Warren Buffett, billionaire investor, said on Monday that the White House’s actions limiting companies from shifting their tax address outside of the US offers a good “time out” to come up with a plan to revamp the current corporate tax rules.\
“It’s good to have a time out while we work out a logical corporate tax code,” said Buffett in an exclusive interview for Politico’s “Lessons from Leaders” series with John Harris, editor-in-chief for Politico.
Buffett, longtime backer of the Democrats, who also backed Pres. Barack Obama, responded to a question in regards to recent rules from the Treasury Department that will curb so-called tax inversions – where a corporation will move their tax base overseas, usually by buying a smaller rival company. In recent months, a number of companies have looked at these deals, including Walgreens, Burger King and Pfizer.
Berkshire Hathaway, investment company founded by Warren Buffett, provided Burger King, based out of Miami at the time, with financing to complete their bid in order to merge with Canadian doughnut and coffee chain Tim Hortons. Burger King intends to use this merger as a way to move its tax base to Canada. They will be able to take advantage of Canada’s comparatively low corporate tax rate at 15%.
Buffett said that Senators Orrin Hatch of Utah and Ron Wyden of Oregon– the United States’ top tax writers in the Senate – now have a chance to move forward with this reform. Buffett also warned that if the rewrite avoids adding to the current deficit, there are going to be companies that will have to pay more, so there will be severe opposition to the change.
“Now if it’s revenue neutral, I guarantee you that there will be a lot of corporations that will therefore pay more and they’ll be on K Street like Occupy Wall Street.”
Warren Buffett has been quite critical of the US tax code in regards to under taxing the wealthy. He most famously talks about how his secretary pays a higher tax rate than he does. He was naturally criticized as a hypocrite in the wake of the recent crackdown of the Treasury on inversions because he helped finance the deal with Burger King.
Buffett was also a large supporter of Obama’s push to increase the highest individual tax rate to 39.6%.
Many of the richest people in the world still do not pay the highest tax rate, said Buffett, while pointing to the most recent data of the top 400 earners that make an average income of over $200 million a year.
“A number of them were paying at a rate of below 10%, including payroll taxes,” said Buffett. “Now that’s still a lot less than my cleaning lady. It hasn’t been fully corrected.”
Buffett also said that it was most likely a lot easier to fix the corporate tax code by itself then rewrite the individual tax code along with it.
Max Baucus, Democrat from Montana, made earlier efforts with the Senate Finance Committee and House Ways and Means Committee and chairman Dave Camp, Republican from Michigan, who focused on rewriting the whole tax code for businesses and individuals.
Unfortunately, both have gone relatively nowhere.