People have generally thought that people with combined average income of $270 million were probably paying a rate that was equal, according to Warren Buffett, Berkshire Hathaway chairman/CEO. The code has shifted into the favor of the extremely wealthy, he says.
Warren Buffett on Corporate Tax Myth
let’s get back to warren buffett and becky in omaha this morning. i’ve got a question. if you’d indulge me, warren, i’ve been doing a little research while you’ve been talking, not just the tax rate, which you’ve talked about the higher tax rate in ’50s and ’60s being 62% but effective tax rate on the 0.1%, and there’s a study, i’ll send it to you, says the effective tax rate on the 0.1% back then was actually 71.4% in the 1960s and 74.6% in the 1970s. my question is, would those rates fly today? what would the impact on the economy be? i ask that in the context that in the ’50s and ’60s, a number of people e-mailing already, paying in the 30s or something like that, until you look up the figures. if you go back to 1992, almost all of them were. it’s just that the code has gotten to favor more and more the extremely wealthy. and that’s why the wealthy have seen — they’ve seen their net worth, the net worth of the forbes 400 since 1992 has gone from $300 billion to $1.5 trillion. you know, we have a system that has drifted toward favoring the ultrarich. you know we — but i don’t think we ought to go back to — i keep getting this question. you own roughly a third of berkshire hathaway. why don’t you consider that the $2 billion that you pay — that berkshire pays a certain tax bill. you own a third. so, basically that income that berkshire gets, the $2 billion, why don’t you consider that as something — that would skew your tax rate a little higher. you include it in your net worth. why don’t you include that $2 billion — your pro rata share of berkshire’s tax bill, since you don’t pay ordinary income, or minimal, why don’t you consider that as part of your tax bill? i’m going to give away every share, every single share of berkshire i have. so, that really belongs to philanthropies. you can argue they — or pay $2 billion. i’ve heard the double taxation argument a lot. actually, i have governor romney’s tax returns here as well as my own tax returns. it’s interesting. here, for example, in 2004 i had d $46 million of capital gains. you can put up the last page of that return. you’ll see on that return that millions and millions of dollars of capital gains. a few thousand of that was doubly taxed. a made a lot of that — millions and millions of dollars from profits in treasury inflation-protected bonds. no double taxation there. there’s no double taxation there. here the same figures for 2006, when i had $40 million of capital gains. here’s the last page of my schedule d there. every single one of those stocks in which i was making millions of dollars was a korean stock. they didn’t pay a dime of united states federal income tax. if you look at governor romney’s return, you see he made substantial capital gains from conditions where the companies themselves went public but in some cases they pay no federal income tax and other cases it paid minor federal income taxes. it is true there is some double taxation. there’s an enormous amount of double taxation with my secretary. if they gets salary of x — you’ll use anybody that gets a salary of $100,000. they are paying 13.3% this year, 15.3% in 2010. they’re paying 13.3% in payroll taxes and that same income gets doubly taxed and gets taxed for income tax purposes. they get no deduction for social security taxes in computing their federal income tax. we have double taxation for tens and tens and tens and tens of millions of people who are making very small amounts of money. warren, let me ask you this, though. by continuing to push this, we did get a lot of questions, presumably from shareholders. one that came in was from david saying, having political positions are part of public life but for the life of me i cannot understand why the ceo of a publicly traded company would antagonize half of the political power in this country. don’t have you a d. no, i don’t think if you’re a ceo that you put your beliefs in a blind trust. i don’t think you give up your citizensh citizenship. we have 270,000 people that work for berkshire. not one i’ve asked about their political views or not one i’ve told in any way to refrain from expressing their beliefs, whether religious beliefs or political beliefs. and i think that my cleaning lady, mary, does not have a voice. she doesn’t have a super pac. she can’t spend $10 million influencing free speech. free speech for her is something in the first amendment. it doesn’t mean a thing. i have a ability to speak out. if you have an ability to speak out and you see things you think are wrong, you ought to talk about them. let me ask you how this has gotten played in the political debate. another question from larry in cleveland, ohio, control room number 40. he says, it seems like the president has expanded the tax increase proposal you had, yet still attaching your name to it. i thought the proposal you made was much more narrow than what the president is has talked about when he talks about the buffett tax proposal. can you explain the idea you originally how and how it’s more narrow in scope than what the president’s talking about? we had a lot of people who said the 250,000 rate versus — i never said 250. the wall street journal sort of implied i said 250 in an editorial so i can see how people may have gotten that idea. i have said above a million and i said a minimum tax. there are plenty of people that make over $1 million, over $5 million, over $10 million that pay normal tax rate and would have no effect on them at all. it’s only people paying low tax rates, like me. some of my friends and some of the 131, that were paying less than 15%, those are the ones i’m talking about. i would have a minimum tax above $1 million and perhaps a different level above $10 million. now, senator whitehouse of rhode island has introduced a bill that is largely along that line. but it is — it does not apply to people at $250,000, does not apply to everybody that makes $100 million. what’s your understanding of the president’s understanding of — there’s not been a specific bill, as i understand it. senator whitehouse has a specific bill. his bill phases it in at a 30% minimum tax, counting payroll taxes, starting at $1 million. it phases in so if you make to people at $250,000, does not apply to everybody that makes $100 million. what’s your understanding of the president’s understanding of — there’s not been a specific bill, as i understand it. senator whitehouse has a specific bill. his bill phases it in at a 30% minimum tax, counting payroll taxes, starting at $1 million. it phases in so if you make $1,000,001 it’s no different than if you made $999,000. we get something like number 9, control room, tongue in cheek, but is there a tax you don’t like? this was a twitter that came — a tweet that came through. when did this start? and you’re aware there’s another side of the balance sheet? what do you say to people like that? i don’t like any tax. i have my tax return from when i was 13 and i paid $7. i can tell you i did not like paying $7 at that time. but the reality is that we are going to have to raise 18.5% or 19% of gdp and revenues. i certainly think people who are very wealthy should do more than people like my cleaning lady. i’m not going to like it, you know, when i sit down and write the check for whatever it may be. i’m not going to like it. but i also like this country. and i think that what this country offers is wonderful and i think a very rich country should take care of the people that get the short straws in life. i believe in things like social security, which is paid for by taxes. i believe in a good public school system, which is paid for by taxes. even people with no children i think should be paying, particularly if they’re well to do, i think they should be