One of the most controversial pieces of President Barack Obama’s economic plan is named for one of the richest men in the world. The president calls his proposal to raise taxes on wealthy individuals and corporations “The Buffett Rule.” Some Republicans are calling it class warfare.
Warren Buffett says he paid almost $7 million in taxes last year. He says that is not enough.
“I think people at the high end, people like myself, should be paying a lot more in taxes," said Buffett.
The billionaire investor wrote an opinion article in the New York Times in August, claiming that all 20 employees in his office pay a higher percentage of their incomes in taxes than he does.
Buffett suggested increasing taxes on millionaires and billionaires. He wrote, “My friends and I have been coddled long enough by a billionaire-friendly Congress. It is time for our government to get serious about shared sacrifice.”
President Obama is incorporating Buffett’s proposal into his plan to reduce the federal deficit.
“Middle-class families should not pay higher taxes than millionaires and billionaires," said President Obama. "That is pretty straightforward. It is hard to argue against that. Warren Buffett’s secretary should not pay a higher tax rate than Warren Buffett.”
The president announced his deficit-cutting plan on Monday, and said it would include a provision he called the “Buffett Rule.”
The rule states that “No household making over $1 million annually should pay a smaller share of its income in taxes than middle-class families pay.” Administration officials have not given details on how the plan would be put into effect.
Some reports have shown that most of the richest Americans already pay a higher percentage of their income in taxes than lower- or middle-income taxpayers.
Meanwhile, some Republicans call the proposal class warfare. Senate Minority Leader Mitch McConnell says it would stifle job creation.
“If he is feeling guilty about it, I think he should send in a check," said McConnell. "But we do not want to stagnate this economy by raising taxes.”
Obama said Thursday the purpose of his plan is basic fairness.
“If asking a billionaire to pay their fair share of taxes, to pay the same tax rate as a plumber or a teacher, is class warfare, then, you know what? I am a warrior for the middle class," he said. "I am happy to fight for the middle class. I am happy to fight for working people.”
Public opinion polls show that most Americans agree with Warren Buffett that the richest citizens should pay more in taxes.
Buffett is ranked as the third-wealthiest person in the world, with $39 billion. He has been investing for 70 years, since he was 11-years-old. His success has earned him the nickname “The Oracle of Omaha.”
Buffett endorsed and contributed money to Obama’s presidential campaign in 2008, and he is scheduled to host a fundraising event for the president in October. Tickets will cost $35,000 each.
The 81-year-old chairman of the conglomerate holding company Berkshire Hathaway has committed to gradually give all of his company stock to philanthropic foundations. He said more than 99 percent of his wealth will go to philanthropy during his lifetime or at death.
“My wife and I, when we were in our twenties, decided that whatever we had that we did not need should go to somebody that did need it," he said. "We had that planned for years, and lately we have taken up with this Giving Pledge to try and encourage others to feel the same way.”
The Giving Pledge was started by Microsoft founder Bill Gates and his wife Melinda. They are asking hundreds of the richest Americans to pledge at least 50 percent of their wealth to charity.
President Obama praised Buffett’s generosity while awarding him the nation’s highest civilian honor, the Presidential Medal of Freedom, in February.
“And yet for all the money he has earned, you do not see Warren Buffett wearing fancy suits or driving fancy cars," said Obama. "Instead, you see him devoting the vast majority of his wealth to those around the world who are suffering or sick or in need of help. And he uses his stature as a leader to press others of great means to do the same.”
Buffett is known for his relatively modest lifestyle. He does not live in the financial and media center of New York, but in his less glamorous home town, the central U.S. city of Omaha, Nebraska.
When awarding Buffett the Medal of Freedom, the president joked about his frugal living.
“I should point out he is so thrifty, I had to give him a White House tie the last time that he came here to visit," he said. "His was looking a little shredded. So then, when Bill Gates came, he wanted one too.”
Now President Obama is hoping that Warren Buffett’s prestige and reputation as a business leader and philanthropist will help build support for the administration’s economic plan.