Buffett Knows Congress Will Eventually Pass A Fiscal Plan

Warren Buffett, billionaire investor, mentioned this past Wednesday that he’s really confident in Congress’s ability to eventually pass a plan that will address the upcoming fiscal cliff, even if that plan doesn’t come to fruition until earlier next year.

Warren Buffett also mentioned that the current debate over the upcoming automatic tax increases and cuts in spending that will take effect on January 1 aren’t going to affect his investment decisions at all.

“The fiscal cliff has nothing to do with long-term investment decisions,” said Buffett during his interview on CNBC.

Buffett believes that Congress will eventually put together a plan that makes perfect sense, whether it happens prior to the spending cuts and tax increases or not.

“I think there will be a lot of pressure if they don’t get an agreement by December 31,” said Buffett.

Buffett made an appearance this past Wednesday on CNBC with Carol Loomis. This appearance was to discuss her new book highlighting his career called “Tap Dancing to Work: Warren Buffett on Practicing Everything, 1966-2012.” The duo made a few different guest appearances together this week promoting the upcoming launch of the new book.

Buffett was also in the headlines earlier this week when he repeated his call for higher taxes, which was published in an opinion article in The New York Times. During his CNBC interview this past Wednesday, he mentioned that President Obama liked his article when he spoke with him on the phone this past Saturday. The two men didn’t talk about their difference in opinion over whose taxes should be increased.

Buffett reiterated that he is fully supporting Obama’s proposal to put an end to the Bush tax cuts for the wealthy. He also says that he’d like to set the tax increase at $500,000 income instead of the $250,000 income suggested by President Obama. He also mentioned that Congress should place a minimum tax of 30% on any income between the amounts of $1 million and $10 million, and if the income is higher than that, then a 35% rate should be implemented.

Buffett also made mention that Congress needs to consider raising corporate taxes as well. He mentioned that 30 or 40 years ago, American businesses paid taxes that roughly equaled 4% of the nations GDP. If you compare that to last year’s corporate taxes, it only represents about 1.5% of US gross domestic product.

“Corporate taxes have not been a problem for corporate America,” said Buffett.

Buffett also spoke about the structure of his own company, since they are a worldwide conglomerate… where he rejects the idea that it is set up to reduce the amount of taxes paid by Berkshire Hathaway. He tells us that Berkshire Hathaway, and all of the subsidiaries of his company, pay the regular rate of taxes on all of their profits.

Berkshire Hathaway owns over 80 companies. Some of the companies are railroads, jewelry, manufacturing, apparel, restaurant, utility and furniture companies. All in all, the utility and insurance businesses typically make up more than 50% of the overall income that Berkshire Hathaway produces.

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