Learn about taxes from a guy who, according to one observer, is so rich he can hire Bill Gates to give away his money.
Note that not one member of the Fortune 400 has taken him up on his challenge.
Click the image or the link to watch video from October 29. 2007.
Brian Williams: (There's) a looming tax fight in Congress. The Democrats want to revamp the tax structure and get rid of some of the loopholes that the wealthy and corporations enjoy to pay less taxes. And it may surprise you to learn that one of the universally accepted richest guys in the world, Warren Buffett, feels he pays too little by percentage. This interesting campaign of his was unveiled in a recent conversation with Tom Brokaw. He's here with us in the studio with more on this. This is fascinating.
Tom Brokaw: It is. And it is well known that Warren Buffett is a contrary billionaire. Unlike most of his fellow billionaires, he believes they should be paying a higher tax rate. And to prove his point, he decided to compare what he pays as a tax rate with what the people who work for him pay.
(Taped report begins)
Tom: Is this what you had in mind when you were 17, Warren?
Warren: Well, in a very, very, very general way ...
Tom: It is no secret that Warren Buffett, the Oracle of Omaha, and the world's third richest man, doesn't have a great deal in common with his fellow billionaires.
Amidst the sports memorabilia and the modest office that is the nerve center of his empire, Buffett sees a fundamental injustice that he says touches all Americans.
Warren: The taxation system has tilted toward the rich and away from the middle class in the last 10 years. It's dramatic and I don't think it's appreciated, and I think it should be addressed.
Tom: You've gone very public with this.
Tom: You've talked about in your own office, for example, you pay a much lower tax rate with all of your wealth than, say, a receptionist does.
Warren: That's exactly right, Tom, and I think the only way to do it is with specifics. In our office 15 people cooperated in a survey, out of 18, I didn't make anybody do it. And my total taxes paid, payroll taxes plus income tax, mine came to 17.7 percent. The average for the office was 32.9 percent. There wasn't anybody in the office, from the receptionist on, who paid a lower tax rate. And I have no tax planning, I don't have an accountant, I don't have tax shelters. I just follow what the U.S. Congress tells me to do.
Tom: Buffett is particularly critical of the lower tax rates paid by hedge fund managers who reap millions of dollars from the investments made by others.
Warren: I do know that the hedge fund operators made a record amount lobbying in recent months, so they give money to the political campaigns, and, who represents the cleaning lady?
Tom: The hedge fund operators, and the U.S. Chamber of Commerce and others have said it's going too far. In fact, these hedge fund operators have created enormous wealth for the little guy as well, pension funds and other people who participate in those private equity partnerships.
Warren: They say they work hard, and in the process of working hard, they make other people money. And that's true of a whole bunch of people in the world, but that doesn't entitle them to a preferential tax rate.
Tom to Buffett's receptionist: Now Warren's taking care of your kids. He's worrying about your tax rate, you know (laughter) ...
Tom: Even some of Buffett's own employees had no idea what kind of a rate they were paying for taxes until he told them.
Tom to Buffett employee: You know, at the end of this year, you're going to pay a higher tax rate, percentage of your income, than this guy will.
Employee: Yes ... I've known that since I started.
Tom: He'll have a little more left over at the end of the year than you will probably.
Employee: It's not right (laughs.)
Tom to Warren: But here's your first tax return.
Warren: Right, that was when I was 13. I owed seven dollars.
Tom: Buffett doesn't hold out much hope that Congress will pass his favorite idea, a progressive consumption tax. But that does not mean he's going to stop speaking out. After all, his employees now are counting on him.
Tom to employee: If you could rewrite the rules, what would you do?
Employee: (Laughs.) I'd first would ask Warren how he would rewrite them.
Tom on set: And to further prove his point, Buffett has challenged .. he's offered a million dollars to charity to any of the Forbes 400 richest people who can show on average that they pay a higher tax rate than their secretaries pay, but so far, Brian, he's had no takers.
Brian: He believes he's paying too low a rate. Does that also mean, by extension, he feels he should be paying more to the Federal government?
Tom: He thinks it's just an unjustifiable system because the payroll tax is the tax most of the people pay on ordinary income and he gets the capital gains tax. He thinks a lot of that should be bumped up.
And, as for that charge that investors will stop working if they get taxed at a higher rate, he says he remembers when capital gains were 40 percent .. people didn't go home at 3 o'clock in the afternoon saying, 'I'm going to a movie. I've paid too much in taxes already.' He doesn't think it will have a big effect on the economy. Pretty controversial.
Brian: Yeah, it's a brave campaign and he can afford to launch it.
By Chuck Sheketoff
Oct. 30, 2007
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