Warren Buffett has enthusiastically broken the money talk taboo with his recent op-ed in the New York Times, which details exactly how much he paid in taxes last year.
“Last year my federal tax bill … was $6,398,744. That sounds like a lot of money. But what I paid was only 17.4 percent of my taxable income—and that’s actually a lower percentage than was paid by any of the other 20 people in our office. Their tax burdens … averaged 36 percent,” the Berkshire Hathaway chairman and chief executive wrote.
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The point Buffett was trying to make was that it is absurd that he—the third-richest man in the world, with an estimated fortune of $50 billion—is taxed at a lower percentage than the employees working in his office.
His proposal? Start taxing the mega-rich.
“My friends and I have been coddled long enough by a billionaire-friendly Congress,” he concluded. “It’s time for our government to get serious about shared sacrifice.”
Democrats Back Buffett
Buffett’s idea differs from President Obama’s proposition, which would levy increased taxes on individuals making more than $200,000. Buffett, in contrast, only wants to raise the income and investment tax rates of those making more than $1 million, who in 2009 represented just 0.2% of tax returns.
Regardless, the President—and other Democrats—received Buffett’s proposal with enthusiasm.
On Monday night in Iowa, one stop on his three-day bus tour of the Midwest, Obama’s reference to Buffett’s call for Congress to “stop coddling billionaires” was met with big applause.
Presidential spokesman Jay Carney also cited Buffet during his briefing with the White House press corps yesterday morning, and the Democratic Senatorial Campaign Committee posted a link to the op-ed under the heading “Important message.”
Numerous Twitter users have also praised Buffett, hailing him as a hero.
Some Find Fault With Buffett’s Tax
Not everyone agrees with Buffett’s call to end coddling. In a Forbes opinion piece published today, Peter J. Reilly points out that the job of wealthy people is to “allocate capital.”
“What happens if we tax Warren Buffett more?” Reilly asks. “There will be less capital.” Instead, he (with a hint of tongue-in-cheek humor) suggests taxing people like Jennifer Aniston, who enjoy a high-income but do not hold nearly as much net worth as Buffett.
Beyond finding fault with Buffett’s proposal, some conservative bloggers and commentators believe his op-ed merely represents a ploy or gimmick to drum up support for increasing middle-class taxes. Pat Buchanan, a commentator on MSNBC, went so far as to challenge Buffett to donate to the federal government.
Brad Dayspring, a spokesman for Virginia Representative and House Majority Leader Eric Cantor, concurred on Twitter: “If Warren Buffett wants to pay more taxes and send more of his money to Washington, why doesn’t he just do it?”
Republicans, for their part, have remained steadfast in their opposition of tax increases. Congressman Kevin Brady firmly rejected Buffett’s proposal.
“There is not a serious solution for deficit control or getting this dismal economy on its feet,” Brady said. “Economic growth does not follow a tax increase. So as much as I respect Mr. Buffett, his proposal fails on virtually every level.”
Would It Work?
Ignoring whether Buffett’s tax proposal would actually pass in Congress, estimations from the Joint Committee on Taxation, the Congressional Budget Office and the Treasury reveal that a tax increase for millionaires, hedge fund managers and income from capital gains and dividends would indeed regenerate as much as $500 billion in 10 years.
This represents a third of what the Congressional committee has been charged to cut from the deficit. It’s a start, but it’s less than 5% of the new debt the country is expected to incur in the next decade—a drop in the national debt bucket.
Do you agree with Warren Buffett? Is it fair to stop coddling the mega-rich and start levying heavier taxes? Let us know what you think in the comments below.
Image credit: Medill DC / Flickr