Buffett Attracts Investments by Republicans Bashing His Tax Rule
Republicans in the U.S. Congress, who have criticized Warren Buffett’s approach to tax policy, are largely holding onto their stocks and bonds in the billionaire’s Berkshire Hathaway Inc. (BRK/A)
That detail is found in lawmakers’ annual personal financial disclosures, released yesterday. The documents include such tidbits as Representative Dennis Cardoza’s sale of the racehorse Unanimous Consent and the multimillion-dollar Virginia and North Carolina land holdings of New York Representative Carolyn Maloney.
“These financial disclosure reports are critical information for the press and the public to determine whether or not conflicts of interest are present,” said Craig Holman, government affairs lobbyist at Public Citizen in Washington. “The purpose is not to show that they’re all millionaires. The real purpose is to show whether any specific member owns stock investments or property directly benefited by their actions in Congress.”
Congress voted earlier this year to require lawmakers to release information about mortgages on their personal residences, and the files released yesterday included such data for the first time. The change followed controversy over special interest-rate deals that Countrywide Financial Corp. made for some lawmakers.
The law will require members to report some transactions within 45 days after a trade.
“There is a lot more that we are going to uncover,” said Holman, whose group advocates for consumers.
Among the Berkshire investors in Congress are Senator Orrin Hatch of Utah, the top Republican on the Finance Committee; Representative Dave Camp of Michigan, chairman of the House Ways and Means Committee; and Representative Paul Ryan of Wisconsin, chairman of the House Budget Committee.
Buffett, the 81-year-old billionaire chairman and chief executive officer of Berkshire, has called for higher taxes for the top U.S. earners, including himself. President Barack Obama, a Democrat, began campaigning in September 2011 for a so-called Buffett rule that would require a minimum tax rate of 30 percent for people with incomes exceeding $2 million.
Camp and Hatch are the top two Republicans on tax policy in Congress. Camp bought Berkshire corporate bonds worth $15,000 to $50,000 in December 2011 and holds as much as $100,000. Hatch has $30,000 to $100,000 in Berkshire stock, including at least $16,000 purchased in October 2011.
“The congressman’s financial information has been fully disclosed in full compliance with the law and rules of the House,” said Sage Eastman, a spokesman for Camp. The congressman called the Buffett rule a “job-killing tax hike” in April.
Antonia Ferrier, a spokeswoman for Hatch, said the senator doesn’t manage his stocks. Hatch has criticized the Buffett rule, calling it part of Obama’s “political games.”
At Berkshire’s annual meeting last month, Buffett took questions along with Vice Chairman Charles Munger. Buffett was asked if he should mute his political views, prompting applause from some in the crowd at Omaha’s CenturyLink Center.
“When Charlie and I took this job, we did not decide to put our citizenship in a blind trust,” Buffett said.
The forms cover holdings as of the end of 2011 and transactions during that year. Lawmakers are required to report holdings in broad ranges, in general categories that make conflicts of interest sometimes tough to discern, Holman said.
In 2002, the Alabama Republican took out a mortgage of $50,000 to $100,000 on a property in his home state. In April 2012, he received a mortgage of more than $250,000 on a Capitol Hill property.
JPMorgan CEO Jamie Dimon is scheduled to testify before the committee on June 19.
On the Senate side, New York’s Charles Schumer, the chamber’s third-ranking Democrat, stands out for the relatively high interest rate he’s paying on his primary residence. Since 2002, he has paid 6.85 percent on a 15-year loan. The mortgage had less than $50,000 remaining in 2012, according to his disclosure form.
Schumer obtained his mortgage from PHH Mortgage Corp., which on its website yesterday listed a 2.9 percent rate for a fixed-rate 15-year loan.
Senators John Thune of South Dakota, John Barrasso of Wyoming and Kyl are paying lower mortgage rates than their fellow members of the Senate leadership. Kyl took out a five- year, 3.25 percent loan in 2010, while Thune and Barrasso refinanced in 2011 and received 3.75 percent rates.
The disclosures also included sections on the legal expense funds of lawmakers who have them.
New York Democrat Charles Rangel, who was censured by the House in 2010 for ethics violations, reported receiving $133,200 in gifts to his legal expense trust last year.
Among the donors were Larry Silverstein, a developer of the new World Trade Center; Leonard Riggio, the founder and chairman of Barnes & Noble Inc.; and former New York Mayor David Dinkins. Some of Rangel’s current House colleagues helped him through their campaign committees, including Ruben Hinojosa of Texas and Mel Watt of North Carolina. Also offering assistance was former Representative Anthony Weiner of New York.
The filings also showed which lawmakers are among the country’s richest people. It takes about $9 million in assets to be part of the wealthiest 1 percent of Americans, said Edward Wolff of New York University.
“It’s no surprise that they don’t want to raise taxes on the very rich,” Wolff said. “They’ll be paying that themselves.”
House Minority Leader Nancy Pelosi of California tops the list of House leaders with $40 million to $187 million in financial assets she reports with her husband, San Francisco commercial real estate investor Paul Pelosi.
Most of their assets are listed as rental properties in California and partnership income in companies including investment management and restaurants. The Pelosis own a vineyard in St. Helena, California, valued from $5 million to $25 million.
House Majority Leader Eric Cantor of Virginia listed financial assets including stocks and real estate holdings valued at almost $4 million to $9.6 million.
In the Senate, Minority Leader Mitch McConnell of Kentucky is the wealthiest member of the leadership, listing assets valued at $9.9 million to $44.5 million. Much of the wealth is held by his wife, Elaine Chao, who was labor secretary under President George W. Bush.
Among Cantor’s biggest stock holdings is an investment of $500,000 to $1 million in Domino’s Pizza Inc. His wife, Diana, a former Goldman, Sachs & Co. vice president who is chairman of the board of the Virginia Retirement System, is a director of Domino’s Pizza and Media General Inc. (MEG), a Richmond-based newspaper and broadcast company.
Maryland Democrat Steny Hoyer, the minority whip, is among the least wealthy House leaders. He cited assets of $30,000 to $100,000. Hoyer reported he owes at least $100,000 and as much as $250,000 in a mortgage on his home in Mechanicsville, Maryland, to SunTrust Banks Inc.
House Speaker John Boehner, an Ohio Republican who once owned a small business, listed assets valued at $1.8 million to $5.4 million. All of his stock and bond investments in companies including Intel Corp. (INTC), Home Depot Inc., Honeywell International Inc., Pfizer Inc. and JPMorgan Chase & Co. were through individual retirement accounts. He and his wife, Debbie, who works as a real estate agent, didn’t report a mortgage on their home near a golf course in suburban Cincinnati.
In the Senate, Majority Leader Harry Reid of Nevada is the wealthiest Democratic leader, listing assets of $2.78 million to $6.19 million. Much of his net worth is in real estate holdings in his home state of Nevada and in Arizona. Reid, the son of a Nevada hard-rock miner, has holdings in bonds and stock mutual funds and other investments.
U.S. Senator Marco Rubio of Florida is one of the few members of Congress who is paying off student loans. The first- term Republican owes at least $100,000, and as much as $250,000, in student loans through Sallie Mae incurred in 1996, the year he earned a law degree from the University of Miami.
Those reporting owing money on their student loans included Representative Linda Sanchez, a five-term California Democrat, and four-term Republican Representative Cathy McMorris Rodgers of Washington. Sanchez paid off the loans earlier this year, and her report next year will show that she no longer has that debt, said her spokesman, Adam Hudson, in an e-mail.
Unless Congress intervenes, on July 1 those who take out new student loans will pay an interest rate of 6.8 percent. The current rate is 3.4 percent.
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