The days of “coddling” the US’ super-rich with low taxes must end if its debt problems are ever to be solved, according to billionaire investor Warren Buffett.
Buffett has called on US politicians to impose higher taxes on his fellow wealthy Americans, who he says are currently indulged with an unfairly generous tax regime.
Writing in the New York Times on Monday, Buffett argued that the richest members of US society are not making a fair contribution to repairing the country’s finances.
“While the poor and middle class fight for us in Afghanistan, and while most Americans struggle to make ends meet, we mega-rich continue to get our extraordinary tax breaks,” wrote Buffett, whose personal fortune was estimated at US$50 billion by Forbes this year.
“These and other blessings are showered upon us by legislators in Washington who feel compelled to protect us, much as if we were spotted owls or some other endangered species. It’s nice to have friends in high places,” the 80-year-old investor added.
Buffett, a long-time critic of the US tax system, has calculated that he handed over 17.4 percent of his income as tax last year — a lower proportion than any of the 20 other people who work in his office.
Under the debt ceiling deal agreed in Washington, a “super committee” of 12 congressmen and senators must find US$1.5 trillion worth of savings and cuts to help cut the US’ national debt.
Tax rises are hugely unpopular with elements within the Republican party, with the Tea Party adamant that the US should balance its books by cutting public spending.
Buffett argues that this super-committee should raise the tax rate paid by those earning more than US$1 million a year, including earnings from capital gains which are currently taxed at a lower rate than ordinary income. Those raking in upward of US$10 million a year could then pay even more.
The package of tax cuts brought in by former US president George W. Bush are set to expire at the end of next year, although they could be extended.
Many of the leading Republicans who hope to challenge US President Barack Obama at the next presidential election have argued for lower taxation to stimulate the US economy.
On Saturday Rick Perry, Texas Governor, argued that it was an “injustice” that almost a half of all Americans currently pay no federal income tax.
“Spreading the wealth punishes success while setting America on a course for greater dependency on government,” Perry argued as he announced his bid for next year’s Republican nomination.
It was not clear whether Perry hopes to increase the percentage of US citizens paying federal income tax by bringing more of them into better-paid jobs, or by lowering the income tax threshold. Either way, Buffett argues that the US political class should be looking at the other end of the spectrum.
As he put it: “My friends and I have been coddled long enough by a billionaire-friendly Congress. It’s time for our government to get serious about shared sacrifice.”
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