Warren Buffett thinks it's a problem that some of the wealthiest Americans pay lower tax rates than their housekeepers.
The billionaire investor said taxes on the wealthiest Americans are far too low, given that some of the 400 largest earners in the United States, whose average income was about $200 million a year, pay a tax rate of less than 10 percent.
“That’s still a lot less than my cleaning lady,” Buffett said in an interview with Politico editor-in-chief John Harris. “So it hasn’t been fully corrected,” he added, referring to the fact that he has been complaining about this issue for years.
Buffett said his own tax rate was “certainly not too high.” He has frequently pointed out that his tax rate is lower than that of his secretary. Debbie Bosanek, his secretary since 1993, has been a symbol for tax inequality since Buffett began touting the disparity in their tax rates as far back as 2007. During a 2012 interview with ABC News, Bosanek said she paid a tax rate of 35.8 percent, while Buffett paid 17.4 percent.
The 84-year-old “Oracle of Omaha” -- a nickname the Nebraska native earned for his track record of lucratively accurate investment predictions -- has long advocated for a minimum tax on top earners. In 2011, he wrote an op-ed in the New York Times calling on Congress to raise taxes on households earning more than $1 million a year. President Obama embraced the idea, calling it "The Buffett Rule."
Specifically, Buffett urged the federal government to charge higher tax rates on income earned from some stock dividends and capital gains. Currently, such income is taxed at rates far lower than ordinary income. This helps widen income inequality and is an example of one way that wealth gained from assets such as stocks and property grows much faster than wages or the actual economy, as French economist Thomas Piketty argued in his bestseller Capital in the Twenty-First Century.
Still, Buffett said that it may be more feasible to fix the corporate tax code before addressing personal taxes.
Last month, the Obama administration issued new regulations cracking down on tax inversions, deals in which American corporations buy smaller foreign companies, then relocate overseas to avoid U.S. corporate taxes. The U.S. corporate tax rate, which caps off at about 35 percent but contains numerous loopholes to lessen it, is among the highest in the developed world.
“It’s good to have time out while we work out a logical corporate tax code,” Buffett told Politico. “I think it’s easier to do that than a personal tax code.”
Buffett was criticized in August for financing Burger King’s purchase of the Canadian coffee-and-doughnut chain Tim Hortons because the deal would involve moving the burger giant's headquarters to Canada. Buffett argued the deal had more to do with Tim Hortons sales than with taxes.
Update: This post has been updated to clarify that not all stock dividends are taxed at lower rates than normal income, though "qualified" stock dividends are.
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