Berkshire Hathaway chairman and CEO Warren Buffett said in an editorial Monday that those making over $1 million and $10 million per year should be taxed at higher rates.
Warren Buffett
The editorial, “Stop Coddling the Super-Rich,” in Monday’s edition of The New York Times, argued that the income of investment managers and stock futures index traders were only being taxed at 15 percent. Buffett, who ranks No. 3 on the Forbes list of the world’s richest people, with an estimated net worth of $50 billion, estimated that he is taxed at a rate of just 17.4 percent.
“Last year my federal tax bill — the income tax I paid, as well as payroll taxes paid by me and on my behalf — was $6,938,744,” he wrote. “That sounds like a lot of money. But what I paid was only 17.4 percent of my taxable income — and that’s actually a lower percentage than was paid by any of the other 20 people in our office. Their tax burdens ranged from 33 percent to 41 percent and averaged 36 percent.”
Buffett has argued in the past that the wealthy should be paying more in taxes (see Buffett Favors Expiration of Bush Tax Cuts for Rich). He noted in his editorial that many of the wealthy pay a relatively low proportion of their income in payroll taxes, compared to the middle-class. “The mega-rich pay income taxes at a rate of 15 percent on most of their earnings but pay practically nothing in payroll taxes,” he wrote. “It’s a different story for the middle class: typically, they fall into the 15 percent and 25 percent income tax brackets, and then are hit with heavy payroll taxes to boot.”
He contended that higher tax rates on capital gains, dividends and income would not hurt either investment or job creation, and that most investors do not avoid investing because of the tax rates.
The so-called "Oracle of Omaha" said that the super committee that will be meeting in Congress this fall to decide on deficit reduction should consider raising taxes for the wealthiest after they “pare down some future promises” with spending cuts. Buffett said that he would leave tax rates for 99.7 percent of taxpayers unchanged and continue the current payroll tax cut of 2 percentage points, which the Obama administration has also been advocating. “This cut helps the poor and the middle class, who need every break they can get,” Buffett wrote.
However, he also advocated providing two higher tax rates for those making over $1 million and over $10 million, including on their dividends and capital gains. “My friends and I have been coddled long enough by a billionaire-friendly Congress,” he wrote. “It’s time for our government to get serious about shared sacrifice.”
21 Comments
When I began tax practice in the 1970s the top tax rate was 70%. It has been around 35% for quite a few years now. We didn't have the limited tax rate on capital gains or dividends we have now either. So, those of you who think tax rates have kept creeping up need to take a look back. The rich have had a major tax break for years. It is time to both cut spending and raise taxes. Stopping the wars would do an immense amount to cust spending.
Posted by: taxsolutionspc | September 13, 2011 7:52 AM
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Obama is always running around complaining and whining and moaning about all that he inherited from George W. Bush. Well, he inherited a AAA credit rating and an unemployment rate of 5.7% Obamageddon. Barackalypse Now. The only silver lining I can find is that, as far as 2012 goes, Obama's a Debt Man Walking.
Posted by: RL | August 20, 2011 11:00 AM
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So, after ten years of reduced taxes, the economy should be roaring, right? The higher tax rates didn't seem to harm the economy during the Clinton administration.
Posted by: cversich | August 19, 2011 6:07 PM
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Folks, if raising taxes were the route to prosperity, why, we wouldn't ever have recessions. We wouldn't ever have downturns. We wouldn't be in a recession now. If raising taxes worked, everybody in the world would agree to pay them to get out of the mess!
Posted by: RL | August 18, 2011 11:02 AM
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When Did Payroll Taxes ever become part of our Income tax system? (I thought payroll taxes were based on Individual contribution to their Old-Age support) Payroll Taxes have nothing to do with Fair share of Income tax system.
If Buffett wants to make comparison's to "SECRETARIES", than he should stop buying Corporation stocks, Liquidate Berkshire Hath.. and go to work at some Broker firm and get paid as a W-2 earner. Hence,,,,,,,,, Pay the office worker rate of tax.
This way his $7mil taxble-income will come to a Tax over $2.5mil.
WOW! makes me feel real good!!!! Question? How many $2.5mil do you need to equal USA Debt of $15Tril-----H-m-m-mmmmmmmm.
Posted by: pete8743 | August 17, 2011 12:53 PM
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Whether our overall tax system should be flat or progressive (and by how much) across income levels is debatable. I favor a progressive, believing that it is good for both the economy and the society.
Our tax system, however, is sharply regressive, especially when the effects of sales taxes, gasoline taxes, vehicle registration fees and the like are included. This is wrong, and everyone knows it. It is fundamentally un-American, ungodly, and unsupportable.
That is why the arguments in favor of it sound so hollow, manipulative, strident, and/or whiny. We are not here to take unfair advantage of our abilities, opportunities, and position in life by exploiting those we presume to lead, by placing economic stumbling blocks everywhere to weigh people down with burdens we refuse to share. That is not leadership, it is oppression, and it is earning the disgust it deserves for a despicable "leadership" culture that blatantly violates its moral trusts, legalizes corrupt practices, and congratulates itself on its cleverness.
We are here to help the less fortunate elevate themselves, and by so doing raise ourselves and our society. We forget that at our peril.
