[Mavdog]

here's one fat cat who says to tax the highly affluent more

Berkshire's Buffett Backs Estate Tax
By JOHN GODFREY
November 14, 2007 3:54 p.m.

WASHINGTON -- Berkshire Hathaway Inc. Chief Executive Warren Buffett said Wednesday that Congress should consider giving lower-income families a $1,000 annual tax credit rather than repealing the federal estate tax.


In testimony before the U.S. Senate Finance Committee, Mr. Buffett noted that of 2.4 million Americans who died last year, roughly 12,000 paid estate tax. "You'd have to attend 200 funerals to be at one" where an estate tax was owed, Mr. Buffett said.

Mr. Buffett suggested that rather than repealing the estate tax, it should be reformed to have less impact on smaller estates, but tax larger estates more to raise the same amount of money.

He suggested an exemption from the estate tax of about $4 million, up from the current $3.5 million. That exemption would be indexed for inflation. But in contrast to prior years, the initial rates beyond that exemption would be relatively low, and would gradually increase, Mr. Buffett said.

Mr. Buffett said, the top rates should be fairly hefty. "In turns of passing on dynasties of wealth, the rate ought to be higher than 45%," Mr. Buffett said.

Senate Finance Committee member Maria Cantwell (D., Wash.) pressed Mr. Buffett on whether family-held businesses should get special treatment. Ms. Cantwell noted that many such families complain that estate-tax planning is eating up precious resources while still leaving their family-held business at risk.

Mr. Buffett said that's an unlikely scenario. A business large enough to owe the estate tax could readily borrow against the estate, use operating revenues to pay off that debt and still generate plenty of income, Mr. Buffett said. "They may not prefer to pay the tax, but they have the resources, ample resources to pay the tax."

However, Mr. Buffett said he would oppose returning to the estate tax-system in place prior to 2001. That system provided a $1 million exemption, with rates rising almost immediately to 55%.

Rather than repealing the estate tax, Mr. Buffett said he would give a tax credit to the 23 million households in the U.S. with under $20,000 a year in income. Mr. Buffett noted that many of those families face a marginal payroll tax rate of 15.3%, higher than the current top rate on capital gains, dividends and carried interest for assets held long term.

In contrast, a repeal of the estate tax would help the richest Americans who have seen their wealth take off like a "rocket ship" in the last two decades while lower-income workers have "been on a treadmill."

Asked what reforms he would favor in the entire tax code, Mr. Buffett said he'd like to move to a progressive consumption tax. But, Mr. Buffett said, he couldn't see how to move from the U.S.'s current income tax system to such a tax.

In contrast with many others proposing a consumption tax, Mr. Buffett wouldn't use the transition to reduce federal revenues overall. Mr. Buffett said it currently takes about 20% of gross domestic product to fund the cost of government, a level that seemed appropriate.

To meet those costs, the government raises about 18.8% of GDP in taxes and borrows the remainder.

Mr. Buffett also said carried interest paid to hedge and private-equity fund managing partnerships should be taxed as regular income. He said that he had been paid carried interest while working with a partnership, and that nothing he had done was any different than if he had been working as an employee for a fund.

the tax cuts simplified the brackets, from 5 to 3. the higher brackets went form 39% and 36% to 33%; the middle brackets of 31% and 28% went to 25%.

I agree with warren buffet, renew the cuts for the middle and lower but not for the higher.