Warren Buffett says he’s not worried about the effect of higher capital gains taxes on investor activity, and he’s urging Congress to impose a mandatory minimum income tax on the wealthy to head off the nation’s looming “fiscal cliff.”
In an opinion article published on Monday in The New York Times, the iconic investor and head of Berkshire Hathaway (NYSE:BRK.A, BRK.B), argues that the wealthy will “forever pursue investment opportunities” no matter what the tax rate.
The billionaire investor noted that he “did pretty well” selling securities during periods when the capital gains tax rate was 25% and the marginal tax rate on dividends was as high as 91%. He also noted that during that time no one he did business with cited tax rates as a reason for declining investment opportunities.
GDP during periods of higher capital gains taxes also “increased at a fair clip” Buffett noted.
Today’s wealthy are far wealthier than their predecessors, Buffett pointed out, largely due to tax cuts. In 1992, the 400 highest-income earners in the U.S. were taxed at an average of 26.4% of gross income. By 2009, that had fallen to 19.9%.
Buffett said he supported a 30% minimum tax on incomes between $1 million and $10 million, and 35% on incomes over $10 million a year. He also noted that he felt the Bush tax cuts on high earners should be eliminated, but he disagreed with President Obama on the income level at which higher taxes should start. Buffett suggested a cutoff of $500,000 in annual income, compared to the $250,000 proposed by the administration.