When the 2nd richest person in the world is saying, don’t give money to the rich, I think people should listen.
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Buffett slams dividend tax cut
One of world’s richest calls plan ‘voodoo economics,’ says it puts burden on low-income families.
May 20, 2003: 10:41 AM EDT
NEW YORK (CNN/Money) - Renewing his criticism of the dividend tax cut laid out by the Senate last week, Berkshire Hathaway’s Warren Buffett called the proposal “voodoo economics” that uses “Enron-style accounting.”
The Senate’s plan for dividends to be 50 percent tax free in 2003, 100 percent tax free in 2004 through 2006 and then face the full tax in 2007 would “further tilt the tax scales toward the rich,” Buffett wrote in an opinion piece in the Washington Post.
Buffett posed a hypothetical situation in which Berkshire Hathaway, which does not currently pay a dividend, paid $1 billion in dividends next year.
Through his 31 percent ownership of the company, Buffett said he would receive an additional $310 million in income that would reduce his tax rate from about 30 percent to 3 percent, while his office secretary would still have a tax rate of about 30 percent.
“The 3 percent overall federal tax rate I would pay – if a Berkshire dividend were to be tax free – seems a bit light,” Buffett wrote.
Instead of the Senate’s tax cut plan, Buffett proposed that it provide tax reductions to those who need and will spend the money in the form of a Social Security tax “holiday” or a tax rebate to lower-income people.
“Putting $1,000 in the pockets of 310,000 families with urgent needs is going to provide far more stimulus to the economy than putting the same $310 million in my pockets,” Buffett added.
He closed the piece by saying that the “government can’t deliver a free lunch to the country as a whole. It can, however, determine who pays for lunch. And last week the Senate handed the bill to the wrong party.”