Buffett tells congress to raise taxes. Lends indirect support to President Obama

Business

oi-Shoaib MD

By Shoaib Md

Published: Tuesday, August 16, 2011, 10:39 [IST]

In the investment and business world, the world listens when Warren Buffett, the world's richest investor, speaks but this time he has written an op-ed in the New York Times making a case for increasing taxes on the rich. The question now would be how will the Republican's react, who oppose any raise in taxes?

Buffett as usual has written many witty lines in his piece.

He starts that though the leaders of United States have said many times to share the sacrifices, but neither the Oracle of Omaha nor his friends had to make any sacrifice so far.

Taking a shot at the privileges that the rich get from the lawmakers, Buffett remarked, "It"s nice to have friends in high places." He even said that Washington lawmakers treat the rich as if they were spotted owls or some other endangered species.

Buffett says, 'while the poor and the 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. Some of us are investment managers who earn billions from our daily labors but are allowed to classify our income as “carried interest," thereby getting a bargain 15 percent tax rate.'

Buffett in his single article took apart the myth that high taxes deter the investors from making sane investments. He wrote, "I have worked with investors for 60 years and 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."

He actually shared his federal tax bill, which was $6,938,744. Though it sounds a lot but according to the Oracle it was only 17.4% of his taxable income. The oracle said that at his office of 20 people, their tax burdens ranged from 33% to 41% and it averaged at 36%.

The nail in the coffin for the lawmakers was when Buffet mentioned that if you are as rich as Buffett and his friends, then tax percentage could be lower than his also but had a person been earning money from a job, the percentage of tax to his income will surely exceed Buffett's.

Some lawmakers will fine new lease of trouble and would lose out their sleep on his "According to a theory I sometimes hear, I should have thrown a fit and refused to invest because of the elevated tax rates on capital gains and dividends."

His opinion will surely open a new level of debate among the economists and the data crunchers, "And to those who argue that higher rates hurt job creation, I would note that a net of nearly 40 million jobs were added between 1980 and 2000. You know what"s happened since then: lower tax rates and far lower job creation."

The opinion of the legendary Warren Buffett will definitely give the democrats if they use it judiciously. But it goes without saying that the consequences of his opinion will definitely affect policies in the coming decade.

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