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Democrats reject Buffet's wealth responsibility offer

The Hill - Warren Buffett, the renowned investor and the world's second richest man, told Senate Democrats that wealthy Americans need to pay higher taxes, giving Democrats something to mull as they address healthcare reform and soaring federal deficits.

Buffett told lawmakers that because of the cuts to the capital gains tax passed under former President George W. Bush, he pays taxes at a lower rate than some of his company’s employees.

It is an argument the investor has made before. Buffett said he paid a 16.5 percent tax rate on all his income because the tax rate on investment dividends and long-term capital gains is only 15 percent.

By contrast, a single employee at Buffet’s firm, Berkshire Hathaway, who earns between $33,000 and $83,000 must pay a 25 percent federal income tax rate.

Sen. Ben Nelson, a centrist Democrat from Nebraska, said he wasn’t sure whether Buffett’s chat would embolden his colleagues to raise taxes.

“I don’t know that people will move toward tax increases,” he said in reference to healthcare reform funding. “Tax is still for a four-letter word, and I think there are other ways to pay for this than raising taxes.”

In 2003, Congress cut the capital gains tax from 20 percent and created a separate 15 percent tax rate for dividends. Before then, dividends were taxed at the ordinary income rate, which is 35 percent for top earners. Read more.

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