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August 15, 2011 9:25 AM Buffett’s good advice

By Steve Benen

Warren Buffett, the chairman and chief executive of Berkshire Hathaway, is spectacularly wealthy. Yesterday, he took to the New York Times to complain that Washington is a little too preoccupied with “protecting” him and those like him, and pleaded with policymakers to be responsible and raise his taxes.

Last year my federal tax bill — the income tax I paid, as well as payroll taxes paid by me and on my behalf — was $6,938,744. 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 ranged from 33 percent to 41 percent and averaged 36 percent. […]

Back in the 1980s and 1990s, tax rates for the rich were far higher, and my percentage rate was in the middle of the pack. According to a theory I sometimes hear, I should have thrown a fit and refused to invest because of the elevated tax rates on capital gains and dividends.

I didn’t refuse, nor did others. I have worked with investors for 60 years and I have yet to see anyone — not even when capital gains rates were 39.9 percent in 1976-77 — shy away from a sensible investment because of the tax rate on the potential gain. People invest to make money, and potential taxes have never scared them off. And to those who argue that higher rates hurt job creation, I would note that a net of nearly 40 million jobs were added between 1980 and 2000. You know what’s happened since then: lower tax rates and far lower job creation.

Millionaires and billionaires, Buffett concluded, “have been coddled long enough by a billionaire-friendly Congress. It’s time for our government to get serious about shared sacrifice.”

Remember, as far as congressional Republicans are concerned, what Buffett recommends is tantamount to radical socialism. Any proposal to increase taxes on anyone by any amount — even on the wealthiest of the wealthiest of the wealthy — is an automatic deal-breaker in GOP circles. Indeed, under House Budget Committee Chairman Paul Ryan’s plan, widely endorsed by Republicans everywhere, what the rich really need is another tax break.

With this in mind, Buffett’s advice will probably be ignored on Capitol Hill, especially among GOP members of the Murray/Hensarling “super committee,” which will begin its work soon. But I’m glad the Berkshire Hathaway CEO is making the case anyway, if only to reinforce the extent to which congressional Republicans are being ridiculous.

Steve Benen is a contributing writer to the Washington Monthly, joining the publication in August, 2008 as chief blogger for the Washington Monthly blog, Political Animal.

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  • martin on August 15, 2011 9:35 AM:

    I look forward to Fox News labeling Buffet "Class Traitor", and maybe accusing him of being a conspirator with George Soros.

  • DAY on August 15, 2011 9:36 AM:

    I guess Warren caught a "social(ist) disease", pallin' around with Soros. . .

  • Montana on August 15, 2011 9:42 AM:

    On the other hand, you noted that the Obama team is suggesting "free trade agreements and improved patent protections for inventors" to improve the economy.

    I live in a medium-sized town in Montana where two men died last winter -- one from hypothermia sleeping in his truck and the other by his own hand -- because there are no jobs.

    The president needs to take this argument more seriously, not only for political reasons but for pure humanitarian ones. If he won't fight for us, who will?

  • Trollop on August 15, 2011 9:45 AM:

    Wow, 17% sounds like a sweet deal! I've got to work harder as an American in the land of opportunity.. The Fox anchor will call him "buffet" (buffay) as well, getting it completely wrong.

  • c u n d gulag on August 15, 2011 9:47 AM:

    Maybe Buffett should threaten an anti-Galtian approach:

    No new jobs until taxes are raised!


    Never mind, then none of us will ever work again...

  • SteveT on August 15, 2011 9:50 AM:

    "People invest to make money, and potential taxes have never scared them off." -- Warren Buffet.

    That's true for non-millionaires, too. The owner of the boutique two doors down from my business didn't leave the shelves empty because she would have to pay 36 percent income tax on the profits of any sales rather than 31.5 percent.

  • Lifelong Dem on August 15, 2011 9:58 AM:

    This story will get as much attention as the time Buffett told Schwarzenegger that California property taxes were too low. In other words, none. Buffett was also loudly against repeal of the estate tax. Notice how much he influenced that debate?

  • walt on August 15, 2011 10:00 AM:

    http://www.washingtonpost.com/business/economy/steven-pearlstein-blame-for-financial-mess-starts-with-the-corporate-lobby/2011/08/08/gIQA3zMlDJ_print.html

    Steven Pearlstein's op-ed piece in The Washington Post adeptly explains where the blame lies. Buffett, obviously, is old school. Too-cool-for-school are all the wealth extractors who obey one rule above all others: winning. They have no particular loyalty to America or any set of values besides winning. So, this is what corporate nihilism has ultimately produced: political nihilism. Those of us who just pawns in your game salute you.

  • POed Lib on August 15, 2011 10:02 AM:

    The reason for Buffett's low tax bill is simple: The capital gains tax rate is set too low. It should be set to the level of ordinary income. This allows also the "carried interest" loophole, where hedge fund pigs also pay this kind of ridiculous tax rate on income in the BILLIONS of dollars.

  • tim on August 15, 2011 10:02 AM:

    Couldn't we compromise and offer the rich a Grand Bargain so when we tax them they are happy? Maybe all wealthy who get taxed at a higher rate could receive a plaque somewhere with their name on it thanking them for their graciousness and sharing. Or maybe a commemorative doorknob, named after them, placed on a door of a patriotic room?

