Warren Buffett must pen another letter to his favorite uncle. The last one was a little too cloying. It was a personal missive, which somehow wound up on the top of the op-ed page of the New York Times on November 16, 2010. Here are a few of the key passages:

DEAR Uncle Sam,

My mother told me to send thank-you notes promptly. I’ve been remiss.

Let me remind you why I’m writing. Just over two years ago, in September 2008, our country faced an economic meltdown.… Several of our largest commercial banks were teetering. One of Wall Street’s giant investment banks had gone bankrupt, and the remaining three were poised to follow. A.I.G., the world’s most famous insurer, was at death’s door.

Many of our largest industrial companies… were weeks away from exhausting their cash resources. Indeed, all of corporate America’s dominoes were lined up, ready to topple…

Only one counterforce was available, and that was you, Uncle Sam…

Well, Uncle Sam, you delivered. People will second-guess your specific decisions… [but], overall, your actions were remarkably effective.…

Your grateful nephew,

Warren

From the Sage of Omaha, who endorsed Barack Obama in the 2008 election, this amounted to a two thumbs up at the midway point of Obama’s first term. It repeated and reinforced the Obamanomic argument that we should be happy that the nation had not reentered a second Great Depression — with unemployment up at 20 or 25 percent, rather than 10 percent going into the second year of a supposed recovery.

So it was a heart-warming moment three months later, in February 2011, when Obama hung the Presidential Medal of Freedom around Buffett’s neck. He described Buffett (with a net worth of some $60 billion) as if he were the second coming of Mother Teresa, saying (with a perfectly straight face): “You see him devoting the vast majority of his wealth to those around the world who are suffering, or sick, or in need of help.”

The president was the first financial analyst to applaud Berkshire Hathaway for investing tens of billions of dollars in combatting global disease and poverty. Even now, no one else has noticed.

O tempora o mores, to cite Cicero’s famous lament. We live in fickle times.

It now seems that the president may have no option but to demand the return of the Presidential Medal. The Sage (according to a newer version of Obamanomics) has gone rogue.

For weeks now, Obama and his treasury secretary (“Clueless” Jack Lew) have inveighed against the recent wave of corporate inversions in which U.S. firms have acquired or merged with foreign firms for the purpose of taking corporate residence in more favorable tax environments — aiming to avoid a confiscatory double whammy: The U.S. has the highest corporate tax rate in the free world, and it also imposes additional tax penalties on U.S. firms wishing to bring money earned aboard back into the U.S. — even after paying overseas taxes on the same income.

Under current law, it is perfectly legal as well as totally logical to take such action. Nevertheless, the president and the “Clueless” Lew have inveighed against inversions as “corporate desertions,” an “abuse of the U.S. tax system,” “unfair” and “unpatriotic.”

Buffett and Berkshire Hathaway are now expected to provide a large part of the financing for Burger King’s owners to engineer a U.S.-tax-avoidance merge and change-of-corporate-domicile deal with Tim Hortons Inc., of Canada.

That makes Warren Buffett — as Obama and his administration are defining it — a Benedict Arnold.

How should Son of Sam (sorry, nephew of Sam) respond?

Buffett is in a somewhat precarious position. On the one hand, as a big proponent of income redistribution, he is a liberal/progressive favorite — who has famously complained at $30,000-a-plate Democratic fundraising dinners that his secretary pays a higher rate of taxation on her income than he does on his.

On the other hand, Buffett and other super-rich donors who attend such dinners know that they have little to fear from higher “income” taxes — because income isn’t what matters for the super-rich: It is unrealized and untaxed capital gains.

In percentage terms, Buffett pays almost nothing in taxes, if you take unrealized capital gains into effect. As famed economist Arthur Laffer and three co-authors observe in The Wealth of States, that is because the income or salary that he pays to himself as a manager is nugatory compared to the rolling capital gains of stock held for long-term appreciation: 

Using Congressional Budget Office’s (CBO’s) definition of income, in 2010 Buffett had a comprehensive income of close to $12 billion yet reported paying taxes of a little less than $7 million on reported adjusted gross income of a smidgeon under $40 million. His effective tax rate was a tiny fraction of 1% ($7 million divided by $12 billion = 0.0006) versus the 17.4% he claims to have paid ($7 million divided by $40 million).

The eponymous “Buffett Rule” deliberately confuses wealth with income — stating that wealthy Americans should pay at least 30 percent of their income to the federal government.

The author of that same rule has also stated, “I will not pay a dime more of individual taxes than I owe, and I won’t pay a dime more of corporate taxes than I owe.”

So how — if he chooses to be a little more honest — should Buffett begin his next letter to Uncle Sam? In no uncertain terms, he could tell his uncle to get lost — following the alleged example of President Gerald Ford in turning down a request for bail-out money for New York City. That prompted the famous headline in the New York Daily News in 1975:

“FORD TO CITY: DROP DEAD.”