Warren Buffett is undertaxed. We know this because he told us so at a million dollar Hillary Clinton fund raiser on June 26, 2007. He stated he paid only 17.7% in taxes on income of $46 million, a lower tax rate than any of his staff.
He revealed his secretary, earning $60,000, paid a 30% tax rate, and the average tax rate for his staff was 32.9%.
Several observations are immediately apparent. First, his secretary is grossly underpaid. The secretary, or executive secretary, or administrative assistant, to a multi-billionaire is certainly worth much more than $60,000.
Second, he never tells us the source of his taxable income, but it apparently is not from wages and salaries. Therefore, his income is derived from capital gains, dividends, and interest on prior investments. Dividends and capital gains are taxed at a 15% rate to encourage capital investment - the key to economic growth in America.
He should also release his tax returns for the edification of the American public.
We can safely assume that much of the tax burden on his employees is from the highly regressive social security (FICA) and Medicare taxes (FICA-HI) since the marginal tax rates of his obviously undercompensated employees are only 10% or 15%. The proper corrective action would be to lower his staff’s taxes or pay them more, but he never advocates for lower taxes for the rest of us. Unfortunately, the future prospect is that these taxes will increase as the base level for social security taxes automatically rises yearly. His Democratic friends are always happy to raise these regressive taxes, as well as the equally regressive sales, tobacco and alcohol taxes. Such compassion for the underprivileged!
Warren Buffet also opposes any lowering of inheritance taxes. The rank hypocrisy of this multi-billionaire is monumental. His estate planning will result in minimal, if any, inheritance taxes from one who professes to be undertaxed. He has almost eliminated any prospect of his estate paying inheritance taxes by donating $30 billion to the William and Melinda Gates Foundation. He has also made it clear that his children should expect nothing from him when he dies. What a loving father!
He earlier complained that the property taxes on his Laguna Beach house were also too low because of California’s Proposition 13. Maybe he should move to California and enjoy our 10.3% marginal tax rate on millionaires, including dividends and capital gains. He should immigrate to California to offset the flow out of California expatriates upset by California’s already high taxes and poor business environment.
If Warren Buffet sincerely bellies he is undertaxed, a simple solution exists. Talk is cheap. He can always put his money where his mouth is by voluntarily writing out a larger check to the IRS, thereby paying more. The solution to his being undertaxed is not to raise the taxes on the rest of us.