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
Liberals and only liberals should be taxed at 85%.
Everybody else flat 10%
COMRADS.....No, I have never tried to get anyone banned....If I don't like, what someone says; I usually tell them pretty quick....Then forget about it, the next day...
I really don't have the time to argue amidst, what I consider foolish aguements or statements...
I more or less give my opinion and move on for the most part...The next day is another day,
So keep on posting....I D K.
Yes the Rich have to be taxed more...And spending CUTS have to put in place...
Take away too many loopholes and the Middle Class,, will be punished...
A graduated income tax increase(TAKE BACK) over a period of years, imposed on Capital Gains.
And small increases on higher income, slowly going up will probably be doable...
Bottomline: We have to CLAWBACK these free rides the Wealthy have been cruising on;
And we have to cut and slash certin spending...
By taxing Cap Gains and interest on "hoarded cash"....Will encourage investing/spending more in America to get the write offs and help in jump starting our jobs and economy again...IMO.
I lived in Australia for awhile back in the 90s. I remember tax time vividly as I was an ex-pat and thought it would be stressful familiarizing myself with the Australian tax code. Luckily my company stepped in and hired a big eight accounting firm to do them for me. For the bargain basement price of $3000 I was given a one page australian tax form to sign. Basically the form was how much you made multiplied by 49% (or there abouts). No deductions, no loopholes, no nothing. While the rate was very high I admire the simplicity of the system. No reason we could not do that here other than we would have to unwind 100 years of favors and incentives.........
There is no reason that everything above a subsistence level of income should not be taxed at an equal percentage for everyone.
The Australians may not be perfect but their blood pressure is considerable lower than ours.
But what we really need to stop; is going to war at a cost of 100 million dollars per day! We did this for ten years, everyone want to say yayyyyy, we kick tail....well folks....time to pay the bill!!!
WE spend 773 billion per year for our military (but not on our soldiers, we spend a very large amount on research with little or no results (too bad we cant spend more for our troops). There is no fear of being out classed by China because I believe the last I read they only spend about 1/4 on military that we do.
Also, keep in mind that Bush made deep tax cuts and we went to war, and dealt with tuff economical issues.....something needs to be done,...not everything is rosy, especially during and post war
Money is your time, talent, and labor distilled into a form you can hold in your hand. It is you....it is your life. It becomes a tool that functions where no other tool functions. It is the power that allows you to follow through on your dreams and desires.
To whatever extent the government TAKES that money away from you it is taking your FREEDOM away from you. It is insidious in its incremental creeping upwards over long periods making each new level seem the norm and each new bump up seem harmless enough.
No matter what side of the argument you are on you are right where a manipulative and malevolent government wants you. Arguing over the impossible to hit moving target of what's fair all the while missing the real issue which is our current tax system is PRIMARILY a tool to control behavior. Your behavior. Doubt me? EVERYONE of you has considered the tax consequences of on decision or another in you life whether it was choosing to stop smoking or buy a new tool for your business. That's your government getting right inside your head helping you make a decision that a free person would decide strictly on its merits.
The cancer that is the current tax code and the IRS that enforces it should be ended, cancelled, pink slipped, banished and replaced.
A flat tax, no deductions, and no with-holding. You have been anesthetized from the pain of the taxes you bear by the practice of with-holding. Every citizen should be required the write a check monthly to the federal government. Imagine the oversight of the governments spending by a citizenry made aware monthly of its tax burden. Better yet a consumption tax where you pay each time you purchase.
Become aware, or go back to sleep believing the government has your best interest at heart.
MORE ON MSN MONEY
Copyright © 2013 Microsoft. All rights reserved.
Quotes are real-time for NASDAQ, NYSE and AMEX. See delay times for other exchanges.
Fundamental company data and historical chart data provided by Thomson Reuters (click for restrictions). Real-time quotes provided by BATS Exchange. Real-time index quotes and delayed quotes supplied by Interactive Data Real-Time Services. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by SIX Financial Information.
When it comes to efficiency gains, a watt saved is a watt earned.
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.