Tags: Buffett | Tax | wealthy | rich

Warren Buffett: Slap a Minimum Tax on the Super Wealthy

Monday, 26 Nov 2012 09:46 AM

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Fiscal reforms up for debate should include a minimum tax rate of around 30 percent applied to wealthy Americans, said legendary investor Warren Buffett.

President Barack Obama has proposed letting the Bush-era tax cuts expire on households making $250,000 or more per year, while taxes are set to rise on investment income such as capital gains and dividend payments.

Fair enough, Buffett wrote in a New York Times column, but be sure to slap a floor in there when it comes to taxes on the very wealthy as well — they benefited the most during past booms and should pay more now.

Editor's Note: You Deserve to Know What Obama and Bernanke Are Hiding From Americans

“The Forbes 400, the wealthiest individuals in America, hit a new group record for wealth this year: $1.7 trillion. That’s more than five times the $300 billion total in 1992. In recent years, my gang has been leaving the middle class in the dust,” Buffett wrote.

“A huge tail wind from tax cuts has pushed us along. In 1992, the tax paid by the 400 highest incomes in the United States (a different universe from the Forbes list) averaged 26.4 percent of adjusted gross income. In 2009, the most recent year reported, the rate was 19.9 percent. It’s nice to have friends in high places,” Buffett added.

The Bush-era tax cuts are due to expire at the end of this year, and Buffett wrote that he supported Obama’s plans to let those cuts expire for high-income taxpayers, though Buffett added he wanted to see a cutoff point somewhat above $250,000, likely around $500,000.

However, putting a floor in will bring about the revenue the government needs to restore fiscal health, he said.

“[W]e need Congress, right now, to enact a minimum tax on high incomes. I would suggest 30 percent of taxable income between $1 million and $10 million, and 35 percent on amounts above that,” Buffett wrote.

“A plain and simple rule like that will block the efforts of lobbyists, lawyers and contribution-hungry legislators to keep the ultrarich paying rates well below those incurred by people with income just a tiny fraction of ours. Only a minimum tax on very high incomes will prevent the stated tax rate from being eviscerated by these warriors for the wealthy.”

Even if taxes rise on the rich, they’ll find a way to make money.

“[L]et’s forget about the rich and ultrarich going on strike and stuffing their ample funds under their mattresses if — gasp — capital gains rates and ordinary income rates are increased,” Buffett wrote.

“The ultrarich, including me, will forever pursue investment opportunities.”

At the end of this year, the Bush-era tax breaks and other benefits are due to expire at the same time automatic cuts to government spending are set to kick in, a combination known as a fiscal cliff that could send the country into a recession next year if left unchecked by Congress.

Some Republican lawmakers have suggested that steering the country away from the cliff and long-term reform afterward would likely include raising government revenue and going against pledges made to tax advocate Grover Norquist.

“The only pledge we should be making to each other is to avoid becoming Greece. And Republicans should put revenue on the table,” Sen. Lindsey Graham, R-S.C., said on ABC’s “This Week.”

Other Republicans have made similar comments.

“I care more about my country than I do about a 20-year-old pledge,” said Sen. Saxby Chambliss, R-Ga., ABC News added.

Editor's Note: You Deserve to Know What Obama and Bernanke Are Hiding From Americans

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