Warren Buffett says even though he and other top earners are paying higher taxes this year, he thinks he’s still paying a lower rate than his secretary.
In 2013, capital gains for those earning more than $400,000 ($450,000 for couples) will be taxed at 20%, up from 15%. And high-income households also will pay an additional 3.8% in Medicare taxes on their investment income for the first time. The top marginal tax rate also rose for the wealthiest wage earners, but since Buffett’s income is from investment gains, not wages, that’s not a factor.
But part of the problem is that his secretary’s tax bill also went up since a partial payroll tax holiday ended, raising what she pays for social security by 2 percentage points.
“I’ll be a fair amount higher, 8 or 9 points higher,” Buffett said of his own tax rate in an appearance on CNBC Monday. “But the differential between me and the rest of the office, not just my secretary but the rest of the office, was greater than that. It’ll be closer, but I’ll probably be the lowest paying taxpayer in the office.”
Buffett has been advocating for a minimum tax on top wage earners — those like himself who benefit from the fact that capital gains are taxed at a lower rate than regular earnings. His proposal, popularly known as the Buffett rule, has the support of the Obama administration but is strongly opposed by Republicans in Congress.
Asked if the rise in the capital gains rate and the top marginal tax rate that took effect this year were pointless since he’s still paying less than his secretary, he responded, “It was better than no change.”