A well-known billionaire has urged Congress to raise taxes on the nation’s wealthiest individuals to help cut the U.S. budget deficit. Warren Buffett, whose fiscal track record ha been very good over the years, is confident that such a move won’t inhibit investment or job growth. Mr. Buffett made this most interesting observation in an opinion article published in the New York Times, where he said:
My friends and I have been coddled long enough by a billionaire-friendly Congress. It’s time for our government to get serious about shared sacrifice.
The advocacy of higher taxes by Buffett, the chairman and chief executive officer of Berkshire Hathaway Inc., for the “mega-rich” should reinforce President Barack Obama’s call for an end to tax breaks for the powerful barons of Corporate America. In the op-ed piece the 80-year-old and highly-successful investor, said his federal tax bill last year, (the income tax he paid and payroll taxes paid by him and on his behalf) was $6,938,744. Relating to his tax bill, Buffett wrote for the Times:
That sounds like a lot of money. But what I paid was only 17.4% 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% to 41% and averaged 36%.
A 12-member panel, created by the August 2nd law that raised the nation’s debt ceiling and averted a government default, is charged with finding $1.5 trillion in budget savings. They have a very difficult job and Mr. Buffett’s recommendations, if followed, would make things much easier for them. Mr. Buffett said that for those making more than $1 million — there were 236,883 such households in 2009 — he would raise rates immediately on taxable income in excess of $1 million, including dividends and capital gains. For the 8,274 taxpayers who made $10 million or more, he said they should get an additional increase in the rate. Mr. Buffett made this interesting observation:
While the poor and middle class fight for us in Afghanistan, and while most Americans struggle to make ends meet, we mega-rich continue to get our extraordinary tax breaks.
Internal Revenue Service data was cited in the Times article showing that the tax burden on the nation’s wealthy had fallen for the past two decades. In 1992 the top 400 American earners had aggregate taxable income of $16.9 billion and paid federal taxes of 29.2% on that amount, he wrote. In 2008, while the aggregate income of the highest 400 had soared to $90.9 billion, the rate paid had fallen to 21.5%.
I agree with Mr. Buffett’s belief that high taxes won’t discourage hiring and investment. He says that “people invest to make money, and potential taxes have never scared them off,” pointing out that a net of nearly 40 million jobs were added in the U.S. between 1980 and 2000. Since then he says we have had “lower tax rates and far lower job creation.” The U.S. unemployment rate has averaged 9.5% in the past two years, dropping to 9.1% in July from 9.2% a month earlier, a recent government report showed. It will be most interesting to see if the members of the panel listen to Mr. Buffett. I fully realize that most U.S. billionaires will totally disagree with his recommendations, but what this influential and highly-respected man says sounds most reasonable.
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