Warren Buffett, in a New York Times op-ed, suggested that the U.S. government raise taxes on the super-rich investor class.
The investor class, which describes a good percentage of the ultra-wealthy Americans, actually gets taxed at a lower rate than many working class Americans.
It's true that for income taxes, wealthy wage-earners are taxed at a significantly higher rate compared to poorer wage-earners. However, many in the investor class, Buffett included, don't make their money from wages.
Instead, they make the lion's share of their money from capital.
In 2008, for example, 88 of the top 400 income earners in the U.S. reported no wages at all, said Buffett. All of them, however, reported income from interest, dividends, and capital gains.
The (long-term) capital gains tax rate is only 15 percent. As such, Buffett's tax rate as a percentage of income was just 17.4 percent in 2010. Many of his billionaire friends in the top 400 undoubtedly received rates that were similarly favorable.
Meanwhile, upper-middle class workers earning over $300,000 per year will see tax rates closer to 33 percent.
The counter-argument against raising taxes on capital is that it stymies investment and therefore hurts the economy. Buffett, arguably the most successful investor in the world, flatly rejects that claim.
"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 said.
Moreover, a net of nearly 40 million jobs were added between 1980 and 2000, an era during which capital gains taxes were higher, which squashes the argument that high taxes on capital kills jobs.
"My friends and I have been coddled long enough by a billionaire-friendly Congress. It's time for our government to get serious about shared sacrifice," said Buffett.