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Warren Buffett, CEO and chairman of Berkshire Hathaway, just announced today that he wrote a personal donation check to the United States treasury in an effort to comply with “The Buffett Rule.” In another interesting turn of events, every Berkshire Hathaway investor is going to have 30% of their capital gains and dividends withheld. This money will then be sent directly to Washington.

The Buffett Rule was championed by congressional Democrats and Pres. Barack Obama, and it proposed that everyone would an income over $1 million pay a 30% tax.

Warren Buffett is going to personally unveil the three-foot by six-foot donation check on the Treasury steps in a press conference this afternoon. According to the press release put out for the event, Warren Buffett said, “As I wrote in the New York Times, ‘My friends and I have been coddled long enough by a billionaire friendly Congress. It’s time for our government to get serious about shared sacrifice.’ Today, I, Warren Buffett, and personally getting serious about shared sacrifice.”

Buffett’s actions received a lot of praise from the White House, and Pres. Barack Obama said, “Let me be clear. This puts to rest any GOP driven allegations that Warren Buffett was a hypocrite on the tax issue or was just engaging in a bit of moral preening.”

According to the Joint Tax Committee, if The Buffett Rule is enacted, over the next decade, it would raise $31 billion worth of tax revenue. As a way to put this in context, that is only less than 1/10 of 1% of the federal spending that will take place in the next 10 years.

Billionaire CEO and chairman of Berkshire Hathaway, Warren Buffett, tells the world investors that they need to bet on the “natural juices” of capitalism in the United States even though the country’s lawmakers are currently struggling to narrow the budget deficit.

During 2012, Buffett’s entire compensation declined by 14% during the year to $423,923. Berkshire Hathaway spent less money on his security during this time, but his overall salary remained the same at $100,000.

During an interview that Warren Buffett conducted with Business Wire’s CEO – a subsidiary of Berkshire Hathaway that also distributes press releases – he mentions that people have a tendency to “focus too much on what the government’s done, and to give them either credit or blame. The real credit belongs to our system.”

Throughout many of his 82 years, Warren Buffett uses his annual letter to shareholders, as well as his public appearances to make note of the prospects for the largest economy in the world, the US, which is also the place where the majority of Berkshire Hathaway’s businesses are based. He even called for a major tax increase to the wealthiest individuals in the US as a way to reduce the budget deficits and hold back cuts, but Republicans believe that this will actually hurt economic growth.

In a recent video interview posted online between Cathy Baron Tamraz and Warren Buffett, he mentions that the US economy “is coming back because of the natural juices of capitalism and not because of the government. We have a wonderful system that eventually is self cleansing and always moves forward.”

During the last three months of 2012, US gross domestic product actually slowed to a 0.1% annual pace. At the time, defense spending plunged the largest since the era of the Vietnam War. Congress put forth a mandate to cut $1.2 trillion in spending across the board. This is going to start in 2013 and it’s spread out over a nine-year period, in an effort created in 2011 to increase the US debt limit.

The reductions are almost going to be evenly split between non-defense spending and defense spending, and they are intended to be so difficult that lawmakers couldn’t possibly let them occur. President Barack Obama and the Democrats have wholeheartedly disagreed with the Republicans as to whether or not a new plan should include new tax revenue.

The Gas Pedal

Warren Buffett is the second richest person in the United States of America, and during his March 1 letter, he mentions that Berkshire Hathaway plans to keep its “foot on the floor” in regards to spending capital as he fully takes advantage of other opportunities presented in the United States of America. Berkshire Hathaway, based out of Omaha, Nebraska, has spent $9.8 billion in 2012 on equipment and plants in order to bolster its energy businesses and railroads. Buffett also wrote that they will most likely even exceed that amount during 2013.

“Opportunities abound in America,” said Buffett.

Warren Buffett built Berkshire Hathaway over 50 years ago through incredible stock picks and business takeovers worth over $250 billion. Some of its operating units produce car insurance, cover natural disasters, sell newspapers, make paint, sell chocolate, diamonds and furniture.

Berkshire Hathaway’s stock is up roughly 14% this year, and during the past quarter it has earned more than 40 fold. The current value of the stock at the time of this writing is $153,312 per share.

“Right Soil”

In the same Warren Buffett interview with Tamraz, he mentions that history shows us the true potential of the United States economy, and he cites issues like the two World Wars, the Civil War and the Great Depression.

“We went from a wooded land to an incredible, absolute abundance of riches” because the United States has had a system that can “unleash human potential,” said Buffett. “Never bet against what humans can accomplish if they’re operating in the right soil. And we have the right soil.”

