On November 26, 2012, Warren Buffett recommended that the cutoff point in the President’s tax proposal plan which would and the Bush era tax cuts to increase from $250,000 to $500,000.
“I support President Obama’s proposal to eliminate the Bush tax cuts for high income taxpayers,” the philanthropist, investor and business magnate wrote in a piece published in the New York Times this past Monday. “However, I prefer a cutoff point somewhat above $250,000 – maybe $500,000 or so.”
He also said to Congress, “right now, to enact a minimum tax on high incomes.
“I would suggest 30% of taxable income between $1 million and $10 million, and 35% of amounts above that,” wrote Buffett.
“A plain and simple rule like that will block the efforts of lobbyists, lawyers and contribution-hungry legislators to keep the ultra-rich paying rates well below those incurred by people with income just a tiny fraction of ours. Only a minimum tax on very high incomes will prevent the stated tax rate from being eviscerated by these warriors for the wealthy.
“Above all, we should not postpone these changes in the name of ‘reforming’ the tax code. We can’t let those who want to protect the privileged get away with insisting that we do nothing until we can do everything.”
He mentions that the wealthy will not stop investing their money if there is a raising taxes, even though conservatives argue that investments will cease.
Buffett also mentioned that between 1956 to 1969, the marginal tax rate on dividends was a very large 70%, when you compare that to the current 35%. Also at that time, capital gains tax was 27.5%, which you can compare to the current maximum of 15%.
“Never did anyone mention taxes as a reason to forgo an investment opportunity that I offered,” he also mentioned in the article.
“Under those burdensome rates, moreover, both employment and the gross domestic product… increased at a rapid clip. The middle class and the rich alike gained ground.
“So let’s forget about the rich and ultra rich going on strike and stuffing their ample funds under their mattresses if – gasp – capital gains rates and ordinary income rates are increased. The ultra rich, including me, will forever pursue investment opportunities.”
Buffett also mentioned that more than 25% of the 400 richest people in the US “paid a less than 15% of their take in combined federal income and payroll taxes,” he said while citing figures from 2009, which is the latest year reported during the study. “Half of this crew paid less than 20%. And – brace yourself – a few actually paid nothing.”
The people in question earned an average of $202 million during 2009 – “which works out to a wage of $97,000 per hour, based on a 40 hour work week,” said Buffett. “I’m assuming they’re paid during lunch hours,” he wrote in parentheses.