Warren Buffett supports an estate tax for big wealth transfers and a minimum tax for people like himself.

The 86-year-old value investor and CEO of Berkshire Hathaway, in an interview this week with PBS Newshour, discussed the U.S. tax system and suggested he’d be happy to pay more tax.

Buffett showed the interviewer, Judy Woodruff, parts of his tax return for 2016, and calculated that if the Republicans repeal Obamacare, he’d receive a windfall in less tax owed. That’s because repealing Obamacare would remove its surcharges for higher income earners.

If the law were repealed and applied to his 2016 taxes, Buffett said, he would save US$679,999 or 17% on his taxes owed last year.

“There’s nothing ambiguous about that. I will be given a 17% tax cut,” he told PBS. “I have got friends where it would have saved them as much as […] US$10 million and up.”

Read: Behind-the-scenes look at Buffett’s AGM

Woodruff pointed out that Buffett earned US$19.5 million last year and had an effective tax rate of 16.3%, the same rate for an average married couple with no children earning US$136,000.

Tax reforms, Buffett said, “ought to be something other than revenue-neutral to the guys like me. Our rates should go up, allowing others to go down somewhat.” He added: “I think there ought to be minimum taxes for people that make $10 million a year, and a different one at a million a year, but certainly at $10 million a year.”

He also supports an estate tax on large estates, he said, one that “starts at a fair-sized level” so that it does not apply to “99%” of Americans.

For those who complain about lower-income people benefiting from food stamps, he countered: “If a kid comes out of the right womb in this country, they have got food stamps for the rest of their life. They just call them stocks and bonds. And their welfare officer is their trust officer.”

Buffett said his US$75-billion net worth has no utility, adding that he would be happy earning US$100,000 per year. His Berkshire stock certificates can’t “buy anything for me that I want. If they did, I would buy it,” he said.

Read: The why behind Buffett’s latest moves

But, since his wealth has utility for others, he said he’s trying to translate it into vaccines, education and other philanthropic causes. Of his net worth, 99% is in Berkshire Hathaway stock, and “every share of that stock has been pledged to philanthropy,” he said.

If Buffett’s enormous wealth doesn’t make him happy, what does? Doing something he loves, he told PBS, and surrounding himself with good people.

Another reveal from PBS’ Buffett interview? The famous investor filed his first tax return when he was 14 because his income from a paper route exceeded an IRS income threshold requiring minors to file.

The tax year was 1944, during which Buffett earned US$592.50 and paid income tax of US$7. Using an inflation calculator, that comes to an income of US$8,221.18 in today’s dollars and taxes of US$97.13.

Those were the days.

Also read: 

Berkshire Hathaway to buy nearly 20% stake in Home Capital

Originally published on Advisor.ca
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Colin Campbell

Buffet is probably right for the 1% in that upper income bracket, but what he did not talk about is the fact that technology in many of the companies he owns is eliminating workers and replacing them with machines and taxing those machines doesn’t happen with income tax. The only solution is to tax consumption and to eliminate income tax. Also as Buffet says 99% of his wealth is going to foundations that don’t pay tax, which is great philanthropy will make the world a better place but it also means that government is going to look to the wage earner for the income they don’t get from that 1%.

Friday, Jun 30, 2017 at 9:10 am Reply