Warren Buffet wants 30% minimal tax for the wealthy

Warren Buffett.(AFP Photo / Mario Tama)
Billionaire investor Warren Buffett is calling for higher taxes on the richest Americans, urging Congress to compromise and cut spending while also mandating a minimum 30 to 35 percent tax on the incomes of millionaires.

In a New York Times opinion article, Buffett on Monday stressed the need to raise taxes on all those making more than $500,000 annually. He also ridiculed the idea that investors would refrain from capitalizing if capital gains taxes increased.

“Let’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,” according to Buffet. “The ultrarich, including me, will forever pursue investment opportunities.”

Buffett, who is the primary shareholder, chairman and CEO of Berkshire Hathaway, a multinational holding company headquartered in Omaha, Nebraska, noted a period in the 1950’s and 60’s where the tax rate on capital gains increased without causing investors to forgo opportunities he offered.

“Under those burdensome rates, moreover, both employment and the gross domestic product (a measure of the nation’s economic output) increased at a rapid clip,” he wrote. “The middle class and the rich alike gained ground.”

In 1992, the tax rate for the 400 wealthiest Americans was about 26.4 percent, whereas in 2009 it averaged 19.9 percent – with some high-income individuals paying no taxes at all, Buffett wrote.

To solve the tax problem, the billionaire investor suggested Congress raise the minimum tax on high incomes to 30 percent for those making between $1 million and $10 million, and 35 percent and all those making more than that.

As one of the world’s wealthiest individuals, Buffett’s avid support for taxing the rich has always differentiating him from other billionaires. Buffett was ranked the world’s wealthiest person in 2008, the third wealthiest person in 2011 and continues to be ranked among the wealthiest and most influential individuals. The 82-year-old Democratic investor has long supported President Barack Obama’s initiatives to tax the wealthy, and promised to himself donate 99 percent of his fortune to charitable causes.

But in his latest column, Buffett differentiated himself from Obama on one key point: the cutoff for those who are required to pay higher taxes.

“I support President Obama’s proposal to eliminate the Bush tax cuts for high-income taxpayers,” he wrote. “However, I prefer a cutoff point somewhat above $250,000 – maybe $500,000 or so.”

The tax code is one that is in need of many reforms, but Buffett hopes the tax rates can be corrected before some of the other disputed issues – like “carried interest” and banking in the Cayman Islands – are attended to.

“All of America is waiting for Congress to offer a realistic and concrete plan for getting back to this fiscally sound path,” he wrote. “Nothing less is acceptable. In the meantime, maybe you’ll run into someone with a terrific investment idea, who won’t go forward with it because of the tax he would owe when it succeeds. Send him my way. Let me unburden him.”