Warren Buffett assails Grover Norquist on taxes

The wealthy investor slams the anti-tax lobby, calling for higher rates on the rich.

By Jason Notte Nov 26, 2012 3:00PM

Taxes copyright Thinkstock, SuperStockHow 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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180Comments
Nov 26, 2012 4:07PM
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Government needs to take a pay cut.  Like everything else these days, we paying high level government employees too much for too little.  No more pay raises until the federal debt is eliminated!  Twenty percent pay cut across the board effective immediately for those making $120k or more a year.
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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.

Nov 26, 2012 4:19PM
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Buffett and Gates are talking about increasing income tax rates which have little effect on their investment holdings.  
Nov 26, 2012 3:44PM
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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?"

 

 

Nov 26, 2012 4:22PM
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People may listen to him if  Berkshire Hathaway paid the 1 BILLION dollars they owe in back taxes. What a loser.
Nov 26, 2012 3:53PM
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Thanks Warren Buffett for standing up to Grover Norquist.
Nov 26, 2012 4:54PM
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Why does Warren Buffett owe the IRS a billion dollars in back taxes?
Nov 26, 2012 4:59PM
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Taxing the rich won't solve our budget woes but I think it would be the outcome of any overhaul of the tax code to make the system simpler and fair.  But let's not foul ourselves - government spending is a big problem and that includes every area, including defense.
Nov 26, 2012 4:49PM
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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.

 

Nov 26, 2012 4:54PM
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 It is funny that Buffett and Gates are pleading for more taxes. If Gov't is so efficient, then why did they put their fortunes in a trust instead of giving it to the Obama Group???
Nov 26, 2012 4:22PM
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Warren is a senile old fart who has already made his billions of dollars.  Guessing every one of the companies under the Berkshire Hathaway banner use every legal remedy possible to avoid paying their "fair share".
Nov 26, 2012 4:34PM
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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.

Nov 26, 2012 4:08PM
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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...

Nov 26, 2012 4:55PM
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We need more than a spending FREEZE, we need to roll back all of Obama's 800 billion in new special interest payback spending.  We don't need to raise taxes to make this permanent.  

The government now consumes 24+% of GDP.  This is up from 19% under W, who also was a spender.

No tax increases on ANYONE until we return to the budget of 2008 spending levels.
Nov 26, 2012 5:07PM
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People, we need to urge Washington and more importantly people of all economic income levels to find a common ground not only to this tax issue, but to the mentality issue that is really dividing America.

We are too divided by the amount of money that is in our bank accounts.  Money is important, but it is not everything in life.  If you have much of it, awesome.  I'm sure you earned it.  Just don't think of yourself higher or better than a person who might not have as much.  If you don't have much of it, I'm sure you earned that position too.  Just don't think that because someone has it you should have it too.  What you reap is what you sow.  That is a common rule of life.

The most important things in life are health, family and the pursuit of Happiness.  Where your heart is that is where your treasure will be.  I can tell you, my heart is not focused on money, it is focused on my wife, 2 boys and baby girl.  I will give up my life for them without blinking an eye.  Money, although necessary to maintain, is truly secondary to me.  My family will always be 1st priority.  

You should take a moment to prioritize the most important things in your life.  If Money is higher than your family, you need to re-evaluate your priorities.  You will quickly realize that there are more important things in Life than a bank-full of Benjamins! :)
Nov 26, 2012 4:21PM
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Warren Buffet (and all the other liberal 1%ers) should put their money wither their mouth is.  If you don't think you pay enough in taxes, take out your check book and make a check out to the us Treasury for any amount you feel you under pay.  Then an only then can you continue to be a blowhard for Barry's crooks.
Nov 26, 2012 5:06PM
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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.

Nov 26, 2012 5:31PM
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Does anyone here really think Warren Buffett means that?  If so, I ask you two questions.  First, why do you think his secretary pays more in taxes than he does?   And, secondly, why does he not pay her more?  I could ask more questions but I won't.  I'll just wonder for myself why he doesn't pay the dividends to his stockholders.  I asked all to vote the incumbents out.  They didn't.  I don't care what happens to America now.  Yes, I said that right!!!  I don't care if China forecloses on us.  I"m old and won't be here long anyway.  I'm not worried about this country.  The idiots in Washington made me feel this way.
Nov 26, 2012 7:37PM
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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?  

 

    

 

.      

Nov 26, 2012 7:14PM
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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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