Warren Buffett, Chairman and CEO of Berkshire Hathaway
Are wealthy Americans really at risk of becoming an endangered species if taxes are raised on them? Warren Buffett says "no," and repeats his call for marginal tax rates to be increased for the wealthiest Americans in an Op-Ed piece in today's New York Times. He essentially says that the GOP meme that raising taxes on the weathiest Americans, the "job creators," will inhibit growth is nonsense.
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. Some of us are investment managers who earn billions from our daily labors but are allowed to classify our income as “carried interest,” thereby getting a bargain 15 percent tax rate. Others own stock index futures for 10 minutes and have 60 percent of their gain taxed at 15 percent, as if they’d been long-term investors.
These and other blessings are showered upon us by legislators in Washington who feel compelled to protect us, much as if we were spotted owls or some other endangered species. It’s nice to have friends in high places.
If you make money with money, as some of my super-rich friends do, your percentage may be a bit lower than mine. But if you earn money from a job, your percentage will surely exceed mine — most likely by a lot.
To understand why, you need to examine the sources of government revenue. Last year about 80 percent of these revenues came from personal income taxes and payroll taxes. The mega-rich pay income taxes at a rate of 15 percent on most of their earnings but pay practically nothing in payroll taxes. 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.
Back in the 1980s and 1990s, tax rates for the rich were far higher, and my percentage rate was in the middle of the pack. According to a theory I sometimes hear, I should have thrown a fit and refused to invest because of the elevated tax rates on capital gains and dividends.
I didn’t refuse, nor did others. I have worked with investors for 60 years and I have yet to see anyone — not even when capital gains rates were 39.9 percent in 1976-77 — shy away from a sensible investment because of the tax rate on the potential gain. People invest to make money, and potential taxes have never scared them off. And to those who argue that higher rates hurt job creation, I would note that a net of nearly 40 million jobs were added between 1980 and 2000. You know what’s happened since then: lower tax rates and far lower job creation.
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.So if you were told you had to place the future of the nation's economy in the hands of one of two people, who would you trust? The Oracle of Omaha, one of the, if not the shrewdest American capitalist of our time, or a lady who spent five years working as a low-level tax attorney for the IRS? To ask the question is to answer it.
Yesterday on Meet the Press David Gregory exposed Bachmann as the consummate follower not a leader. She talked about how the people she is meeting on the campaign trail in Iowa tell her raising taxes to address the deficit is counterproductive. She wants to be a president who "listens to the people." Gregory could not get her to admit that the definition of a president is someone who leads in what he or she thinks is the best interest of the country, even when seemingly swimming against the tide of popular opinion. She just repeated her talking point about "no one I am meeting on the campaign trail has asked to have their taxes raised." Stunning.
But what about Romney? He is a highly successful and very wealthy venture capitalist, and he raised his hand on that stage at the Iowa debate, pledging to reject tax increases as one arrow in the debt reduction quiver. Who do you trust more, Buffett or Romney? There are at least four reasons to trust Buffett over Romney. Romney has always had a chameleon quality to him, saying what is expedient at the moment. See conservative Ross Douhat's piece on the Republican field also in today's Times. Second, and related to the first reason, Romney was forced by the expected entry of Perry into the campaign to move further right to have a good chance in the early GOP primaries. Third, the Republican parties in the battleground states are controlled by apparatchiks who have signed on to the Grover Norquist pledge. These are the people that Romney must connect with to be a successful candidate. Fourth, Warren Buffett has, by about two orders of magnitude, more at stake financially.