Buffett On Why Romney Should Pay Higher Taxes: He’s Just ‘Shoving Around Money,’ Not ‘Straining His Back’

By Pat Garofalo/Think Progress

Last week, Mitt Romney finally admitted that he pays a tax rate of 15 percent, lower than that of many middle-class families. Romney is taxed at such a low rate because, as he freely admits, all of his income comes from investments, and is thus subject to the top capital gains tax rate of 15 percent, rather than the top income tax rate of 35 percent.

However, Romney has refused to sign on to the Obama administration’s “Buffett rule,” which aims to ensure that millionaires can’t dodge taxes to the extent that they’re paying less than teachers. Today, billionaire investor Warren Buffett himself was asked about Romney’s tax rate, replying that letting millionaire investors like Romney pay such low taxes is “the wrong policy” because he makes his income by just “shoving around money”:

He makes his money the same way I make my money. He makes money by moving around big bucks, not by straining his back and going to work cleaning the toilets or whatever it may be. He makes it shoving around money. I make it shoving around money. If you look at the 400 highest incomes in the United States, they average $220 million. Something like 90 of them are effectively unemployed. They have no earned income, and that number has gone up over the years. [...]

It’s the wrong policy to have. Nothing wrong about [Romney] doing that. He will not pay more than the law requires. I don’t fault him for that in the least, but I do fault the law that allows him and me, earning enormous sums to pay over all federal taxes at a rate that is about half what the average person in my office pays.

Watch it:

Not only does Romney make all of his money from investments, but his company Bain Capital (with which Romney still has a lucrative retirement deal) uses tax havens to boost its profits.

ANALYSIS: Warren Buffett Would Pay As Little As 0.2 Percent Tax Rate Under Rick Perry’s Tax Plan

 Seth Hanlon/think progress

Republican presidential candidate Rick Perry released a tax plan this week that he and many media reports called a “20 percent flat tax.” But Perry’s new alternative tax scheme is hardly “flat.”

Leaving aside the fact that it is layered on top of the existing tax code, it establishes not one but two different tax rates: 20 percent for wages, and zero percent for investment income. Because capital gains and dividends would be sheltered from taxes under Perry’s plan, some of the wealthiest Americans would wind up paying nowhere near 20 percent overall.

In fact, billionaire Warren Buffett, who has lamented the fact that he currently pays only 11 percent of his adjusted gross income in federal income taxes, would pay as little as 0.2 percent under Perry’s plan.

Perry’s campaign has helpfully released a sample of the tax form that wealthy people would use under his plan. We’ve taken the liberty of filling out this form for four high-income Americans whose tax information is public: Buffett, Dick Cheney, Barack Obama, and Perry himself. By computing their tax bill using Perry’s sample tax form and the income reported on their most recent actual tax returns, we can calculate just how big a tax cut Perry is proposing to give them.

Here are the results [CLICK ON THE FORMS FOR A LARGER IMAGE]:

BUFFETT: Since the legendary investor receives most of his income from capital gains and dividends, Perry’s plan wipes out most of his already-low tax bill. Buffett reported $62,855,038 in income on last year’s tax return while receiving only $600,000 in compensation from Berkshire Hathaway and the Washington Post Co. (where he is a director). If, aside from that $600,000, all of his other income is from capital gains and dividends, Buffett’s effective federal income tax rate under the Perry plan would be a microscopic 0.2 percent. Buffett’s tax bill would be slashed from the $6.9 million he actually paid in 2010 to $120,000. (Even if Buffett had two-thirds of his income in the form of capital gains and dividends, the average for the richest 400 people in the country, he’d get a $2.7 million tax cut and pay a 6.8 percent effective rate.)

CHENEY: Former Vice President and Halliburton CEO Dick Cheney fares almost as well under Perry’s tax plan. Cheney reported $3.1 million in income on his 2007 tax return (the most recent available), including $2.1 million in dividends and capital gains. Since he’d only pay Perry’s 20 percent tax on his other income, his tax bill would be reduced by about two-thirds — a $387,000 cut. Cheney’s effective rate, which was 19.1 percent in 2007, would be 6.4 percent under Perry’s plan. Of course, this is probably fine with Cheney, since he believes that deficits don’t matter.

OBAMA: Even though President Obama has said that “people like me don’t need another tax cut,” Perry’s plan would give him a big one. The Obamas reported relatively little investment income on their most recent tax return. Still, they would get a $60,000 tax cut from Perry’s plan because they paid more than 20 percent on their other income ($1.8 million from the President’s salary, book sales, and other items). President Obama has proposed the polar opposite of Perry’s plan by suggesting the “Buffett rule,” which would ensure that millionaires can’t pay lower taxes than middle-class families.

PERRY: Perry himself would receive a tax cut of $6,310, based on the income reported on his most recent tax return. That would drop his effective rate from 18.6 percent to 15.8 percent. (If Perry has another large capital gain like he did from selling land in 2007, he’d benefit even more. Had his tax plan been in effect that year, the Perrys would have saved more than $150,000 in taxes on $1.1 million of income and paid a minuscule 3.8 percent effective rate.)

The bottom line: It’s pretty clear from crunching some numbers on his proposed tax form that Perry is not proposing a 20 percent flat tax (nor would a flat tax be a good idea in any event). Far from flat, Perry is proposing an upside-down tax that delivers more tax cuts for the wealthy on top of the ones they’ve already received in recent years — exploding the deficit and shifting a greater share of the tax burden onto the middle class.

Billionaire Investor Warren Buffett Would Pay No Income Tax Under Cain’s 999 Plan

By Pat Garofalo/Think Progress

Billionaire investor Warren Buffett’s push for increasing taxes on the very wealthiest Americans — who, due to the preferential tax treatment of investment income, often pay lower taxes than those in the middle-class — led to the creation of the Obama administration’s “Buffett rule.” The rule is aimed at ensuring that millionaires can’t use special treatment in the tax code to drive their tax rates down below that of their employees.

Republicans have met the Buffett rule with universal derision, calling it “class warfare.” “If it’s not class warfare, it’s highway robbery,” said 2012 GOP presidential candidate Herman Cain. “Pick my pockets, because that’s what he’s doing!” As it turns out, Cain’s much-touted 999 tax plan would basically do the opposite of the Buffett rule, driving Buffett’s already low tax rate down to new depths:

If the “9-9-9″ tax plan promoted by Herman Cain, a leading Republican presidential candidate, had been the law of the land last year, Warren Buffett would very likely have paid no income taxes, according to an analysis prepared for Yahoo News and The Lookout by the American Institute of Certified Public Accountants. At most, Buffett would have paid taxes on just 1 percent of his income.

As Yahoo’s Zachary Roth wrote, “if Buffett thinks he’s getting off easy under the current tax system, he should try life under Cain’s plan. Then he’d really be complaining.” Under 999, Buffett’s taxable income would come to $4.9 million of the $62 million he earned last year. After accounting for charitable deductions — which is one of the few tax preferences Cain says he would preserve — “Buffett would have paid no income taxes at all last year under the plan.”

However, low- and middle-income Americans would pay much more under the 999 plan than they do currently. They will be hammered by Cain’s nine percent sales tax (which Buffett would also pay, though at nowhere near the effective rate of poor Americans, who spend almost all of their income in a given year), while also paying a nine percent income tax.

Cain finally admitted this weekend that “there are some” people who will pay more in taxes under his 999 plan. However, he has yet to fess up to the fact that his plan entails a humongous tax cut for the very wealthiest Americans.

Note To GOP And The Media: Buffett Did Not Disagree With The Buffett Rule

By Pat Garofalo/Think Progress

Billionaire investor Warren Buffett appeared on CNBC today, where, of course, he was asked about the Obama administration’s “Buffett rule,” which stipulates that millionaires should not pay a lower tax rate than middle-class families. Buffett said he is happy to have lent his name to the administration’s push:

Q: Are you happy you said yes [to having your name on the Buffett rule]?

BUFFETT: Sure, I wrote about it.

Q: Are you happy with the way it’s been described? Is the program that the White House has presented — a million dollars and over — your program?

BUFFETT: Well, the precise program, I don’t know what their program will be. My program will be on the very high incomes that are taxed very low. Not just high incomes, some guy making $50 million a year playing baseball, his taxes won’t change. Make $50 million a year appearing on television, his income won’t change. But if they make a lot of money and they pay a very low tax rate, like me, it would be changed by a minimum tax that would only bring them up to what other people pay.

Watch it:

Somehow, the media (goaded by Republican misinformation?) have taken this to mean that Buffett does not support the Buffett rule, which is only a principle and not, at the moment, a specific proposal. But Buffett was asked repeatedly if he disagreed with the rule and never said that he did — he merely pointed out that the specific idea he has been promoting, from which the Buffett rule grew out of, is a minimum tax rate for the ultra-wealthy.

Some seem to be tripped up by Buffett’s saying that an athlete making $50 million wouldn’t see his or her taxes go up. But that’s entirely consistent with the Buffett rule, since wages that athletes earn are taxed as income (at 35 percent), not as an investment (and therefore at 15 percent) like much of Buffett’s income. It’s that break on investment income that, in large part, allows the wealthy to pay lower tax rates

Later in the interview, Buffett explained that he is not sure that he will support everything in the American Jobs Act, President Obama’s plan to spur job creation. But that was distinct fromthe question regarding the Buffett rule. When he was asked if he disagreed with the President’s plan to raise taxes on those making more than $250,000 a year (which has nothing to do with the Buffett rule), Buffett said “no, no, no, no.”

Buffett also said he is “supportive of the action” Obama is trying to take to put people back to work. So for those trying to turn this into a “Buffett v. Obama” story, as Mitt Romney would say, “nice try.”

UPDATE

TPM lays out how the false version of the Buffett story spread on Twitter.

UPDATE

During an earlier interview on CNN, Buffett not only said that “there’s been class warfare going on for the last 20 years, and my class has won,” but implied that the Buffett rule should also apply to millionaires.