Buffett blasts system that lets him pay less tax than secretary:
Mr Buffett said that he was taxed at 17.7 per cent on the $46 million he made last year, without trying to avoid paying higher taxes, while his secretary, who earned $60,000, was taxed at 30 per cent. Mr Buffett told his audience, which included John Mack, the chairman of Morgan Stanley, and Alan Patricof, the founder of the US branch of Apax Partners, that US government policy had accentuated a disparity of wealth that hurt the economy by stifling opportunity and motivation.
The comments are among the most [significant] yet in a debate raging on both sides of the Atlantic about growing income inequality and how the super-wealthy are taxed. They echo those made this month by Nicholas Ferguson, one of the leading figures in Britain’s private equity industry, when he criticised tax rates that left its multimillionaire venture capitalists “paying less tax than a cleaning lady”.
Last week senior members of the US Senate proposed to increase the rate of tax that private equity and hedge fund staff pay on their share of the profits, known as carried interest, from the 15 per cent capital gains rate to about 35 per cent.
Related: Estate Tax Repeal – USA Federal Debt Now $516,348 Per Household – Income Inequality in the USA – General Air Travel Taxes Subsidizing Private Plane Airports – Warren Buffett bio
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Maybe we’re looking at the wrong tax base here! While I share the notion that those who make huge fortunes owe more than those who don’t, I think we’re placing our emphasis in the wrong place.
Our primary forms of taxation should be based on what is taken from the commons, in the form of occupying choice land, mining non-renewable resources, polluting the environment, using our scarce airwaves, etc.. These are some pretty awesome tax bases, if only we’d put some attention to measuring them. Many of those who are winners in our current system don’t particularly want us to put attention to measuring their magnitude; they like the current system just fine, thank you! (Sort of a Brer Rabbit approach, one might say.)
Once we’ve fully tapped these tax bases, if we still need more revenue, then we might directly tax the incomes of those who receive the very highest incomes. But we must not neglect these taxbases. We will all benefit in the process, through sinincreased opportunities, through the removal of perverse incentives, and in increased access to the sites which can be most effectively used for the business plans that float in entrepreneuri al minds, thwarted primarily by the lack of necessary sites.
What are the private equity firms buying? Hotels. Real estate. Prime real estate. They aren’t looking to make money from being hotelkeepers. They are looking for gains from appreciation of fabulous sites, made fabulous by our common investment in infrastructure and services — and pork.
See http://www.wealthandwant.com/ for more context.
“We did an informal office survey by looking at the total tax footprint versus the total income. I earned 46 million and paid a tax rate of 17.5%. My rate was the lowest, the average was 33%…”