Warren Buffett, billionaire investor, isn’t the biggest fan of the automatic federal cuts to the budget that started last Friday. He did say they should not hurt the American economy at all, and that they will certainly help reduce the US deficit.

As of now, the US is currently running a deficit of around 6% of entire economic output. This amounts to creating a form of stimulus for the economic recovery by having $85 billion worth of less spending during the calendar year 2013.

“I think that’s still giving the economy quite a juice,” said Buffett (CEO of Berkshire Hathaway Inc.) to CNBC this past Monday.

President Barack Obama warned Americans of the overall economic impact of the supposed sequestration. Currently, the nonpartisan Congressional Budget Office tells us will slow US growth by 0.6 percentage points during 2013, and reduce jobs by 750,000.

Buffett is in agreement with both Republicans and Democrats in Washington when he describes the wide-ranging process of cutting the budget as a “meat ax” way to help reduce the national deficit.

“It’s a very dumb way of attacking a very serious problem,” said Buffett, in which he notes that automatic spending cuts do not slow the issues of the growth in Medicare, which are the main issue with long-term future deficits.

Buffett also said that the increase in taxes on January 1 were a meat ax approach as well, since the expiration of the payroll tax break of 2% (that was only temporary) affected workers in a wide range.

“We’re going to bring down spending and we’re going to bring up revenues and we may get there in fits and starts and everybody may scream each time we do it. But the deficit is going to come down,” said Buffett.

“We may be doing it in a meat ax way in this particular move,” he said. “We did it in kind of a meat ax way in terms of the revenues going up at the start of the year.”

Approaching deficit spending this way is most likely better than not doing anything at all, said Buffett. But he hopes that the politicians in Washington can come up with a way to improve upon it, and in the end come up with a broader deal.

“You may have to use the meat ax first and then people kind of look at their handiwork and say we have to do better than this,” said Buffett.

Mr. Warren Buffett believes he understands the biggest challenge that President Obama will face during his second term, and that challenge is Congress.

Even though the Oracle of Omaha believes that Congress will present Obama with his biggest problem during his second term, he also believes that the United States will overcome the poor decision-making of lawmakers.

“What is right about America just totally dwarfs what’s wrong with Washington,” said Buffett in a recent interview on CBS News.

The billionaire investor has regularly criticized lawmakers during his career. Throughout the entire fiscal cliff debate, Buffett strongly recommended that Republicans “put country before party” in an effort to come to an agreement that would prevent $1.2 trillion in automatic spending hikes and tax cuts. They managed to avert the fiscal cliff, but President Obama and Congress didn’t come to an agreement until the 11th hour.

During 2011, Warren Buffett made an effort to influence Washington with a proposal where the ultra rich Americans would be required to pay a much higher tax rate than the American middle class. The plan was dubbed “the Buffett Rule” and the Senate ultimately didn’t agree with this plan.

Buffett recently spoke about another major issue that Washington is facing during his interview with CBS. The issue was the national debt. The leaders of the Republican Party believe that we should only raise the debt ceiling if an effort is made to reduce the debt through major cuts in spending. If Congress doesn’t do anything, the US can potentially lose its ability to meet its financial obligations during the middle of February, which we learned from our report by the Bipartisan Policy Center.

“It is not a good thing to have it going up in relation to GDP,” mentions Buffett in an interview. “The debt itself is not a problem.”

An ex-employee of Berkshire Hathaway and Warren Buffett is currently lashing out against his old boss.

David Sokol, who was once expected to succeed Warren Buffett as head honcho of Berkshire Hathaway when he retired, called out Buffett in regards to a Wall Street Journal article that came out over the weekend.

“I will never understand why Mr. Buffett chose to hurt my family in such a way, but given that he is rapidly approaching his judgement [sic] day I will leave his verdict to a higher power,” said David Sokol in a response that he e-mailed to WSJ.

The statement given by Sokol comes two years after he left Berkshire Hathaway. The reason he left was over questionable stock trades. This was not long after David’s lawyer announced that the United States SEC wasn’t planning on charging Sokol with insider trading.

During 2011, right after Sokol departed Berkshire Hathaway, Buffett said that Sobel’s actions were “inexplicable and inexcusable.”

It’s very rare that an ex-employee of Berkshire Hathaway feels the need to lash out against Warren Buffett. The billionaire investor often has a very good relationship with all of his executives and “gives them lots of room to manage their companies,” we learned from the Wall Street Journal.

The CEO of Berkshire Hathaway, often known as the Oracle of Omaha, is often a beloved figure in the financial community, with financial media, investors and even our current president regularly touting his ideas.

