A lot of wealthy Americans likely grouse when President Obama calls on Congress to raise taxes on the highest-income Americans. But at least one wealthy American is sticking by the president: Warren Buffett.
Buffett, chairman and CEO of Berkshire Hathaway and the off-and-on richest man in the world, has long been a close ally of the president. In his book, The Audacity of Hope, the president points to a conversation he had with Buffett to justify his position on tax increases for the top income earners.
Last month, Buffett wrote an op-ed in The New York Times calling on Congress to raise his taxes, along with the taxes of high-income Americans. He points out that the wealthiest Americans gain much of their income through carried interest on investment, allowing individuals to pay only 15 percent of that income on taxes.
Given that the top income tax rate is 35 percent, the investment income loophole allows the wealthiest Americans to pay lower rates than middle-class taxpayers.
These and other blessings are showered upon us by legislators in Washington who feel compelled to protect us, much as if we were spotted owls or some other endangered species, Buffett wrote in the Times. It's nice to have friends in high places.
Obama has frequently used Buffett's arguments on the campaign trail, and the president even mentioned Buffett's support for higher taxes in his most recent speech to Congress pertaining to jobs, comparing Buffett's tax rate to that of the CEO's secretary.
The White House has used the Times piece as a fodder for the most recent deficit reduction plan. The president unleashed a plan Monday calling for $3 trillion in deficit reduction over the next decade. Some of that will come from new tax revenue by implementing a new minimum tax rate for those who make over $1 million annually. In fact, Obama has said he will veto a plan that does not call for shared sacrifice, a turn from a president eager to compromise with Republicans.
When White House officials wanted to name the new taxes the Buffett Rule, they sought out the CEO's permission first, notes the Wall Street Journal. Buffett agreed on the term.
The Buffett Rule has an uphill climb in Congress, given that Republicans have refused to compromise with the president on tax increases. Top Republicans, such as Senate Minority Leader Mitch McConnell (R-KY) and Rep. Paul Ryan (R-WI) have called the proposal class warfare, saying the new taxes would discourage job creators from hiring and would discourage individuals from investing their income.
But Buffett has noted that he has received mostly positive support for his recent Op-Ed, calling the comments he has received 3-1 in favor of support.
Buffett hosting an economic forum and fundraiser for the President in New York on Sept. 30, the Wall Street Journal notes. Tickets begin at $10,000.