Building an Economy that Works for Everyone

“Coddling” Washington’s Millionaires?

From the Washington News Service:

warren buffett

Photo: Seth Wenig/AP

A much-talked-about editorial in the New York Times this week by Warren Buffett accuses Congress of “coddling” the super-rich with lower tax rates, and the billionaire investor says it’s time to ask him and others to pay more to decrease the deficit.

In Washington state, higher taxes for the wealthy have been the subject of ballot initiatives and legislative debate, but the wealthy are still being “coddled” here, too, according to Marilyn Watkins, policy director with the Economic Opportunity Institute.

“Here in Washington state, we have what’s known as the most regressive tax system in the country – it’s pretty broadly recognized to be such. That means the lowest-income individuals are paying the most – and the very wealthiest people in our state are paying the very least – in state and local taxes.”

Last year, Washington voters rejected an income tax for single people making over $200,000 or couples making more than $500,000 a year. Watkins says the richest in the state now pay less than 3 percent of their income in state and local taxes, middle-class residents pay closer to 12 percent and the poorest pay even more.

Buffett notes in his editorial that he pays a lower percentage of his income in taxes than any of the people in his office, because investment income is taxed at a lower rate than income from work. Watkins says that becomes a problem when super-rich individuals and corporations do not use their wealth to help grow the economy.

“Henry Ford, decades and decades ago, figured out that if he wanted to sell more cars, the best thing he could do was pay his workers enough that they could buy his cars. And right now, American corporations, they’re not making that kind of investment in their workers, so that their own workers can buy their own goods and services.”

Supporters of the current tax system say when wealthy people and big businesses can keep more money, it allows them to generate jobs for others. However, Watkins says that is not happening, and with fewer tax dollars, there is less money for education, health care and infrastructure at every level of government.

Here is the complete op-ed by Buffett.

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