Few American investors have enjoyed as much success as Berkshire Hathaway CEO Warren Buffett, whose net worth is an estimated $46 billion.
So one might assume that Buffett’s ideas about the Jan. 1 ‘fiscal cliff’ of tax hikes and spending cuts would carry more weight than those of anti-tax lobbyist Grover Norquist, who has no business record to speak of but has earned a comfortable living through symbiotic parasitism with Washington politicians.
It’s encouraging that several House Republicans – including Reps. Chris Gibson and Peter King of New York – have recently ditched Norquist’s ill-conceived and unworkable Taxpayer Protection Pledge, which forbids even the closing of tax loopholes.
But it’s disconcerting that Buffett’s reasonable and prudent call for modest tax increases on the wealthiest Americans has fallen on deaf ears. Buffett stated his case last week in a New York Times essay, rebutting the argument that such increases would cripple employers and investors.
“Between 1951 and 1954, when the capital gains rate was 25 percent and marginal rates on dividends reached 91 percent in extreme cases, I sold securities and did pretty well. … Never did anyone mention taxes as a reason to forgo an investment opportunity that I offered,” Buffett wrote. “So let’s forget about the rich and ultra-rich going on strike and stuffing their ample funds under their mattresses if – gasp – capital gains rates and ordinary income rates are increased.”
Buffett suggested a minimum tax of 30 percent on all taxpayers earning between $1 million and $10 million yearly, and a 35 percent tax on higher incomes.
But House Speaker John Boehner, R-Ohio, still hasn’t budged from his position that any tax increase on upper incomes is a non-starter. He dumped cold water on the suggestion of Rep. Tom Cole, R-Okla., who said Obama’s plan to extend the Bush-era tax cuts for incomes below $250,000 is an offer worth considering.
Boehner said after the election that he would be open to ‘new revenue’ through tax increases, but seems intent on doing this only by eliminating deductions and loopholes. This steadfast insistence on coddling the wealthiest Americans at the expense of everyone else means Congress will have to consider cutting deductions that directly benefit the economy. These include the mortgage interest deduction, which costs the government an estimated $100 billion a year but fuels the housing market – which still needs all the help it can get.
If the Bush-era tax cuts expire as scheduled in January, the House Republicans would be unable to renew them over a Democratic-controlled Senate and an Obama veto threat. Keeping those cuts in place for those earning less than $250,000 might be the most palatable option for Boehner, who doesn’t seem to understand who holds the leverage here.