WASHINGTON – Billionaire Warren Buffett said raising taxes on the wealthy won’t stop them from investing and called on policymakers to boost rates for income over about $500,000.
Buffett has been a staunch ally of President Barack Obama on boosting taxes on high-income earners. But the Oracle of Omaha did not back Obama’s push to raise taxes on income above $250,000, saying he preferred a “somewhat” higher cutoff point.
Still, Buffett derided suggestions that increasing tax rates, including those on capital gains, would keep people from pursuing potentially lucrative investment opportunities and “stuffing their ample funds under their mattresses.”
“Suppose that an investor you admire and trust comes to you with an investment idea,” Buffett wrote in an opinion article Monday in The New York Times. “‘This is a good one,’ he says enthusiastically. ‘I’m in it, and I think you should be, too.’”
“Would your reply possibly be this? ‘Well, it all depends on what my tax rate will be on the gain you’re saying we’re going to make,’” Buffett continued. “‘If the taxes are too high, I would rather leave the money in my savings account, earning a quarter of 1 percent.’”
Buffet said such a response exists only in the imagination of Grover Norquist, president of the fiscally conservative Americans for Tax Reform, whose group asks lawmakers to sign a pledge never to increase taxes in exchange for its support.
Buffett has been an outspoken advocate of raising taxes on the wealthy.
His complaint that his secretary pays a higher effective tax rate than he does led Obama to propose the “Buffett Rule,” which would require people making more than $1 million a year to pay at least the same tax rate as middle-income earners.
Buffett reiterated that call Monday.
He said Congress should enact a minimum tax on high incomes – 30 percent for taxable income from $1 million to $10 million and 35 percent for anything above that level.
But he’s not backing Obama’s call to allow the George W. Bush-era tax cuts to expire at year’s end for household income over $250,000 a year.
“I support President Obama’s proposal to eliminate the Bush tax cuts for high-income taxpayers,” Buffett wrote. “However, I prefer a cutoff point somewhat above $250,000 – maybe $500,000 or so.”
Obama also wants to increase the tax rate on capital gains to 20 percent from 15 percent. Buffett noted that he and other investors did fine when that rate was as high as 27.5 percent in the 1950s and 1960s. “Never did anyone mention taxes as a reason to forgo an investment opportunity that I offered,” Buffett said.
Democrats and Republicans are fighting over tax increases as part of the effort to stop the looming “fiscal cliff” – the expiration of the Bush tax cuts, which combined with automatic spending cuts to reduce the deficit would likely push the fragile economy back into recession next year.