxpayers Pay $1.2 Million for Lunch with Warren Buffett
Wall Street Journal: Lunch With Warren Buffett: One Giant Tax Deduction, by Laura Saunders:
Is the donation tax-deductible? Experts say most of it probably is, meaning taxpayers in effect will pick up about $1.2 million of the tab. ...
Like any other charity, Glide will have to send the donor a letter saying how much of the gift is tax-deductible, and the assessment must be able to withstand a challenge by the IRS. Last month, the U.S. Tax Court, in a case known as Mohamed v. Commissioner, denied an $18.5 million charitable deduction by a California couple who didn't have correct paperwork before they filed their return.
Experts expect Glide's letter to exclude the fair-market value of the lunch from the donation total. The law mandates a disallowance for any goods or services received in connection with the donation, such as the lunch, which includes Mr. Buffett, the donor and up to six invited guests. The fair-market value is the cost of the prepared food to regular diners, not the purchase price of the groceries at a market.
What is Mr. Buffett's company and conversation worth? Nothing, under an IRS rule in effect since the mid-1990s. It deems "celebrity presence"—as when a famous artist gives a museum tour to a donor who has won it in a charity auction—to have no value in and of itself. Mr. Buffett has specified that talk of investments is off limits, so he isn't providing a service.
Update: Forbes, Should Warren Buffett's $3.46M Lunch Be Tax Deductible?
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That's a silly way to characterize it. It's not that taxpayers are paying $1.2 million for a lunch with Buffett, but that the taxpayers are getting almost $3.5 million of antipoverty assistance for only $1.2 million.
Posted by: Anon | Jun 16, 2012 1:20:06 PM
Sorry, a deduction is not a payment by the government or taxpayer. It merely allows a person to keep or spend their own money as they wish. I do not like Buffett, the ultimate crony capitalist, but letting people keep and spend their own money is not bad.
Posted by: Bob | Jun 17, 2012 8:38:38 AM
It is not the government's money. Not one single cent. Stop falling for the "taxpayer pays" meme. The most that can be said is the government doesn't get some piece of a transaction that it thinks it should have. Codswollop! I'll say it again, it is NOT the government's money! Starve the beast.
Posted by: BarryS | Jun 17, 2012 9:08:38 AM
So it's OK for the taxpayers to get reamed everytime someone rich buys a celebrity for lunch or dinner...and the money goes to who knows what?
Posted by: OldPhil | Jun 17, 2012 9:36:02 AM
That's an equally silly way to put it. I'm one of, say, 150,000,000 taxpayers, so my 'share' of that is a net one-and-a-half cents. And to a 'charity' I don't necessarily endorse. I'm not impressed, and it is a distortion of a useful tax code.
Posted by: JorgXMcKie | Jun 17, 2012 10:12:29 AM
What am I missing here? If the dining group bought products or paid someone income the IRS would have received taxes from the spending. But because they give it to a charity, taxes aren't collected on the money move so somehow the taxpayers are paying something? This doesn't pass the smell test. Didn't the bidder already pay taxes when he earned the money intially? So he is costing the taxpayers again by not paying taxes on it a second time when he "spends" it? What would the authors of the constitution think of this logic?
Posted by: Jim692 | Jun 17, 2012 10:27:59 AM
Sorry, but allowing a taxpayer to keep more of his own money (i.e., reducing his tax burden by 1.2 million dollars) is not the same as having taxpayers pick up the tab on a 1.2 million dollar federal expenditure. What you're saying is the same as saying a tax rate reduction in the top bracket is a "giveaway" to the rich. It is no such thing.
Posted by: Mike in Oregon | Jun 17, 2012 10:35:23 AM
Almost as silly as saying the government is spending money on tax cuts.
Posted by: RM | Jun 17, 2012 12:49:16 PM
"Almost as silly as saying the government is spending money on tax cuts."
Which is exactly what the government does say about tax cuts. Good Lord, I can't believe so many commenters here have missed the point: What Ms Saunders is doing is hoisting the government by its own petard. Enjoy it for the irony it is.
Posted by: PersonFromPorlock | Jun 17, 2012 3:45:27 PM
How do they know the donor has $3.5 million in taxable income this year?
Posted by: Anon2 | Jun 17, 2012 9:38:25 PM
Unfortunately, the widespread presence in the culture (thank you, socialized education) of the Marxist notion of collective ownership of wealth, tends to clobber such attempts at irony and satire. Poe's Law is making that sort of thing unworkable pretty damn fast.
Posted by: seerak | Jun 18, 2012 12:46:23 AM