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.
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.”