Taxing Warren Buffett
Investors might hang on Warren Buffett’s every word when it comes to financial advice, but Republicans are less than enthusiastic about the Oracle of Omaha’s opinions on taxation. After the billionaire chairman of investment firm Berkshire Hathaway wrote an op-ed in the New York Times complaining that the mega-rich are undertaxed in comparison to the middle class, conservatives urged him to voluntarily send more of his own money to the Internal Revenue Service and leave others alone. Not only are they willfully missing Buffett’s point, they’re seemingly oblivious to the fact that in many ways his tax ideas mirror those of Ronald Reagan.
Hard to believe as it may seem, it has been a quarter of a century since the last comprehensive overhaul of the U.S. tax code. Under the Tax Reform Act of 1986, which was signed by President Reagan, the number of tax brackets was reduced, loopholes were closed, the top tax rate was lowered and capital gains were taxed at the same rate as ordinary income. Yet in the years since, Congress has steadily drilled loopholes back into the code while lowering the tax burden for wealthy people who make money through investments rather than labor. That was the source of Buffett’s complaint.
“The mega-rich pay income taxes at a rate of 15 percent on most of their earnings but pay practically nothing in payroll taxes,” Buffett wrote. “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.”
The response from Republicans, who are working tirelessly to block all attempts to level the playing field by raising taxes on the wealthy? Playground jeers. “For tax-raising advocates like Warren Buffett, I am sure Treasury would take a voluntary payment for deficit reduction,” Sen. John Cornyn (R-Texas) said in a tweet. In California, where the powerless (except at budget time) Republican minority in the Legislature appears to have too much time on its hands, a GOP lawmaker is teasing liberals by introducing a bill to add a line item on state tax forms allowing people to voluntarily pay extra taxes. “Under my legislation, folks like Warren Buffett can easily find a way to pay the additional taxes that they believe they should owe,” said state Sen. Doug LaMalfa of Richvale, the bill’s author, in a release Monday.
Practically no one would pay voluntary taxes, not only because people resent paying more than their fair share but because, unlike charities, government spends money on many things that individual donors would prefer it didn’t. Of course, Buffett’s conservative critics know this; like most bullies confronted with a powerful argument, they’d rather mock it than try to refute it.
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