Buffett Repeats Opposition To Dividend Tax Cut

by Leroy Baker, Tax-News.com, New York

07 May 2003

Billionaire investor Warren Buffett has repeated his criticism of President Bush's plan to eliminate tax on share dividends, claiming that the cut will unfairly benefit only a small minority of wealthy individuals in the United States.

Buffett, chairman of Berkshire Hathaway, spoke at the investment and insurance firm's annual general meeting in his home town of Omaha, Nebraska, on Sunday. When asked at a press conference to air his thoughts on the possible effects of the dividend tax cut, the centrepiece of President Bush's economic stimulus package, Buffett announced: "He (Bush) is not changing the amount the American public sends the government, just changing who does it." He went on to assert that the only way taxes can be effectively reduced is to cut government spending.

Buffett echoed sentiments expressed earlier this year at a Democratic Party Policy Committee lunch, where he observed that the dividend tax cut, if introduced, would mean that he would be paying proportionately less taxes than his secretary. He estimated that the measure would result in his personal tax bill being reduced by $300 million.

A recent study by the Institute on Taxation and Economic Policy has concluded that 49% of the tax cut benefit will go to the top 1% of earners in the US. This means that people earning more than $374,000 per year would save an average of $11,500 as a result of elimination of dividend tax. Meanwhile, the remainder of the population would see a benefit ranging from $1,232 to $1.

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