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Warren Buffett agrees with Bill Gates that America’s rich are not paying enough taxes; here’s why

Buffett suggested that earned income tax credit — that benefits low to moderate income working people — should be expanded.

American businessman Warren Buffett, who is the third richest person on earth according to Forbes, says wealthy Americans are not paying enough taxes compared with the rest of the population. “The wealthy are definitely undertaxed relative to the general population,” Buffett told CNBC in an interview on its morning programme “Squawk Box”. Berkshire Hathaway’s Buffett, who is a revered investor, says as industries become more specific and workers develop more specialized skill sets, it’s the wealthy who benefit.

Berkshire Hathaway’s Chairman and CEO Warren Buffett said that in the 1800s, people who were stronger and worked harder among those who worked on farms, still earned more, but “the top person working on that farm would be worth one-and-a-half to two times what the bottom person was.”

That not-so-significant gap has only widened today as 85 per cent of the global wealth is concentrated among the richest 10 per cent of people across the world, Credit Suisse said in its 2018 Global Wealth Report. Now, with the market system becoming increasingly specialized, “the rich will get even richer,” Buffett said.

To solve that problem, the next step has to be understading how to take care of people like “a guy who is a wonderful citizen” but “just doesn’t have market skills,” according to Buffett.

He suggested that earned income tax credit — that benefits low to moderate income working people — should be expanded. Even though “that probably means more taxes for guys like me,” Buffett said, “I’m fine with it.”

Microsoft’s Bill Gates echoes these thoughts. “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, ” Gates 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,” he said.

Gates too admits that taxes for rich like him should go up. “I need to pay higher taxes,” he told CNN in an interview last year. “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.”

He suggested that government needs to increase revenue to cap the growing gap and invest in programmes that provide health care and pensions.

One way to collect more money, Gates said is to raise the capital gains tax, that would increase how much the rich pays on their investments.

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Source: Financial Express