I previously posted an article on how those with political power (the rich) use their influence to write the tax laws in their favor. Warren Buffett says the same thing to Hillary Clinton here. He says that, on an income of $46m a year ($100,000 salary as CEO of Berkshire Hathaway, plus income he makes as a board member for several corporations, plus income from whatever other investments he has), he pays a federal 17.7% tax rate. He claims his subordinates typically pay around 32.9%. The top tax bracket is 35% for income above about $200,000, but there are numerous deductions available, and long-term capital gains and qualified dividends are taxed at 15%.
Many Republicans wish to simplify the tax code, and that would certainly do the nation a lot of good. However, they also complain about how the tax system is unfair (read: somehow unfair to the rich), and that taxes should be lowered. Mitt Romney has the gall to say: "I want to get rid of all capital gains taxes for middle-income taxpayers. I also think it's fundamentally unfair that you get taxed when you've earned it, taxed when you save it, and taxed when you've died. So I'd get rid of the death [estate] tax, too, for middle-income Americans."
The problem is, the estate tax only applies to estates over $2m through 2008; the exempt amount should go down to $1.5m in 2009 barring tax law changes. Romney is not stupid, so the only other explanation is that he is blatantly lying. The estate tax rate is 45%, which sounds like a lot, but various deductions are available, people typically make gifts during their lifetime that reduce the size of their estate, and there is an exemption of $2m. People pay effective tax rates far less than 45%.
By David Ellis, CNNMoney.com staff writer
June 27 2007: 12:22 AM EDT
NEW YORK (CNNMoney.com) -- Presidential hopeful Hillary Rodham Clinton was all ears at a fundraiser Tuesday evening when famed billionaire investor Warren Buffett suggested ramping up the tax code on big businesses and the super rich.
The Berkshire Hathaway (Charts, Fortune 500) chairman touched on a variety of issues in a question and answer session with Clinton, including his disdain for private equity firm power brokers.
"The people that earn their living doing that should be subject to taxes that reflect their labors," he said in the gathering at a hotel in midtown Manhattan.
Recently private equity firms have become targets of Congress, who claim that fund managers benefit from unfair tax advantages. One Senate committee has proposed raising taxes on publicly traded private equity firms such asBlackstone Group (Charts).
Speaking to several hundred supporters of the U.S. Senator from New York, Buffett revealed his puzzlement that he was taxed at a lower rate than many of the lesser-paid individuals working for his company.
Buffett said he makes $46 million a year in income and is only taxed at a 17.7 percent rate on his federal income taxes. By contrast, those who work for him, and make considerably less, pay on average about 32.9 percent in taxes - with the highest rate being 39.7 percent.
To emphasize his point, Buffett offered $1 million to the audience member who could show that one of the nation's wealthiest individuals pays a higher tax rate than one of their subordinates.
"I'm willing to bet anyone in this room $1 million that those rates are less than the secretary has to pay," said Buffett.
The Berkshire Hathaway chairman remained relatively positive about the U.S. economy overall, and remained doubtful that the recent woes in the subprime mortgage market would spread to the rest of the housing sector and the larger economy.
"Overall if the unemployment rate doesn't increase and interest rates don't increase then I don't think it will have an effect on the rest of the economy," he said.
Buffett, however, did not explicitly back Clinton in her bid for the White House during Tuesday night's event - although he has made a number of contributions to her different political campaigns, according to the Federal Election Commission
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