David Sokol, a native of Omaha just like Warren Buffett, appeared to be another big fan of Warren Buffett until the day that he resigned. In the past, Mr. Buffett once called Sokol “an enormously talented builder and operator,” we learned according to the Associated Press.

After leaving Warren Buffett’s company Berkshire Hathaway, Mr. Sokol went on to open up his own private equity firm called Teton Capital. David mentions that he doesn’t have any plans to rekindle his relationship with Warren Buffett anytime in the near future, reports Fox Business.

Sokol told Fox Business: “I haven’t spoken to Warren and I don’t want to… The notion that I violated some company policy is absurd.”

Throughout the years, Warren Buffett has gone very far in life with his folksy way of thinking and his ability to make difficult financial concepts very simple to understand. And as I’m sure you can imagine, people trying to push a higher tax agenda for the wealthy have also gotten a lot out of Warren Buffett’s way of thinking as well, since he is an advocate for this specific type of policy.

As you may or may not know, Warren Buffett is at it again this week, as he posted an op-ed piece in the New York Times – where he calls for a higher capital gains tax rate among other things.

For many years now, your capital gains have often been taxed at a rate lower than the tax on ordinary income. This was to help spur investments. The simple idea is that having taxpayers spend their money on wealth creating enterprises, will be much better off on the whole than if they were to waste their money on things like expensive vacations and consuming large amounts of luxury goods.

But the opinionated Warren Buffett had his own thoughts to share in regards to this logic, where he wrote:

“Suppose that an investor you admire and trust comes to you with an investment idea. “This is a good one,” he says enthusiastically. “I’m in it, and I think you should be, too.”

Would you potentially reply to this by saying something like “Well, it all depends on what my tax rate will be on again you’re saying were going to make. If the taxes are too high, I would rather leave the money in my savings account, earning a quarter of 1%.” Only in Grover Norquist’s imagination does such a response exist.”

For the most part, Warren Buffett is making the argument that investors are going to continue investing no matter what amount of money the government takes in taxes after the investment is successful. So there’s no reason to worry about using the tax code as a way to encourage people to invest.

He instead suggests that we should start worrying that a lower capital gains rate is not fair to the people who earn the majority of their income through labor, which obviously pays a much higher tax rate under the current laws. He points out that this wrinkle in the tax code is the reason why former presidential hopeful Mitt Romney was able to pay such low tax rates in the years 2010 at 2011.

So who’s right on this issue? Are the economists on the left like Jared Bernstein, who is the former chief economic advisor to current Vice President Joe Biden, in which he argues that higher capital gains tax rates will not lead to any less investing. In a blog post that he made last summer, Bernstein showed us several different studies which prove that capital gains tax rate changes didn’t affect investing at all on any level.

In this post, he wrote:

“There are a few economic principles that we consistently get wrong in ways that do lasting damage to our economy and diminish our future. At the top of this list are arguments about large behavioral responses to changes in tax rates. I don’t think it’s zero, but I’ve simply never seen compelling evidence that tax increases significantly hurt growth, labor supply, jobs, wages, or that rate decreases provide much of a boost the other way.”

Many conservatives often respond that it’s very difficult to empirically prove these negative effects on higher capital gains taxes because the overall economy is such a complex, large beast with many different moving parts. As an example, the Internet boom sparked dramatic growth, which could very well have covered up any of the disincentives brought on by higher capital gains taxes when President Clinton raised them briefly during the 1990s – but it doesn’t show us whether or not and negative affect actually existed.

The second line in conservative arguments is that higher capital gains taxes also raised the cost of capital for all companies. When a firm gets equity capital, they do so by issuing shares on the stock market. If capital gains and dividends earned by those shares present a higher tax rate, then the overall share value will decrease – and this will result in the fact that lots of corporations won’t have enough ability to raise the money they need to hire more employees and continue to build factories.

Lastly, the Conservatives also believe that higher dividend and capital gains taxes are another way of “double taxation.” If you own stock in a firm that pays you out a dividend, the company paid taxes on that money already, so the individual investor shouldn’t have to pay taxes again. And then there’s the fact that when you sell a stock and realize a gain, there is the strong possibility that you bought that with money that was already taxed through labor income that you earned at your job or business.

If you are a wage earner of moderate wealth, you are already paying income tax at a higher rate, and this plan will have you also paying a higher rate of taxes on your investments. While you may not end up leaving your money in a bank account which Buffett jokingly mentions, it’s highly unlikely that you’re also going to start buying luxury goods. Why would you want to be taxed twice?

