Warren Buffett, the third-richest man in the world, has criticised the US tax
system for allowing him to pay a lower rate than his secretary and his
cleaner.
Speaking at a $4,600-a-seat fundraiser in New York for Senator Hillary
Clinton, Mr Buffett, who is worth an estimated $52 billion (£26 billion),
said: “The 400 of us [here] pay a lower part of our income in taxes than our
receptionists do, or our cleaning ladies, for that matter. If you’re in the
luckiest 1 per cent of humanity, you owe it to the rest of humanity to think
about the other 99 per cent.”
Mr Buffett said that he was taxed at 17.7 per cent on the $46 million he made
last year, without trying to avoid paying higher taxes, while his secretary,
who earned $60,000, was taxed at 30 per cent. Mr Buffett told his audience,
which included John Mack, the chairman of Morgan Stanley, and Alan Patricof,
the founder of the US branch of Apax Partners, that US government policy had
accentuated a disparity of wealth that hurt the economy by stifling
opportunity and motivation.
The comments are among the most signficant yet in a debate raging on both
sides of the Atlantic about growing income inequality and how the
super-wealthy are taxed.
They echo those made this month by Nicholas Ferguson, one of the leading
figures in Britain’s private equity industry, when he criticised tax rates
that left its multimillionaire venture capitalists “paying less tax than a
cleaning lady”.
Last week senior members of the US Senate proposed to increase the rate of tax
that private equity and hedge fund staff pay on their share of the profits,
known as carried interest, from the 15 per cent capital gains rate to about
35 per cent.
Lloyd Blankfein, the chief executive of Goldman Sachs, acknowledged in an
interview yesterday that there were justified concerns about the huge
profits generated by private equity firms and that he worried that income
inequality was “poisoning democracy”. He also said that he would be voting
for the Democrat candidate at the next election. Mr Blankfein is the
highest-paid executive on Wall Street, earning $54 million last year.
Mr Buffett, who runs the investment group Berkshire Hathaway and is widely
regarded as the world’s most successful investor, said that he was a
Democrat because Republicans are more likely to think: “I’m making $80
million a year – God must have intended me to have a lower tax rate.”
Mr Buffett said that a Republican proposal to eliminate elements of
inheritance tax, which raises about $30 billion a year from the assets of
about 12,000 rich families, would broaden the disparity between rich and
poor. He added that the Republicans would seek to recover lost revenue by
increasing taxes for the less prosperous.
He said: “You could take that $30 billion and give $1,000 to 30 million poor
families. Or should you favour the 12,000 estates and make 30 million
families pay an extra $1,000?”
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