  • Zorro on August 15, 2011 10:03 AM:

    Ah, what does Warren Buffett know about making money, anyhow.

    Sigh,
    -Z

  • RepublicanPointOfView on August 15, 2011 10:05 AM:

    Warren Buffah is a socialist, commie, class traitor who should be publicly whipped and then have his assets stripped from him and redistributed to the Koch brothers.

    Everyone knows that the only real problems with our economy are that the wealthy (Buffett & Soros aside) do not have enough wealth and that we have too large a middle class!

  • Gandalf on August 15, 2011 10:08 AM:

    Buffet is pragmatic. The wealthy aren't going to stop making more money no matter what the tax rates are. The only question is are they actually patriotic americans or just attemptin. and sometimes succeding, to be nothing more than feudal lords.

  • FRP on August 15, 2011 10:39 AM:

    When twiddling the thumbs most experienced coaches advise their students to start clockwise then to alternate counter clockwise , you know those students are paying for first rate coaching . Advancing students can partake in thumb wrestling competitions when they have mastered the left thumb clockwise right thumb counter clockwise and reverse with ease .
    When all is said and done after counting up all the money you have that is only available to the "Great Game" statesmen adventurers , the bulk of great wealth is a training ground for the twiddling greats of world history . Croesus is known to have been recruited by Cyrus , who is to gainsay what they did with their thumbs after a hard days conquering . Carnegie had to have something to do when he was off to the highlands when squeezing the pay for steelworkers . Just because a great man like Carnegie refused to foul his beautiful mind when he started taking back what was rightfully his , with the "standard" crap his overpaid workers extorted from him , doesn't mean his thumbs were idle .
    Twiddling is how people of substance can maintain a sharp edge without the nasty side effects of hunger cramps , sweat , or filth and fatigue .

    Do we keep on coming or stand and wait
    with the sun so dark and the hour so late ?

  • JW on August 15, 2011 10:46 AM:

    "This story will get as much attention as the time Buffett told Schwarzenegger that California property taxes were too low".

    More specifically, Buffet publicly counseled Schwarzenegger to reform Prop 13. Not repeal it, mind you, just reform it. Schwarzenegger had spent his first campaign touting the fact that Buffet was to be a principal economic adviser. Buffet lasted maybe 3 days after that recommendation.

  • square1 on August 15, 2011 10:58 AM:

    I am often accused of attacking President Obama "no matter what". That isn't true at all. But this comment from Buffett reminds me of what I had hoped that I was getting when I voted for Obama in both the primary and general election in 2008.

    I had hoped that Obama would leverage his claimed powers of consensus-building to advance sound and, yes, liberal policies by building a coalition between traditionally liberal groups and reasonable business people, like Warren Buffett. That Obama could be a President that could strengthen the middle classes without scaring off the business and professional classes.

    I didn't expect President Obama to always be politically successful because, even then, he appeared too timid and deferential to institutional authority. But I expected him to try.

    Take health care reform. I never expected Obama to take a blowtorch and pipe to the insurance and pharmaceutical industries. But I had hoped that he would put together a coalition of sane business leaders. i.e. CEOs who wanted to stop providing health insurance to their employees and focus, instead, on their core business. IOW, I had hoped that Obama would have the political skills to make Medicare buy-in look pro-business.

    So I had hoped that President Obama would leverage the support of people like Warren Buffett to get rid of the Bush tax cuts, not extend them.

  • marty on August 15, 2011 11:09 AM:

    Utterly amazing, isn't it......Buffett, in 60 years, has yet to come upon an investor who makes his decisions based on his personal tax rate. I read a comment on another site this morning from someone who says he has has worked with a small business for 20 years and - his quote- " is always in the room when hiring decisions are made". He says that not once, ever- has the decision been based on the owner's personal tax rate, but on perceived demand for their product.

    But to Republicans, not only are personal tax rates the deciding factor, they are apparently the ONLY factor.

    Pretty damn discouraging that this line of horsehit been swallowed by so many.

  • CDW on August 15, 2011 11:10 AM:

    This is old news. Buffett says the same thing from time to time so this is not the first time he'll be ignored.

  • bdop4 on August 15, 2011 11:29 AM:

    To link this to an earlier thread:

    Just as no business will hire someone on the prospect of receiving a tax credit, no investor will shun a good investment on the prospect of having to pay higher capital gains tax.

    Businesses and investors will pull the trigger when there is a good prospect for a PROFIT. If it doesn't pencil out, then they will sit on the sidelines.

    Also, buying and selling a stock within a very short period of time isn't an investment, it's a bet. I think punitive rates need to be applied to ultra short-term capital gains, with perhaps incentives to hold securities beyond the traditional 1-year holding period.

  • square1 on August 15, 2011 11:55 AM:

    Actually, tax rates do affect business investment...just not how Republicans claim they do.

    Take a small but profitable business owner. When marginal, personal income tax rates are fairly high, the owner is less likely to pull money out of the business and then pay taxes high taxes. Instead, the owner is likely to plow the money back into the business (in a down economy, when businesses are hard up for customers, they may be fearful of over-investment...but then the businesses are unlikely to be seeing significant profits at that point also).

  • N B on August 15, 2011 3:00 PM:

    Go to Senator John Cornyn's FB page and join in the the argument at his typical, fatuous post that if Buffett wants to donate more money to the government, he can.

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