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Warren Buffet backs tax increases for wealthy

By Catholic Online (NEWS CONSORTIUM)
November 28th, 2012
Catholic Online (www.catholic.org)

In a move sure to curry favor with President Barack Obama, billionaire Warren Buffet has come out in favor of his tax increases for the wealthy in the U.S. In an Op-Ed piece in the New York Times, Buffet assures that higher taxes will not deter the wealthy from making more money.

LOS ANGELES, CA (Catholic Online) - Buffett says he would favor restoring the higher tax rates of the 1990s for high-income families, while also setting a minimum tax of 30 percent for people earning between $1 million and $10 million per year, and 35 percent for incomes over $10 million.

This would close loopholes that allow many people who get most of their income from investments to pay lower tax rates. For example, if such a rule applied to Mitt Romney in 2011, it would have raised his tax bill from $2 million to $4.8 million, on $13.7 million worth of income.

The CEO of the conglomerate Berkshire Hathaway, Buffet further argued in his article that such higher tax rates on the wealthy wouldn't deter investors from investing, or damage economic activity the way some anti-tax crusaders claim.

Buffet did add this as an aside: Instead of setting the cutoff point for high-income households at $250,000, which is Obama's threshold, how about raising it to $500,000 or so?

Since the median U.S. income nationwide is about $50,000, a family earning $250,000 per year seems wealthy to most Americans. People who live in expensive cities like New York and San Francisco argue that a quarter-of-a-million dollars doesn't go that far if you need to spend at least $500,000 to purchase a home in a good area.

For many families, it takes two full-time workers to pull down that kind of money, and the stress of working and raising kids at the same time hardly makes them feel affluent.

It's relatively possible to index the cutoff points for tax rates to the city you live in. But in practice that would make an already complicated tax code devilishly confusing, while inviting vast amounts of abuse.

A typical scenario would have relatively wealthy New Yorkers claiming residency in small towns in Texas.

That's why one income level fits all when it comes to tax rates. However, Obama's preference for higher taxes on households earning $250,000 is only an opening bid. Tax rates on all Americans are scheduled to go upward starting January 1, and reaching a deal to prevent that with Congressional Republicans will require some tradeoffs. An obvious one on Obama's side is raising the cutoff point for tax hikes to $500,000. Buffett has now given Obama some important cover for doing just that.

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