Warren Buffett Tells Congress to Stop Coddling the Super Rich

Warren E. Buffett, CEO of Berkshire Hathaway

Warren Buffett chastised Congress in a NY Times op-ed piece Sunday for its refusal to raise taxes on the wealthiest Americans.  Buffett wrote in part, "While the poor and middle class fight for us in Afghanistan, and while most Americans struggle to make ends meet, we mega-rich continue to get our extraordinary tax breaks. Some of us are investment managers who earn billions from our daily labors but are allowed to classify our income as 'carried interest,' thereby getting a bargain 15 percent tax rate. Others own stock index futures for 10 minutes and have 60 percent of their gain taxed at 15 percent, as if they’d been long-term investors.

These and other blessings are showered upon us by legislators in Washington who feel compelled to protect us, much as if we were spotted owls or some other endangered species. It’s nice to have friends in high places.
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."

Ham on Wry encourages readers to study his words carefully in order to grasp the full meaning of his message to Congress.  The last paragraph graphically presents a strong case for his entreaty.  While Buffett paid more money that most of us will ever earn, it totaled just 17.4% of his taxable income.  He explains, " To understand why, you need to examine the sources of government revenue. Last year about 80 percent of these revenues came from personal income taxes and payroll taxes. The mega-rich pay income taxes at a rate of 15 percent on most of their earnings but pay practically nothing in payroll taxes. It’s a different story for the middle class: typically, they fall into the 15 percent and 25 percent income tax brackets, and then are hit with heavy payroll taxes to boot."

Buffett proposes that Congress add two new tax brackets to add revenues. The first will apply to those earning between $1 million and $10 million, and the second for those earning over $10 million.  The first bracket would cover approximately 237,000 people and the second only about 8,000.  Those people receive the most tax advantages, and, in so doing, place a heavier burden on those who earn less than $1 million and keep a larger percentage of their money.

Amy Bingham from ABC World News wrote online, Republican presidential candidate Michele Bachmann told the Wall Street Journal 's Stephen more in June that if elected she would eliminate the capital gains tax, which Buffett said should be increased and amend the tax code so every American pays income tax.  By eliminating the capital gains tax, which is currently 15 percent, the Tax Policy Center estimates that about 23,000 millionaires would no longer have to pay income tax because their only income comes from capital gains. This move would add $11 billion to the federal deficit, according to Forbes.

Many Americans pay little attention to the ramifications of candidates' proposals until its too late.  Buffett has more knowledge about finance and investing than the majority of people sitting in Congress currently.  The notion that raising taxes would cause job loss and curtail investment doesn't wash.  Thank you, Warren Buffett.  Perhaps many voters who have been "asleep at the wheel" will educate themselves before they cast their next vote.