Warren Buffett wants the super-rich to pay more in taxes. In Monday's New York Times, he writes that Congress has coddled the super-rich for too long and it's time he and his uber-rich pals indulge in some "shared sacrifice." Judging by your comments on our coverage of the story yesterday, most of you agree.
If you haven't read the op-ed, Buffett says because most of his income comes from capital gains, he's paying far too little of his fair share.
"Last year my federal tax bill — the income tax I paid, as well as payroll taxes paid by me and on my behalf — was $6,938,744. That sounds like a lot of money. But what I paid was only 17.4 percent of my taxable income — and that's actually a lower percentage than was paid by any of the other 20 people in our office. Their tax burdens ranged from 33 percent to 41 percent and averaged 36 percent."
His solution: raise capital gains taxes.
Sounds well and good but James Altucher of Formula Capital says Buffett's reasons aren't as altruistic as one might imagine. Buffett has a hidden agenda that has more to do with profits than it does the collective good of the nation, Altucher explains:
"It's not that investors are less likely to buy when there are higher taxes, it's that they are less likely to SELL. Warren Buffett has $50 billion in the stock market. It's very very hard for him to sell even when he wants to. When he sells he not only moves the stock but people get afraid ("Warren Buffett is selling!!") and they start selling also, making it harder for Buffett to sell. Also, when there is bad news on a stock Buffett owns, the retail investor has a much easier time getting out of a bad position than Buffett does. In other words, the one advantage the retail investor has over Buffett is that they are more nimble. And Buffett hates that. He hates when someone has an advantage over him.
So let's penalize them. Let's raise the capital gains to 40%. Let's raise it as high as possible. "The rich should pay more taxes!" That's what Buffett is saying on the surface. But underneath, what he's really saying is: "lets penalize people for having one single advantage over me in my investing."
Plus, Altucher notes, if Buffett wants to pay more in taxes he's free to do so.
Personally, I think Altucher's reasoning is far too cynical. Do you agree?
- Warren Buffett
- Warren Buffett