Warren Buffett assails Grover Norquist on taxes
The wealthy investor slams the anti-tax lobby, calling for higher rates on the rich.
How does Warren Buffett get back into fighting shape the Sunday after Thanksgiving? By using the New York Times' op-ed page to crack conservative lobbyist Grover Norquist square in the jaw.
With the fiscal cliff on the horizon and the entire political and financial ecosystem scrambling to find a solution, it's a bad time to be an anti-tax zealot. Buffett called out the tax-averse Norquist by name in his Times op-ed piece Sunday as he pressed for a 30% tax rate on those making between $1 million and $10 million a year and a 35% rate for those making $10 million or more.
Dismissing the notion that well-heeled investors would stop investing because there's a greater tax liability for their gains, the Berkshire Hathaway (BRK.A) chief executive is looking for a tax rate exceeding President Barack Obama's proposed "Buffett Rule." That plan would impose a minimum 30% rate on those making $1 million or more a year, but does little to tax capital gains or carried interest. Those don't qualify as ordinary income and are taxed at a far lower rate that favors wealthy taxpayers.
How does Buffett justify the hike? By noting the far more extreme levies he once paid as a wealthy investor. During the 1950s and 1960s, he was taxed between 70% and 90% on dividends and between 25% and 27.5% on capital gains. By 1992, he notes that the tax paid by the 400 highest incomes in America dropped to 26.4% percent of adjusted gross income. By 2009, it was down to 19.9% on a group that made an average of $202 million a year -- or $97,000 per hour for a 40-hour work week. Half paid less than 20% and a quarter paid less than 15%.
Even once-fervent supporters of Norquist's Americans for Tax Reform are coming around to Buffett's line of thinking. Before the November elections, Norquist got 238 out of 242 Republicans in the House of Representatives and 41 out of 47 GOP senators to sign his "Taxpayer Protection Pledge" vowing to "oppose any and all efforts to increase the marginal income tax rate for individuals and business; and to oppose any net reduction or elimination of deductions and credits."
The elections dropped the number of GOP pledge signers in the House to fewer than 220, while the Senate saw its ranks of GOP tax hawks cut from 41 to 39. Georgia Senator Saxby Chambliss signed Norquist's pledge nearly two decades ago, but says the fiscal cliff has made him shy away from that stance.
"I care more about my country than I do about a 20-year-old pledge," he told the Macon, Ga., television station WMAZ on Wednesday. "If we do it (Norquist's) way then we'll continue in debt and I just have a disagreement with him about that."
GOP Sen. Lindsey Graham from South Carolina and Republican Congressman Peter King from New York had Chambliss' back, taking to the morning shows on Sunday to express their support for changing the current tax structure. Buffett, meanwhile, doesn't want these converts to just dither around with the tax code while more money flies out the door. He wants to see changes implemented immediately so "carried interest" stops converting labor income to capital gains and offshore tax shelters stop making it easy to duck payments.
His targets are revenues at 18.5% of gross domestic product and spending at 21% of GDP. Considering revenues are 15.5% of GDP now, while spending is still at 22.4%, there's still a lot of sacrifice to be made at both ends of the spectrum. CNBC's Robert Frank suggest that it's not just the rich who could stand to pay more taxes, as deductions drop the rate paid by folks making $30,000 to $100,000 to between 4.8% and 7.7% -- or far less than their standard rate.
True, but Buffett's continued line of argument is that those in the upper echelons can spare a little extra far more than the folks in the middle income brackets. As incentive to implement changes more quickly and assuage the fears of taxpayers below the "Buffett Rule" threshold, Buffett further suggests ending President George W. Bush's tax cuts for high-wage earners. The not-so-minor caveat would be changing the cutoff from an almost upper-middle-class household income of $250,000 a year to an unquestionably rich $500,000 a year.
Buffett's been talking about this for a while, but this past week has offered the first signs that people in Washington on both sides of the aisle are listening. Let's see who else let Buffett's ideas digest over the holiday weekend.
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Taxing the rich will benefit our deficit for a few days. We need a spending freeze. We may have to go cold turkey, but we need to get our spending under control Why not just let the Cliff come and what happens, happens???
There isn't anyone that can't agree we can and should be taxed by the Gov'ts, both State and Federal, but what people are offended by is the amount of people not paying anything towards their own country.
They are along for the free ride. That has to stop. We as a nation are already good Samaritans, but to help those that can help themselves is a travesty against the rest of us.
