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To: DuckTapeSunroof who wrote (48780)	11/28/2011 11:12:49 AM
From: tonto	3 Recommendations Read Replies (1) \| Respond to of 71588

I do not see how you specifically were not talking about ordinary income. The following is what you wrote: nearly all of which is of course derived from dividends and long and short-term capital gains --- all taxed at preferential below-income-tax-rates, and all offset by healthy dollops of accrued realized capital losses which can carry-forward an unlimited amount of time, so that even the ordinary income from coupons and interest isn't enough in this current interest rate environment to pull his weighted average effective federal tax rate up anywhere near to what his secretary pays. :-) Please explain what you mean above since it does not go against ordinary income what is limiting his tax rate so that he does not pay what his secretary pays. What do they both pay?

To: DuckTapeSunroof who wrote (48780)	12/2/2011 9:21:37 PM
From: TimF	Read Replies (1) \| Respond to of 71588

I specifically wasn't talking about matching realized Cap. Losses against ordinary ('earned') income. But about matching against realized Cap. Gains to 'wash' them clean of tax liability. If you gain $1bil, and lose $500mil you've only gained $500 mil. The taxes apply against what you actually gained. To calculate the effective percent on your gains you divide the taxes paid by $500mil not $1bil. If Buffet made such gains and losses and paid 15% statutory rate on them, he would pay an effective rate of 15% on this part of his income. $75mil would be paying a 15% rate. If he paid $150mil it would be a 30% rate.