But this example basically applies to wage earners that are already moderately well-off, and this does not particularly represent all mainstream investors in the majority. Many of the investors are already wealthy like Mitt Romney, and they are basically just reinvesting the income that they made off of other investments which paid a much lower tax rate. Lots of them are also invested in the stock market through their 401(k) plans, which are basically funded by wages that are pre-taxed.

It’s safe to say that nobody really likes taxes. They are pretty much just a necessary evil that we need in order to fund our government. But since the middle class of this country is in a terminal state, it makes sense that the rich paying higher taxes on capital gains would be one of the best ways to raise revenue to get our budget deficit back under control.

Nobody is saying that Warren Buffett oversimplifies the case by increasing capital gains, and the basics of his argument do stand up to scrutiny. By raising capital gains taxes just a little bit, or changing the code so that they meet the rates of regular income, there will be plenty of investors still available to capitalize on the many incredible investment opportunities available today. They will not be disappearing anytime soon.

Within the business community, Warren Buffett is the greatest ally of President Barack Obama. There is even a proposal to raise taxes brought about by President Obama named the Buffett Rule, which obviously bears the name of the billionaire entrepreneur and investor.

And more often than not, President Obama appeals to the authority and business savvy of Warren Buffett when he needs someone to defend his policies. But some of the statements that Buffett made this week potentially tell us that he’s not completely sold on the policies of our current president.

In this past Sunday’s edition of the New York Times, they published an op-ed piece where some of Warren Buffett’s opinions differed on topics that both he and President Obama are both concerned. For starters, Buffett opposes an increase in taxes on those people making less than $500,000 a year. As of right now, President Obama is currently negotiating a tax deal where Republicans will have to accept rate hikes in households making $250,000 a year or more.

And in a personal interview that Warren Buffett gave on TV with Charlie Rose of PBS, he sang the praises of Jamie Dimon, CEO of J.P. Morgan Chase Bank. Buffett thinks he would make an excellent Treasury Secretary. The interesting thing is that Mr. Dimon very clearly opposes the economic policies of the president and has openly criticized them. I’m particularly talking about financial regulations brought about from the 2010 Dodd-Frank law.

But during his interview, Warren Buffett said that Jamie Dimon is “terrific” and also mentioned to Charlie Rose that “if we did run into problems in markets, I think he actually be the best person you could have in the job.”

Even though Warren Buffett is considered President Obama’s biggest cheerleader throughout the business community, it is apparent that they do not agree on everything. This is particularly true of tax and regulatory policies that are a big part of the president’s agenda.

Is Warren Buffett a hypocrite because of this? I don’t believe so, not anymore then his advocacy of the Buffett Rule, since he exposes very little of his own fortune to taxation.

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.

President Barack Obama is currently looking to replace Tim Geithner as Treasury Secretary. Everybody’s favorite billionaire investor Warren Buffett thinks that the best person to lead the Treasury Department during the financial crisis is none other than the CEO of J.P. Morgan Chase, Mr. Jamie Dimon.

It is believed that Dimon is not one of the potential candidates in the running for this fantastic position in the cabinet, but it’s also not the first time that this banker on Wall Street has been recommended for the job.

“If we run into problems in markets, I think he would actually be the best person you could have in the job,” said Buffett during an interview that he had with Charlie Rose that aired on PBS this past Monday night. “World leaders would have confidence in him.”

It is currently believed that Jack Lew is the leading candidate to replace Tim Geithner. He is the former director of the Office of Management and Budget, and the current White House Chief of Staff.

There are a few others that are possibly under consideration as well. Some of the names floating around are Larry Fink, CEO of BlackRock; Roger Altman, chairman of Evercore; and Gary Gensler, current chairman of the Commodities Futures Trading Commission and former partner at Goldman Sachs.

Dimon has the reputation of being a safe and savvy banker, although that reputation took a little bit of a hit this year during the entire London Whale trading debacle. So far, this error cost J.P. Morgan $6.2 billion.

“Obviously, you know, there was a failure of control,” said Buffett to PBS when discussing the trading losses. “If you run an army, if you run a church, if you run a government, any large institution, people will go off the reservation sometimes.”

There was a time when Dimon was looked upon as a friendly Wall Street executive to the administration. But he has recently criticized the Dodd-Frank financial overhaul championed by President Obama, and he’s also criticized some of the policies implemented by the Federal Reserve.

As of this time, Geithner is leading the negotiations in regards to the fiscal cliff. He is expected to leave his post once a potential deal is reached.

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.