Warren Buffett did, or did so in 16 words to be exact, in a chat with The New York Times: "I'm paying the lowest tax rate that I've ever paid in my life," Buffet said. "Now, that's crazy."
Further, Buffett, the world's richest person as ranked by Forbes Magazine with wealth totaling $62 billion, also said the U.S. Government should increase taxes on the wealthy to help pay for the recently-passed bank rescue, which is designed to end the financial crisis.
Buffett's stance demonstrates that there is at least one person of high income and/or wealth (and probably many more) who believe upper-income groups should be paying more in federal taxes each year.
2001 tax cut generated large U.S. budget deficits
Buffett's view is also in stark contrast to the Bush Administration's philosophy and policy, which has prevailed for the decade and which argues that lower tax rates on upper-income groups will not only generate higher GDP growth, but also result in revenues high enough to close the federal budget deficit. It hasn't happened, said economist David H. Wang.
"Under the best economic growth circumstances, the Bush Administration's tax cut, assuming spending was held in check, would have narrowed the budget deficit to about $100 billion," Wang said. "But at the same time the Bush Administration's tax cut was passed, the federal government was increasing spending for the War on Terror, and later for the Iraq War, and other programs." The tax cut of 2001 substantially cut taxes on upper income groups, lowering the top tax rates of 39.6% and 36% to 35% and 33%, respectively.
The result has been predictable, Wang said -- deficits every year the Bush Administration formulated a budget, fiscal 2002-2009, with red ink rising as the U.S. economy slowed. The U.S. recorded a $161 billion deficit in fiscal 2007; a $407 billion last year, fiscal 2008; and is expected to run at least a $438 billion deficit this year, fiscal 2009, which began on October 1, according to the Congressional Budget Office (pdf).
However, this year's projected $438 billion deficit does not include the costs of the bank rescue and related programs, Wang said. These programs are expected to add at least $200 billion to this year's deficit, and could add more than $400 billion, he said.
Federal Budget / Economic Analysis: The bottom line -- taxes are going up on upper-income groups, and on just about everyone else. The new U.S. president and Congress can limit spending in some programs, but the costly bank rescue and related programs needed to end the financial crisis guarantee that the federal government will need much more revenue than even what the most optimistic economic growth projection would imply.