Posted by: ccaylor | August 17, 2011 11:39 AM
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https://www.pay.gov/paygov/forms/formInstance.html?agencyFormId=23779454
Posted by: Pitbullll | August 16, 2011 7:27 PM
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Note to Warren Buffett:
You could continue to flap your gums like all the other limousine liberal hypocrites who love to blather on and on about "wanting" to pay higher taxes.... or you could just shut up, put your money where your mouth is and WRITE THE CHECK:
https://www.pay.gov/paygov/forms/formInstance.html?agencyFormId=23779454
Otherwise, you should probably stop because it's pretty nauseating to anyone who is not a confused leftist.
Posted by: Pitbullll | August 16, 2011 7:26 PM
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What about the large corporations such as GE, IBM , Exxon Mobil and others who pay either no federal income tax or even have tax credits ? Why are those tax laws not changed ?
Posted by: marvinkoe | August 16, 2011 2:43 PM
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Warren, now that he has accumulated his billions, should stay out of politics and focus his energy on earning money for B-H shareholders. Anyone with a grain of income tax education can see right through his "rates". Bogus!
Posted by: pirate65 | August 16, 2011 1:53 PM
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I love the comments that we need more millionaires. Perhaps, ideally, everyone should be a millionaire. Of course when that happens, either no one will work, as we clean or own homes and serve our own food, or the price of a cup of coffee with be somewhere between $75. to $250. (Who would actually work for less.)
Of course not everyone can be millionaires, so when the non haves cannot feed their children, the haves should start digging foxholes.
Posted by: Tedego | August 16, 2011 1:13 PM
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A CPA friend has said:
Warren Buffett tells us that his effective federal tax rate was only 17.4% - engaging in the same sanctimonious, demagogic, arrogant and self-righteous condemnation of the very wealthy as we have come to expect from the Obama Administration.
The difference is that Buffett knows and understands that the builk of his income, in the form of dividends and capital gain, has already been subject to corporate tax at an effective federal rate of perhaps 32%. So the real effective rate on his income approaches 50% without consideration of state income taxes.
This is a much higher rate than his secretary pays on her salary, which is only taxed once because her employer, Berkshire-Hathaway, takes a tax deduction for payments to her.
Regardless his 'stature' in the investment world, in the political world, Buffet engages in the shameless, duplicitous rhetoric of the charlatan.
I agree with the above and my point is the following:
High taxes are one of the greatest obstacles to accumulating the kind of wealth that Mr. Buffett has. This makes it clear that he does not wish to share his power and prefers to encourage the system to suppress any and all of his competitors.
Posted by: efhcpa | August 16, 2011 12:17 PM
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The Tax Code is irrationally tilted against the middle class to keep us in our place.
Posted by: EnrolledAgent | August 16, 2011 10:56 AM
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Buffett as well as anyone can write a check to the US Treasury anytime he wants. He is completely disingenuous in his remarks. In 2009 51% of families paid no income tax. Those with money are paying all of the income tax and constantly get crucified as if they screwed someone to get to where they are. I am selling my Bershire stock and boycotting any products of its Companies. To the poster that thinks he is "warm and honest." You are a sheep, and Buffett like our President want nothing more than to turn the USA into worthless European socialism.
Posted by: Ninja | August 16, 2011 10:42 AM
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I believe the crux of the issue is not higher or lower tax rates on increments of income. The issue is how the congress (lower case use for lack of respect)spends the money. If you had a social club and paid dues and the dues where steadily rising and the elected officer spend the money frivolously like the U.S. congress; I dare say you would demand their resignations.
This election is a fight between the will of the people and the arrogance of those in power. Many of the imcumbents believe the voters/citizens are little children and no matter what happens at the end of the day they will remain in power.
We the people are the government and we must make a change on November 2012. It is time to put people in congress that are held accountable amd repsonible to the people they serve. They serve us, (we the people) not the people serving them.
I pray that this coming election all real Americans vote intellignetly and not believe the media, pundits, talking heads etc. take to time to do your own research before you cast your vote.
Posted by: mdesbiens@vgncpa.com | August 16, 2011 10:04 AM
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Mr. Buffett, You can write a check anytime you wish and Uncle Sam when you feel generous, but do not believe our congress will spend it wisely.
It is my strong belief that Spending must be controlled FIRST! or the simple process of raising the debt and raising taxes can only continue throughout time untill it all goes to Uncle Sam to pay the debt.
All of us in these past few years First had to control our spending. Those that did not went to bankruptsy.
Our great country is next!
Posted by: CRABTAX | August 16, 2011 9:37 AM
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I have to be skeptical of Buffet. He does everything possible to minimize his tax liability and then publically complains about it.
Posted by: colin@colincoopercpa.com | August 16, 2011 9:07 AM
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All the more reason for a flat tax and controlled spending by an irresponsible government.
Posted by: mel4600 | August 16, 2011 9:07 AM
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You want to be honest about this, we need new wealth, we need an expanding economy, we need people amassing new fortunes. That's what we need. We don't need to be going after those who have already existed. And Warren Buffett, stop it. What are you doing? If you want to pay more taxes I can send you the Web link where you can do it, but leave me out of it. My taxes are not the problem. I am not being coddled. We need more millionaires. We need more wealth being created in this country.
Posted by: RL | August 16, 2011 8:27 AM
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Warren, wish you were President. You are warm and honest. You are willing to pick up the slack and you re-invest in the good old USA.
Wish there were more top earners with the same spirit!
Posted by: MG | August 16, 2011 8:09 AM
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Amen Mr Buffet.
Posted by: mlscpa | August 16, 2011 7:59 AM
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