Billionaire Warren Buffett says he will match donations made by a Republican Congressman to cut the nation’s $15.2 trillion debt.
Last week, Buffett challenged the GOP to a $1 for $1 donation match to cut the debt — and offered to match $3 for every $1 Senate GOP minority leader Mitch McConnell (R-Ky.) gave.
In a letter FOX Business has obtained, Buffett writes “he is delighted to match” Republican Virginia Rep. Scott Rigell’s 2011 and 2012 donation, which is about $49,000 total, and that he “plans to send along my match to the Treasury around April 20th, after I’ve had a chance to hear from everyone” in Congress.
Scroll down to read the letter
Moreover, after the GOP chided Buffett to include Democrats, not just Republicans, in the match, Buffett now says he hopes to spur “an intramural rivalry between Republicans and Democrats” on who can personally do more to cut the debt, adding “this would be a form of competition between the two parties that the American public would applaud.”
Buffett also noted this “’rivalry’... might possibly lead to better cooperation between the two parties and it also might be helpful in restoring the faith of the American people in Congress.”
Moreover, Buffett, a billionaire who reaped an estimated $47 billion net worth running Berkshire Hathaway, now says that while he and the GOP Congressman “may differ on tax policy,” the two “almost certainly agree on the necessity to dramatically reduce the deficit soon” and that federal government “spending must drop to 20-21% of GDP.”
Buffett still says tax hikes are in order, noting government “revenue must increase to 18-19%” of GDP.”
The tongue-in-cheek jousting between the Berkshire Hathaway billionaire and the GOP comes as interest on the $15.2 trillion in U.S. debt soared to $454 billion last year.
If members of Congress donated all of their annual salaries in their entirety towards the nation’s debt, and if Buffett forked over his estimated $47 billion in net worth, the total amount would still only cover just about 10% of the annual interest cost on the U.S. debt.
On President Barack Obama’s watch, the federal government has added $4.6 trillion to the nation’s debt burden. That is roughly the equivalent of adding the economies of Germany and South Korea combined to the U.S. debt, based on figures from the International Monetary Fund.
Rigell, had sent a letter on Jan. 13th to Buffett, which his office forwarded to FOX Business, where he noted he has been contributing 15% of his annual salary towards paying down the federal debt.
The Congressman, a former Marine, also said he has declined “the federal health and retirement benefits I have been offered – in service to my country.”
The latest debate stems from a New York Times opinion piece Buffett wrote last summer in which he said millionaires ought to pay more in taxes, in which he noted that he paid a smaller percentage of his income in federal taxes than his secretary due to loopholes. His effective federal rate is about 17% of his $39.8 million in taxable income. The vast majority of Buffett’s income comes in the form of capital gains.
In his editorial, Buffett said he would like to “raise rates immediately on taxable income in excess of $1 million, including, of course, dividends and capital gains.”
President Obama then used the Buffett anecdote to back his effort to rewrite the federal tax code, as he then championed the “Buffett Rule” to raise taxes on the rich, which could hit filers who make $200,000 a year if the Bush tax cuts expire.
Then, last fall, GOP Congressmen offered their own “Buffett Rule Act,” legislation introduced by Sen. John Thune (R-SD) and Rep. Steve Scalise (R-La.) which would require the IRS to include a check box on tax returns letting taxpayers directly donate money to the U.S. Treasury to pay down the deficit.
Currently, an individual may make a contribution to reduce the national debt by attaching a check to their returns payable to the Bureau of the Public Debt; itemizers can then deduct that sum as a charitable donation.
Buffett then countered with an offer to donate $1 towards paying down the national debt for every dollar donated by a Republican in Congress, according to the latest issue of Time magazine. Buffett added he would donate $3 for every $1 Republican Senator McConnell gives.
Last week, Senator McConnell’s office told FOX Business that if Buffett wants to pay more, he can do so by simply checking a box on his own tax return to make voluntary donations.
And the Senator added that deficit spending really is to blame for the nation’s record debt.
Senator McConnell’s spokesman Don Stewart told FOX Business: “Sen. McConnell says that Washington should be smaller, rather than taxes getting bigger. And since some, like President Obama and Mr. Buffett, want to pay higher taxes, Congress made it possible for them to call their own bluff and send in a check. So I look forward to Mr. Buffett matching a healthy batch of checks from those who actually want to pay higher taxes, including Congressional Democrats, the President and the DNC.”
In a statement emailed to FOX Business, Rep. Rigell says: “For reform to occur in Congress, we need bipartisan acknowledgement that this system is broken and we need men and women who will lead by example. I think we have folks on both sides of the aisle who see this and I along with some of my colleagues are working to bring real change,” which includes “term limits to end careerism, eliminating Congressional pensions, and tackling budget and committee reform.”
However, the White House is in favor of increasing income taxes on the wealthy by letting the Bush tax cuts expire. In doing so, that means Buffett himself would not pay at the higher rates because Buffett has structured his tax bill to pay at around the same lower rate as the $50,000-$75,000 crowd pays, an average 15%.
In other words, the higher tax rates would not tax the vast majority of Buffett’s own sheltered income, including either his unrealized capital gains, which are currently taxed at 0%, or charitable contributions, which are tax deductible. Buffett also pays himself a reported $100,000 annual salary, which keeps his federal income and payroll taxes low, among other things.
In addition, the upper brackets already pay a mountain of tax. The top 1% of income earners paid 38% of all federal taxes, while the bottom 50% pay just 3%. An estimated 49% of U.S. households pay no federal income tax at all. All of which is why Europe’s Organization for Economic Co-operation and Development says the U.S. tax system is one of the most progressive in the world.
Elizabeth MacDonald joined FOX Business Network (FBN) as stocks editor in September 2007.