A value added tax is likely a foregone conclusion in the United States, three of the leading lights of American business told FOX Business on Monday.
Berkshire Hathaway Chief Executive Warren Buffett, Vice Chairman Charlie Munger and board member and Microsoft (MSFT) Chairman Bill Gates said that for the U.S. to continue to compete on the world stage, revenue must increase - and the VAT is the best option to ensure that.
“In the end we are not taxing enough, unfortunately, or we’re spending too much, probably some of each,” Buffett told FOX Business' Liz Claman. “We’ve got a gap of 10 percentage points between what we’re raising in taxes and what we’re spending. One way or another we are going to have to close that gap in a major way, so if some of those taxes fall on me, or some fall on Berkshire, that’s probably the way it should be.”
The VAT is an efficient system, Munger said, causing as many fears about how the additional revenue will be spent as it does about the additional tax burden.
“The people that are against it are against it because they think it will work too well, that the politicians will get too much money and do too many dumb things with it, and there is a good deal to be said for that point of view,” he said.
In a wide-ranging interview, the three executives touched on financial reform and the government’s case against Goldman Sachs (GS), derivatives trading, the Berkshire Hathaway succession plan and the role of technology in today’s economy.
As he has earlier, Buffett said he sees no issue with Goldman Sachs’ actions in the so called ABACUS deal, which has run the company afoul with the government. The bank has been charged with fraud by securities regulators, who claim the company mislead investors in a mortgage derivative that had been designed by one investor to fail. The U.S. Department of Justice has begun a criminal investigation of the transaction as well.
“The ABACUS transaction, which is all that has been brought forth…I don’t see anything wrong,” he said.
Buffett, who holds a substantial position in Goldman Sachs, said he would decline if the company asked him to sit on its board, saying it would take too much time away from his first love, Berkshire Hathaway.
Asked to respond to the situation in Greece, where credit rating agencies have downgraded that country's sovereign debt, Buffett scoffed at the notion that U.S. debt is in for a similar fate. Both Moody's Investor Services and Standard & Poor's ratings agencies have threatened a downgrade of U.S. debt as the deficit continues to rise.
"They would be out of their minds if they did," he said. "All of our debt is in our own currency. When you can print your own currency you can't default," he said. The real risk is the purchasing power of the dollar, Buffett said.