Warren Buffett calls for fair—that is, higher—taxes on the super-rich

The battle in Congress over America’s budget problem is both practical and ideological. People on the left argue that the budget can never be brought under control without a blend of tax hikes on the rich and spending cuts. On the right tea-party-fueled passions oppose any tax increase on the grounds that the rich are already paying more than their fair share and, moreover, that raising their taxes will stifle job creation.

Into this battle rides Warren Buffett, the world’s third richest person with assets of $50 billion. In an op-ed in today’s New York Times, headlined “Stop Coddling the Super-Rich,” Buffett demolishes both arguments against higher taxes for the super-rich.

First he explains how under-taxed the wealthy are: his tax rate of 17.4 % of taxable income is the lowest of the twenty people in his office, including his secretary. And that’s not uncommon for the super-rich. His summary:

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.

And as far as the argument that higher taxes will slow down investment by the super-rich in new jobs, America’s most successful investor puts it this way:

People invest to make money, and potential taxes have never scared them off. And to those who argue that higher rates hurt job creation, I would note that a net of nearly 40 million jobs were added between 1980 and 2000. You know what’s happened since then: lower tax rates and far lower job creation.

Buffett calls for immediate income tax increases on taxable income above $1 million, including dividends and capital gains; and at the same time reducing the payroll tax paid by working people. If the Congressional super-committee charged with laying out a path to deficit reduction is guided by what’s ethical and what’s best for the economy, rather than by ideology and by greedy zillionaires, they’ll heed the wisdom of the Sage of Omaha.

Thanks to Sue Willett for calling Buffett’s article to my attention.

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