Warren E. Buffett, the second-richest man in the U.S., pressed his call for more taxes on the wealthy by mocking the idea that higher rates discourage investment.
Legislators should increase taxes on those earning more than $500,000, including minimum rates of at least 30% on all income above $1 million, he wrote in an opinion piece in The New York Times last Monday.
U.S. lawmakers returning from the Thanksgiving recess are seeking to avoid the so-called fiscal cliff by coming up with a budget deal with more than $600 billion in tax hikes and spending cuts to begin in January.
Republicans such as Mitt Romney, the defeated presidential candidate, and Grover Norquist, who has encouraged lawmakers to sign a pledge swearing off tax increases, have said that lower rates boost the economy.
“Let's forget about the rich and ultrarich going on strike and stuffing their ample funds under their mattresses if — gasp — capital gains rates and ordinary income rates are increased,” Mr. Buffett wrote. “Only in Grover Norquist's imagination does such a response exist.”
Mr. Buffett, worth $46.5 billion, according to Bloomberg data, is using his clout to urge Congress and President Barack Obama to include measures that raise revenue as part of a deal to resolve the fiscal cliff, which could push the economy back into
recession.
“We need to get rid of arrangements like "carried interest' that enable income from labor to be magically converted into capital gains,” Mr. Buffett, chairman of Berkshire Hathaway Inc., wrote. “And it's sickening that a Cayman Islands mail drop can be central to tax maneuvering by wealthy individuals and corporations.”
CAYMAN ISLANDS
Mr. Romney, whose tax returns show investments in funds around the world, including the Cayman Islands, Bermuda and Ireland, has said it is fair for him to pay a lower tax rate than a worker making a median annual income of about $50,000.
“It's the right way to encourage economic growth, to get people to invest, to start businesses, to put people to work,” he said during an interview with “60 Minutes” on CBS, broadcast Sept. 23.
Mr. Romney, who paid a 14.1% tax rate on income of $13.7 million last year, makes most of it from investing a fortune estimated at $250 million.
Mr. Buffett has said that his tax rate is the lowest among the about 20 employees at Berkshire Hathaway's headquarters in Omaha, Neb.
Capital gains from most assets held for longer than a year are taxed at a top rate of 15%, while wage income is taxed at a top rate of 35%. The difference between those two accounts for Mr. Buffett's lower rate.
MIDDLE CLASS
Tax considerations never led any of his clients to forgo an investment when he managed funds through partnerships from 1956 to 1969, Mr. Buffett wrote in his Op-Ed. During that period, the capital gains rate was as high as 27.5%, and the top marginal rate was at least 70%.
“Under those burdensome rates, moreover, both employment and the gross domestic product increased at a rapid clip,” he wrote. “The middle class and the rich alike gained ground.”
Berkshire Hathaway's market value as of Nov. 23 was $220 billion. Mr. Buffett is the company's largest shareholder.
