Earlier this month, Warren Buffett appeared on CNBC’s “Squawk Box” and had several things to say in his interview; especially about Trump’s American Health Care Act. While many speculated that Trump’s proposed bill to repeal and replace Obama’s Affordable Care Act would only help the wealthly, Buffett confirmed the suspicions.
“If there’s one clear-cut message that comes out of that bill it is we’re going to cut the hell out of income taxes for the rich on investment income,” he told CNBC, footnoting it with the stat that he would be paying 17% less in taxes should the AHCA be passed in its current form. That averages to about $680,000 saved in Buffett’s deep pockets. This follows comments Buffett made during a company meeting for Berkshire Hathaway, the global giant to which Buffett is Chairman. He called the AHCA “a huge tax cut for guys like me.”
The reason? While the AHCA aims to remove ACA-mandated taxes and penalties, it also moves to eliminate perhaps the most significant tax: the surtax on investment income and capital gains from the highest income taxpayers. That tax is around 3.8%—which given the staggering amount of those taxpayers’ investment incomes, takes a huge chunk of the funding that was used for the ACA and places it back into the wealthy’s bank accounts.
Senior fellow at the Urban-Brookings Tax Policy Center Howard Gleckman commented on Buffett’s remarks to News 4 Tucson. “Warren Buffett’s right. For somebody like him this would be a major tax cut,” Gleckman said. “If you just look at the tax provisions of the American Health Care Act, which repealed the tax increases in the Affordable Care Act, it dramatically is skewed towards the highest income households.” Gleckman added that Trump’s moves in the way of tax reform will leave the wealthy with huge cuts in excess of $200,000 and the poor paying $10 more.
The reason is quite simple: the average working class American doesn’t make their money through investments; rather they make it through their wages. Americans with substantially high incomes have a hybrid of income through both wages and investments, so removing an investment surtax will only give the wealthy more money. Where does that leave everyone else?
It’s a harsh truth that had to come from the mouth of someone who will be reaping the benefits of it.
