The rich are protected like “spotted owls” and other “endangered species,” wrote Warren Buffett in a recent New York Times op-ed piece. And despite Republican assurances that they will not approve any tax increases, they may be inevitable.
Buffett says that his effective tax rate is far lower than anyone else’s in his office. Citing the sacrifice of the poor and middle class who fight for the U.S. in Afghanistan and who are struggling during the halting post-recession recovery, Buffett says Washington spared him and his billionaire friends when it called for “shared sacrifice” in the recent debt limit discussion.
Although his federal tax bill last year was an astounding $6,938,744, Buffet notes that his tax rate was only 17.4% of his total taxable income. He compares his tax burden to that of his employees, whose tax rates range from 33% to 41%, with an average of 36%.
Countering Republican claims that raising taxes on the rich will halt growth, he says that in his 60 years of working with investors, he has never seen anyone “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.”
Buffett recommends that Congress raise taxes on those making more than $1 million, including capital gains and dividend tax rates. He suggests an additional increase for those making $10 million or more, noting that only 8,274 people made $10 million or more a year in 2009.
Recent events may make it difficult for Congress to resist Buffett’s call for higher taxes.
When Standard and Poor’s downgraded the U.S. credit rating earlier this month, it hinted that it had previously assumed the Bush tax cuts would be allowed to expire at the end of 2012. But in its downgrade announcement, S&P said that it had changed its assumption “on this because the majority of Republicans in Congress continue to resist any measure that would raise revenues.” Presumably, this means that Republican reticence at tax increases played some part in the S&P’s assessment of U.S. fiscal health.
Sen. Harry Reid, D-Nev., the Senate majority leader, says he believes that Republican insistence on spending cuts without tax increases could be the downfall of the deficit reduction process. “If there’s continual talk by Republicans in the House and the Senate that there will be no new revenue, then there will be no bill,” Reid said on NPR. “They have to understand today, right now, the day that we passed the bill, that they will have no legislation that will come out of that joint committee unless revenues are part of the mix. It’s a fact of life.”