U.S. taxes are likely to rise in order to tame the federal deficit, according to investor Warren Buffett.
The Berkshire Hathaway chairman and chief executive officer offered his prediction at the company’s shareholders meeting in Omaha on Saturday. The billionaire, 93, shared his economic outlook and thoughts on investing during the annual meeting. According to his forecast, the U.S. government will hike taxes rather than reduce spending to deal with the mounting national debt.
“With present fiscal policies, I think that something has to give. Higher taxes are quite likely, and if the government wants to take a greater share of your income or mine or Berkshire’s, they can do it. And they may decide that some day they don’t want the fiscal deficit to be this large,” he said.
The U.S. national debt recently hit a record high of $34 trillion, according to data by the Congressional Budget Office, an amount that is nearly as big as the U.S. economy.
The federal deficit is simply “too massive to ignore,” according to Andrew Lokenauth, banker and financial advisor. In a statement to NTD News, Mr. Lokenauth said that Americans need to brace for higher rates across the board.
“Warren’s absolutely right – taxes are headed up, no doubt about it. Warren’s warning makes sense – the deficit situation is unsustainable long-term. Tax hikes are probably unavoidable with these mind-boggling deficit levels,” he said.
However, a corporate tax rate increase is “appropriate,” and Berkshire Hathaway is expected to pay “substantial federal income taxes,” according to Mr. Buffett. He revealed that the company paid more than $5 billion in federal taxes last year.
Currently, the corporate tax rate sits at 21 percent. It was lowered from 35 percent in 2017 by then-President Donald Trump. By contrast, President Joe Biden has called to raise the rate to 28 percent.
“President Biden’s State of the Union address presented a vision of higher taxes for American businesses and high earners combined with carveouts, credits, and more complex rules for taxpayers at all income levels,” according to a recent analysis by the Tax Foundation, a nonpartisan and nonprofit tax policy organization.
“The increase in the corporate tax rate and the additional taxes on top earners would result in U.S. top marginal tax rates on income that are among the highest in the developed world,” the organization said.
Berkshire Hathaway will pay whatever the corporate tax rate is, whether it stays at 21 percent or goes up, according to Mr. Buffett.
“And if 800 other companies had done the same thing, no other person in the United States would have had to pay a dime. It doesn’t bother me in the least to write that check, and I would really hope with all that America has done for all of you, it shouldn’t bother you that we do it,” he told shareholders.
Mr. Buffett also further discussed the future of Berkshire Hathaway during the annual shareholders meeting and endorsed Greg Abel as his designated successor. Additionally, the billionaire investor made a tongue-and-cheek comment about his age.
“I not only hope you come next year. I hope I come next year,” Mr. Buffett jokingly said.
