Buffett Proposes Minimum Tax on High Incomes
Warren Buffett, regarded by many as the greatest investor of all time, made waves earlier this week when he penned an op-ed for the New York Times titled "A Minimum Tax for the Wealthy".
Buffett started the piece by stating that an investor would never turn down a great investment opportunity because of the taxes that they may incur if they happened to make money on the investment. During times of much higher capital gains and dividend taxes, Buffett states, "never did anyone mention taxes as a reason to forego an investment opportunity that I offered."
After pointing out that incomes and net worths for the nation's wealthiest have both increased substantially in recent years (the net worths of those on the Forbes 400 have increased from $300 billion in 1992 to $1.7 trillion currently), Buffett proposed two changes:
1) Expiration of Bush tax cuts for those making $500,000 or more per year (higher than the $250,000 cutoff that has been floated by President Obama)
2) Implementation of a "minimum tax" for people with high incomes.
-minimum tax of 30% of taxable income between $1 million to $10 million
-minimum tax of 35% on amounts above that
Buffett says that this minimum tax needs to be enacted by Congress "right now".
According to Buffett, the US government should have a goal of spending 21% of GDP and bringing in revenues of 18.5% of GDP. While this would not fully eliminate deficits, Buffett argues that this would make the servicing of the nation's debt load manageable (for comparison's sake, the US government spent 22.4% of GDP last year and took in just 15.5%).
In short, Warren Buffett argued that:
1) the wealthy need to pay more taxes in order to help the nation get its books in order
2) higher tax rates (capital gains, dividend) won't prevent somebody from entering into a potentially profitable investment
As you can probably imagine, reaction to Buffett's proposals has been mixed.
Source: NYTimes.com - A Minimum Tax for the Wealthy
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Filed under: General Knowledge
4 COMMENTS - What Say You?
Comment by P.T. Goodman on November 29, 2012 @ 3:42 pm
What do I know about these things? Regardless, I do have some general impressions. The wealthy should certainly pay more in taxes now. At some point--if the economy ever takes off--almost all of us should be paying more in taxes. There is no other way to meet the obligations that we have towards one another in a civil society. Buffett's proposals seem reasonable, but also seem to add another layer of tax code and complexity. Keep it simple. I'd favor an increase in statutory income and capital gains tax rates now, along with the elimination of some (unspecified) tax deductions or credits. I think that Buffett believes that the changes in tax rates he proposes would be more difficult to undercut and that special interests would chip away at the overall marginal tax rates as well as deductions and credits that I suggest. Is Buffett correct?
Comment by good on December 03, 2012 @ 5:22 am
be more difficult to undercut and that special interests would chip away at the overall marginal tax rates as well as deductions and credits that I suggest. Is Buffett correct?
Comment by Martha Stevenson on December 05, 2012 @ 3:28 pm
My business pays in 25% and it is less than $150.000 per year. Buffet knows what he's talking about. I hope the president listen's to him and that he doesn't give in to the congress and their lobbist protection ideas.
Comment by David Partin on January 09, 2013 @ 1:57 pm
I am sure your business pays plenty of taxes; however, I have to comment on your 25% statement. You need to remember that your 25% is a marginal rate(highest rate of the highest dollar earned). You are not paying 25% effective rate on 150k per year. Maybe if you count State, FICA, and Federal. Kind Regards
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