Let's first get rid of the 15% max tax on the millionaires and billionaires hedge fund profiteers who bought the US congress to give them this incredible deal. You make 10-100 million salary or you make 10-100 million gaming the stock market, you pay the same rate.
Stop the Hostess hedge fund scams, You decide to buy a cash/pension rich company, you get a JP or GS or bank to back you on paper. You raid the cash and pension millions, load up the business with debt to keep running for a while, go bankrupt, put thousands out of work, put unemployment payment millions burden on states, have US taxpayers through federal law, take up paying the unfunded pensions, sell or license brand names for tens of millions and then pay only maybe 15% max tax or less if you structured it through another offshore deal. Sweet isn't it?
Thought for the day" Do you think now Romney will redo his 2011 taxes where he only took deduction for some of his charity deductions so that he could say he never paid less than 15% in taxes and now redo and get the other millions back?"
Could we please begin by getting rid of the tax loopholes, simplifying our tax code? Get rid of ALL of them as far as I am concerned.
I think that they should tax billionaires like bufett 50%, and not just income, but wealth. You want to get money from two-faced billionaires like buffett, tax wealth, not income. By taxing income, it is harder for any of the middle or working class to ever succeed. While the filthy rich like Buffett will still be a billionaire even with a 50% or more tax on income. This keeps him and his cohorts a distant aristocrcy from the rest of us. Let him, put his money where his mouth is and stop hiring attorneys to get every loop hole possible for his income tax. Go after wealth, not income if you truely want to move the money.
PS... Obama and many of hid supporters are millionaires and billionaires. They talk the talk, let them walk the walk. They can volunterily donate to the national debt. Obama could help just by using his own money to send his wife and kids on world wide vacations instead of using taxpayers money. They could also stop sending money to foriegn countries. Stop the State Department and the Pentagon from sending billions of $$ to countries that will never repay and do not even like us. Use our tax dollars here, stop trying to buy friends, they hate us anyway.
Delmar....It's not just about taxing the Rich....The tax maize has to be changed or adjusted to a more workable solution...Yes the Rich are not going to make a huge dent, but will make a difference over a longer period of time...
I don't know about a "spending freeze"...SPENDING HAS TO BE CUT ALSO...
And offshore monies should be hunted down and taxed at a rate comparable to low dividend or maybe even interest rates...Capital gains are already very low AT THIS TIME FRAME.
That's part of the disgusting practice of the Elite...
Taxes is NOT the issue, Buffett is either too stupid or to senile to know that. Buffett was a great investor, but he should realize even if you tax the richest 2% of the population 100%, it still will not make a dent in the amount we owe until the government starts to cut back on spending.
Giving the federal government more money is like giving a drug addict more drugs and expecting that to change anything.
This country is toast because the majority of the people living in the country are scum. The smart ones better find another country to live in pretty fast.
The current tax code is skewed towards making those with alot of money have more money. It wasn't always that way and it was done for a specific purpose. The theory was that those with money would create opportunities for everyone else and the gooey goodness would trickle down. Had the trickle down actually occurred we wouldn't be having these discussions. Unfortunately it trickled down to China, India, Vietnam, etc. That's where the new job creation has taken place since we started believing in "Trickle Down". All arguments for trickle down are moot because we have been doing this since Reagan and it just hasn't trickled down. It seemed OK off and on as wealth bubbles grew and later popped making the average Joe think he was improving his situation but after it the last pop (housing) most people are back where they were 15 years ago. I don't have alot of sympathy for the uber wealthy, they will be fine no matter what the tax code says. They know that. You can unwind all the trickle down tax laws and the disparity will not change a bit because our base of middle class jobs has gone away. Tax me whatever percentage you want, if I don't have a job you get nothing.
I really love the comments about the 47%. What the H_ll are they supposed to do? McDonalds only needs so many people. We've joked about this for the last 20 years and now it's coming home to roost. You export all the industry to the third world and expect to tax unemployed people. It just doesn't work.
Coach's new law. If you want to sell it here, you have to make it here. Works for the car guys, why not for everybody else?
Americans are just as much at fault for our country's Debt issues too.
I think if Americans agree to tax hikes and the Government agrees to apply the monies to the proper debt and Reduce Spending - it's a good trade off and the end result is America is stronger than ever.
In WWII Americans gave up their metal for our country and the fighting men, it's 2012 and now we are being called on to give some money to help, I think we owe it to ourselves to make the place we live in and love so much, better for us all!
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The solid report comes a month after the retailer closed all of its Canadian operations.
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