Warren Buffett And Bill Gates: The Rich Should Pay Higher Taxes

Berkshire Hathaway chairman and CEO Warren Buffett told CNBC's Becky Quick that, in America, the "wealthy are definitely undertaxed relative to the general population." Bill Gates has recently made the same points. Here are their suggestions for a fix.

Warren Buffett doesn't think the rich in America are paying enough in taxes.

As industries become more specific and as workers develop more specialized skill sets, Buffett said in an interview on "Squawk Box" on Monday, it's the wealthy who benefit.

Back in the 1800s, for example, when most people worked on farms, those who were stronger and worked harder still earned more, Buffett explained, but "the top person working on that farm would be worth one-and-a-half to two times what the bottom person was."

However, that disparity has grown. Today, the richest 10 percent of people worldwide own 85 percent of global wealth, according to Credit Suisse's 2018 Global Wealth Report. And as the market system continues to become increasingly specialized, "the rich will get even richer," Buffett said.

To Buffett, that means the next step should be figuring how to take care of people like "a guy who is a wonderful citizen" but "just doesn't have market skills."

His solution: Expand the earned income tax credit, which benefits people with low incomes. Even though "that probably means more taxes for guys like me," Buffet said, "I'm fine with it."

Fellow billionaire Bill Gates has made similar comments. "There's no doubt that what we want government to do in terms of better education and better health care means that we need to collect more in taxes," he said during a recent conversation in New York City. "And there's no doubt that as we raise taxes, we can have most of that additional money come from those who are better off."

Gates, like Buffett, acknowledges that he's among those whose taxes should go up. "I need to pay higher taxes," he told CNN's Fareed Zakaria during a 2018 interview. "I've paid more taxes, over $10 billion, than anyone else, but the government should require people in my position to pay significantly higher taxes."

In order to keep up with the growing deficit and also fund programs that provide health care and pensions, for example, the government needs to bring in more revenue, Gates says. Plus, "some people think the government should provide new promises, which is fine. It just emphasizes there's no free lunch here, you'd have to collect more money," he told Zakaria in 2019.

One way to collect more money, Gates says, is to hike the capital gains tax, which would increase how much the wealthy are paying on their investments.

"I think our system can be a lot more progressive (that is, richer people paying a higher share)," he wrote on Reddit on Monday. "A key element is making capital gains taxation more like ordinary income and having an estate tax more like we had in the past."

Buffett doesn't think he and Gates would be alone in supporting or accepting higher tax rates, either. Though some critics contend that the tax changes proposed by politicians like Bernie Sanders and Elizabeth Warren would provoke the rich to flee the U.S., the idea doesn't scare Buffett.

He could move to a state like South Dakota or Wyoming that doesn't impose an income tax, after all, he told Quick, but he doesn't. "I think people want to come here," Buffett said, not leave. Even with higher taxes, he thinks, "they would come."

About CNBC Make It.: CNBC Make It. is a new section of CNBC dedicated to making you smarter about managing your business, career, and money.

Connect with CNBC Make It. Online

#WarrenBuffett
#CNBCMakeIt
#BillGates

Warren Buffett and Bill Gates agree that the rich should pay higher taxes—here's what they suggest | CNBC Make It.

[victorignacio]

Lmao 😂 Warren Buffett said “if any of those billionaires are leaving it’s s because they’re trying to leave, before the feds get to them” Oh my goodness 😂

[theemacsen]

Warren buffet is smart by making him self look like a good guy

[abrahamayala]

Warren Buffett: Yea you can take my money in taxes I'm dying soon anyway

[CommandoMaster]

Rich people would rather leave the country than pay more taxes. They are already moving their money to tax safe havens banks in Switzerland and hire the best tax lawyers and accountants to make sure they take advantage of every tax loophole in the system so that they keep as much of their wealth as possible without breaking the law.

[crypticslayer]

I feel like poor people want to increase taxes for the rich

[grapplerunit]

Wealth is a relative term if you make 100k in Ohio you are doing great and live great. If you make 100k in San Francisco you are actually considered to be in poverty

[manwarr]

did you have to add that unnecessary
music in the background?

[algow]

If billionaires feel under taxed, they can simply fire their armies of accountants, tax lawyers, fund managers, and lose out off shore bank accounts. That otta help them immensely .

[raulantunez]

You want to help the poor? Ok, do it. Don’t force others to do the same. You’re both part of the richest people on Earth. Why don’t you give everything you have to charity?

[hansklok]

If i were a poor family that could choose to live somewhere else. I would not go to the US.

[je]

So why doesnt he cut a bigger check April 15th. O wait I bet his accounts filing his taxes get multiple extensions so his money can grow more interest. If the billionaires were truly worried about the poor and middle class they'd already give more. But if you earn something yourself you'll take care of it. If you give someone something it gets abused.

[bfbvouabeorbvoaervure]

Taking half of someone’s net worth straight away could cause major issues. They could lose their homes, businesses and all of the above. It would need to be a slow change taking place over the course of a few years.

[ericclaeyborn]

I wonder why Buffet didn't talk like this when he was younger? Now, that he has one foot in the grave, it's different. Take away 70% of Buffet's wages, and he's still a billionaire. He can always volunteer to give more instead of waiting for a law to force the issue.

[christinewood]

I have a hard time believing 2% wealth tax on those who earn over $50 would make them leave the country. That capital would have more growth than that even if it sits in the bank.

[CasualMisinformationSpreader]

I want to give him even bigger tax cut just to irritate him. Take your money Buffet! Take it!!!

[rockwithyou]

The reason why it is easy for Buffet and Gates to say this is the following. They are asking for an increase in Income Taxes. They both have already earned that money and will not get affected if the income taxes go high. The stocks they own are already in the long term bracket so they do not need to worry about that either. In short, the high taxes they both are recommending will not affect them. Also, they both are pretty old and have way more than enough money. Even if the government decided to tax their wealth (money in the bank, not income), they will live a great 10-30 years of their remaining lives. High income taxes will make sure that none of us can ever get rich like them. If they had implemented high taxes above a 500K income, today mark zuckerberg and many many more millionares, wouldn't have existed.

[hassehougaard]

The Buffett Rule is the basic principle that no household making over $1 million annually should pay a smaller share of their income in taxes than middle-class families pay. Warren Buffett has famously stated that he pays a lower tax rate than his secretary, but as this report documents this situation is not uncommon.

[jakeg]

Why dont they pay all their taxes without deductions then

[esonon]

If he really feels this way, let's bring up the capital gain taxes from 15% to 40%. Let's also put regulations on margin loans and securities backed line of credit.

[SharonCreamer]

I knew it! My feeling was that there were some rich people that are dying to pay a little bit more in taxes. In the meantime, you can make a donation to The United States of America Federal Government and request that it be put in the General Fund, or, wherever. Or, not a little but more, but whatever their surplus is.