- REUTERS/Rick Wilking
Republican desperation for a legislative win means a tax package has a better chance of making it through Congress than observers may think, Warren Buffett said during a television interview on Tuesday.
But calling such legislation “reform” is disingenuous, the billionaire investor said during an appearance on CNBC. He also said it was “not a tax-reform act – it’s a tax-cut act.”
The framework for a tax overhaul released by President Donald Trump and Republican leaders last week calls for changes including a cut in the top corporate tax rate to 20% from 35% and a cut in the rate for high-earning Americans to 35% from 39.6%.
Buffett has been an outspoken advocate for changes in the tax code, most famously for claiming that his secretary pays a higher tax rate than he does, despite his massive wealth. He was giving the CNBC interview to discuss his new investment in Pilot Flying J truck stops.
Investors will know soon though whether the tax changes will happen, Buffett predicted, saying it would be determined “within three months, actually less than that.”
Trump and GOP leaders are hoping to get a tax plan through Congress this year and are trying to get through the initial steps to make that possible including passing a budget, hammering out the details of the legislation, and winning over interest groups and the American public.
‘A terrible mistake to start with’
Despite these challenges, Buffett said it’s “a real possibility” that Congress would pass a bill and that the chances were “higher than most people think.”
“Any politician that can’t pass a tax cut is probably in the wrong line of work,” Buffett said.
Buffett also said he would wait to see how the tax push played out before doing any significant selling of Berkshire Hathaway stock to avoid paying unnecessary taxes on his gains.
“I would feel kind of silly if I realized $1 billion worth of gains and paid $350 million in tax on it if I just waited a few months and would have paid $250 million,” Buffett said.
In terms of the actual details of the plan, Buffett did not appear as sold on the proposal.
For one thing, he disagrees with the idea of eliminating the estate tax – which is paid by people inheriting more than $5.7 million in assets. Buffett said eliminating the tax would reinforce a “dynastic” system that ran counter to American values.
“That’s not good for capitalism, it’s not good for the children, and I sure don’t think it’s good for society where there’s already a ton of inequality to start with,” Buffett said, referring to the heirs of large estates. “I think that’s a terrible mistake to start with.”
Buffett has already committed to The Giving Pledge, in which he has promised to give away at least half of his wealth.
While Buffett agrees that lowering the federal corporate tax rate to 20% from 35% would benefit Berkshire shareholders and corporate profits, he said he didn’t think taxes were holding American businesses back.
“We have a lot of businesses, 60 or 70, and I don’t think any of them are noncompetitive in the world because of the corporate tax rate,” Buffett said.
Watch Buffett’s comments via CNBC: