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.
More from Top Stocks
The tax rate matters very little as long as the President and Congress are spending our money like drunken Sailors. And, fact is, even a drunken Sailor spends money more wisely than our Politicians. At least when the Sailor runs out of money he stops spending.
I'd have to guess that Buffet was never a Sailor.
Why take it all and print more?
Go ahead Obozo, take another long expensive vacation!
Why Buffett would buy into this is a puzzlement to me, unless he stands to specially benefit or be exempt in other ways from laws if he plays along with helping this bunch stay in power. Obviously, we're not there yet, but I am inclined to believe that this is where we are headed. See Venezuela.
Why not just say it like it is. The middle class pays the taxes in this country. If you earn less that 50 K a year, and are above the poverty line, you are taxed at about 55%. It gets progressively lower as earnings go up.
55%, am I crazy? Absolutely not. Fed income tax, state income tax, SS tax, Medicare/Medicaid tax, Property tax, license plate tax, Gas tax, Phone tax, Energy tax (thanks a lot for that one environmentalist politicians), Countless government surcharges of a few cents on all kinds of things, Drivers license/ID tax and on and on. Add it all up some day, and after you stop puking, think about why you are paying so much. You pay so much because the rich (including almost every politician) don't want to pay. And, they wont pay.
Next thing we'll see is the taxes on the wealthy going up (a scheme really, tax increase for the wealthy will be offset somehow). Then we'll hear "we taxed the rich, but it isn't enough. You middle class folks are going to have to pay more". Then we'll be paying 60% in taxes, and if you are a liberal, think nothing of it.
We should be demanding 2 dollars in spending cuts for every dollar in tax increases. That is the only way to get these politicians to take responsibility for the fiscal state of this country
Absolutely!! TAX, TAX, TAX the Rich. They make plenty, have plenty__They're Wealthy. By all means, they can pay more taxes. They can help support their country and pay their dues.... OR, Go live on MARS - all by their selves. How bout that? No Room for their GREED here... If they got a problem w/ paying more taxes, get their Greedy asses on a rocket to Mars. There ya go!
No room for pathetic wealthy people.
Because of the earned income tax credit, most of America's poor pay little or nothing.
What the Tax Policy Center calls working class pay 3 percent of all federal taxes,
middle class 11 percent,
upper middle class 19 percent
and wealthy 67 percent.
It seems to me that paying taxes is contrary to human nature. I'm not really aware of anyone throughout the course of human history that has wanted to be taxed more. With that said I'm always taken back by Mr. Buffett's position that he and his fellow 1% would willingly pay more in taxes. Something doesn't add up in my mind.
If taxes were the answer for Mr. Buffett why then did he establish 4 foundations with 5 billion dollars for each of his children to oversee? Shouldn't he just give that money to the US Treasury at the time of his death through inheritance taxes ?
Mitt Romney took it on the chin for his +/- 15% tax rate because he derives most of his money at the moment through dividends. I believe he earned 20 some million and paid approximately 3 million in Federal taxes. He has an estimated net worth of approx. 250 million. I'm sure we all envy those numbers. Income of approx. 10% of net worth.
Mr. Buffett has spoken out about how his secretary pays an effective rate higher than his dividend rate and therefore suggests that the rich should have a 35% tax rate. He has stated that he paid only 6.5 million in federal taxes but never stated his income. Using Romney as a guide it would seem that Mr. Buffett may have been in the 50 million dollar range. With a net worth of 50 billion his yearly income is .001% of his net worth. No wonder Mr. Buffett doesn't care about paying more taxes. He can always adjust his yearly income to suit his needs.
I believe we need a new "Buffett Rule". Minimum 10% yearly wealth tax, not income tax to spread a little tax suffering around. No one likes to pay taxes and neither should those who have the good fortune to be able to adjust their levels of income and taxes without feeling it. I'm sure a 5 billion dollar tax bill will make Mr. Buffett change his tune.
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?
The top 10 percent earned 48 percent and paid 71 percent of all personal income taxes. The bottom 50 percent earned 12 percent of personal income but paid just 3 percent of income tax revenues. Need I say more? Free ride my bu++, they worked hard for their money, took all the risks, created employment then get demonized.
It's time to put up or shut up, Warren. Put your damn money where your big fat mouth is and write a check out to the US Treasury. Come on, Warren, true leaders lead by example. Maybe if you write the first check, you'll inspire others who think like you to do the same. In fact, maybe you and your ilk would have an easier time passing tax hikes if you go ahead and and voluntarily and preemptively pay more now, before the rates officially go up. Hey Warren, did you know the federal gov spends about $9 billion a day?? So pony up, Warren, send in an extra billion so the gov can operate at the break even point for about 3 hours. For now, Warren, until you write that check and it clears, STFU!
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!
Increase taxes and reduce Spending is his plan and we should do it from both ends too.
Listen to Buffett and look at the History he gave you in this article about how much taxes have been reduced for him since the 50's and 60's - Imagine how our debt would be if the taxes hadn't been reduced for his tax bracket....
Let's put an end to the Greed ruining our great country.
God Bless America!
Liberals and only liberals should be taxed at 85%.
Everybody else flat 10%
Copyright © 2014 Microsoft. All rights reserved.
As geopolitical tensions threaten to spin out of control, investors are wondering how best to position their portfolios for the global turmoil.
VIDEO ON MSN MONEY
Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.
Contributors include professional investors and journalists affiliated with MSN Money.
Follow us on Twitter @topstocksmsn.