A:

Warren Buffett's current opinion on taxation is apparently reflected in "the Buffett Rule," part of a tax plan put forth by President Obama that ensures millionaires and billionaires pay a minimum income tax rate of 30% or higher. Buffett questions why his capital gains tax rate of around 20% is a lower effective income tax rate than that of his secretary, or rather that paid by most middle class hourly or salaried income earners.

Consider Buffett's current financial condition in evaluating his stated viewpoint on taxation. As one of the two or three richest men in the world and well past the age of 80, having long ago established a mass of wealth that virtually no amount of future taxation can seriously dent, Mr. Buffett offers his opinion from a state of relative financial security that is pretty much without parallel. Even if, for example, every future dollar Warren Buffett earns is taxed at the rate of 99%, it is doubtful that it would affect his standard of living. Some analysts point out that Mr. Buffett was not so staunch and outspoken an advocate of aggressive taxation when he was considerably younger and first making his fortune.

Buffett's recent comments on taxation have helped fuel an already heated debate on the issue of taxes and the concept of "fair share." Investors are particularly concerned with the capital gains tax rate, which increased from a maximum of 15% to 23.9%. Adding in state capital gains taxes, the United States has one of the highest capital gains tax rates of any developed nation. Some economists consider capital gains taxes to present a form of double taxation, making raises in the rate even more controversial. Some countries do not impose any capital gains taxes at all, and countries such as Singapore have, therefore, become increasingly attractive to Americans seeking new citizenship in countries with less burdensome tax laws. Billionaire Facebook mogul Eduardo Saverin, who renounced his U.S citizenship in favor of Singapore, represents those well-to-do investors whose opinions on appropriate taxation differ significantly from Mr. Buffett's viewpoint.

RELATED FAQS
  1. How is Warren Buffett Plan Bequeathing his Estate?

    Find out how much Warren Buffett is leaving for his heirs and how he wants the funds invested after his death. Learn about ... Read Answer >>
  2. Why does Warren Buffett largely avoid investing in the technology sector?

    Learn about why Warren Buffett has traditionally avoided investing in technology companies. Read about his value investing ... Read Answer >>
  3. How does Warren Buffett choose his stocks

    Investors have long praised Warren Buffett’s ability to pick great companies to invest in. Here are the key considerations ... Read Answer >>
  4. Does Warren Buffett invest in gold? Why or why not?

    Discover what Warren Buffett's investment stance is toward gold and silver, why he likes one of them a lot and the other ... Read Answer >>
  5. How does the "Buffett Premium" increase Berkshire Hathaway's stock price?

    Explore the theory that Berkshire Hathaway stock carries a Warren "Buffet Premium" that would disappear upon his death and ... Read Answer >>
  6. What was the worst investment Warren Buffett made in his career?

    Discover what Warren Buffett's surprising answer is to the question of what was the single worst investment that the "oracle ... Read Answer >>
Related Articles
  1. Investing

    The Best Books On Warren Buffett

    These six books aren’t as satisfying as owning Berkshire-Hathaway shares, but there is a lot of knowledge and enjoyment in them nonetheless.
  2. Investing

    Look at Warren Buffett's First Tax Return at Age 14!

    The "Oracle of Omaha" Warren Buffett was a diligent businessman even at the age of 14, as his 1944 tax return shows.
  3. Managing Wealth

    Rules that Warren Buffett lives by

    Warren Buffett, the Oracle of Omaha, has some timeless words of advice.
  4. Managing Wealth

    Buffett's early days as a value investor

    Warren Buffett has been honing his investing process for years.
  5. Managing Wealth

    Buffett's Biggest Mistakes

    This investment guru is still human, and his biggest investing blunders prove it. Find out where he went wrong, and what you can learn from his mistakes.
  6. Personal Finance

    Warren Buffett's frugal, so why aren't you?

    Warren Buffett, the Oracle of Omaha, has a net worth in the billions, but his lifestyle is not as rich as you may think.
  7. Insights

    4 Reasons Buffett's Portfolio Is Irrelevant to Today's Investors (AXP, KO)

    Find out why investors should not try to emulate Warren Buffett's stock portfolio and why they could not achieve his same level of success.
  8. Financial Advisor

    Markets Are Tanking: Time to Buy Like Buffett

    Learn about three value stocks Warren Buffett holds in his portfolio. See how Buffett uses market declines to find good deals on stocks.
  9. Managing Wealth

    Warren Buffett's Bear Market Maneuvers

    This esteemed investor rarely changes his long-term investing strategy, no matter what the market does.
RELATED TERMS
  1. Double Taxing

    A tax law that causes the same earnings to be subjected to taxation ...
  2. Double Taxation

    A taxation principle referring to income taxes that are paid ...
  3. Buffett Rule

    A tax rule proposed in 2011, by President Barack Obama, stating ...
  4. Ability-To-Pay Taxation

    Taxation in the form of a progressive tax. The ability-to-pay ...
  5. Oracle Of Omaha

    The Oracle of Omaha is a nickname for Warren Buffett, who is ...
  6. Taxpayer

    An individual or entity that is obligated to make payments to ...
Hot Definitions
  1. Initial Public Offering - IPO

    The first sale of stock by a private company to the public. IPOs are often issued by companies seeking the capital to expand ...
  2. Cost of Goods Sold - COGS

    Cost of goods sold (COGS) is the direct costs attributable to the production of the goods sold in a company.
  3. Profit and Loss Statement (P&L)

    A financial statement that summarizes the revenues, costs and expenses incurred during a specified period of time, usually ...
  4. Monte Carlo Simulation

    Monte Carlo simulations are used to model the probability of different outcomes in a process that cannot easily be predicted ...
  5. Price Elasticity of Demand

    Price elasticity of demand is a measure of the change in the quantity demanded or purchased of a product in relation to its ...
  6. Sharpe Ratio

    The Sharpe ratio is the average return earned in excess of the risk-free rate per unit of volatility or total risk.
Trading Center