Warren Buffet’s Social Justice: Stop Coddling the Rich

Billionaire Warren Buffet’s tax rate is below average. As Israeli tycoons hold on to their money, Buffet says, “Stop coddling the rich.” <br/>

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Tzvi Ben Gedalyahu,

Warren Buffett
Warren Buffett
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Billionaire Warren Buffet’s reveals his tax rate is lower than the average Joe. While Israeli tycoons hold on their riches, Buffet tells President Barack Obama through a New York Times op-ed, “Stop coddling the rich.”

“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,” wrote Buffet, whose Berkshire Hathaway investment company has made the “Oracle from Nebraska” the world’s richest man.

His remarks would be exactly what Israeli “social justice” protesters want to hear from the oligarchy of Israeli tycoons have murmured understanding for the month-long demonstrations but who also have said they need every shekel they can make in order to justify investments.

Buffet sees it differently.

“Our leaders have asked for ‘shared sacrifice,’ he wrote. “But when they did the asking, they spared me. I checked with my mega-rich friends to learn what pain they were expecting. They, too, were left untouched.”

Buffet revealed that his tax bill of nearly $7,000,000 last year actually was paltry when considering that it represented only 17.4 percent of his taxable income while the tax burdens for his office staff ranged from 33 to 41 percent.

“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,” he added.  

Buffet explained, “The mega-rich pay income taxes at a rate of 15 percent on most of their earnings but pay practically nothing in payroll taxes. It’s a different story for the middle class: typically, they fall into the 15 percent and 25 percent income tax brackets, and then are hit with heavy payroll taxes to boot.”

He said that tax rates for the rich were higher in the 1980s and 1990s than in the following years.

The chairman of Berkshire Hathaway also pooh-poohed the theory that high taxes drive away investors. “I have yet to see anyone –  not even when capital gains rates were 39.9 percent in 1976-77 –  shy away from a sensible investment because of the tax rate on the potential gain,” according to Buffet. “People invest to make money, and potential taxes have never scared them off."

The Israeli experience of capital gains taxes on stock profits proves his point. When the taxes were introduced under during the period that Binyamin Netanyahu was Finance Minister, there as an uproar that it would doom the local market, but the opposite was true. The Tel Aviv Stock Exchange has flourished, attracting hundreds of millions of dollars in foreign investments as well as local money.

The tax structure in Israel also did not scare Buffet away from his $4 billion purchase of the Iscar metal working factory in the Galilee five years ago.

Buffet called on Congressmen, 12 of whom have been appointed to repair America’s badly damaged financial structure, to do more than just reduce the federal deficit.

“It’s vital…that they achieve far more than that. Americans are rapidly losing faith in the ability of Congress to deal with our country’s fiscal problems. Only action that is immediate, real and very substantial will prevent that doubt from morphing into hopelessness,” he wrote.

“I would leave rates for 99.7 percent of taxpayers unchanged and continue the current 2-percentage-point reduction in the employee contribution to the payroll tax,” he wrote, explaining that “this cut helps the poor and the middle class, who need every break they can get."

But for those making more than $1 million — there were 236,883 such households in 2009 — I would raise rates immediately on taxable income in excess of $1 million… 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.”