Warren Buffett (second richest man in the U. S) pays less tax than you do

Warren Buffett is challenging Forbes 400 members to fork over more

Warren Buffett has been up on his soapbox recently, railing against the Bush Administration's tax policy. America's second-richest man--whose net worth now exceeds $57 billion--pontificates that the rich have lower tax rates than the middle class. It's not a novel argument for Buffett, but he's finding new ways to showcase it.
A few weeks ago he told Tom Brokaw of NBC News that he pays less tax, as a percentage of his taxable income, than the folks who work in Berkshire Hathaway (NYSE:BRK-A - News)'s home office. That's because much of his income is taxed at the lower dividends and capital gains rate. To prove his claim, the Oracle (NasdaqGS:ORCL - News) of Omaha produced a memo showing that he had $46.9 million in taxable income in 2006 and paid just 18% to the Feds. The average federal tax paid by Berkshire employees was nearly double Buffett's rate, at 33%. Their salaries range from $60,000 to $750,000.
Buffett wants to take the argument further. He says he will bet any Forbes 400 member $1 million (proceeds to charity) that the average federal tax rate (income and payroll) paid by The Forbes 400 is less than the average rate of their secretaries and receptionists. "So far only three close friends, all 400 members, have made the calculation for me," he tells forbes in an e-mail exchange. "They all came up with results similar to mine but have no interest in being identified."

While we couldn't pin down many other Forbes 400 members to a real million-dollar wager, some did speak their minds.

Phillip Ruffin $2.1 billion Casinos

"I think Buffett is (getting) carried away with all of the media hype he gets. He is forgetting about the 55% estate tax at death that goes along with making the money. Maybe he is getting senile? [I have] no interest in his challenge, but I will play him (in) a game of poker, any stakes he wants."

Mark Cuban $2.6 billion Broadcast.com, Dallas Mavericks

"I agree with him. I put a lot of money in tax-free instruments. So, yes, I do pay less as a percentage of income than those that work for me, and I have no problem admitting it. Conceptually I have zero problem with paying more taxes. Unfortunately, far too much money is wasted by our politicians."

John Catsimatidis $2.1 billion Oil, real estate

"The numbers can fool you. If I make $20 million, I'm not going to pay 35% on it because I have a complex business. I own real estate, stocks and bonds, and so I have depreciation and writeoffs. But I do pay a lot in taxes. My secretary is going to pay it straight, because her only income is her salary, and her assets are essentially her home. Death is where the government really gets the rich."

George Kaiser $11 billion Oil, banking

"I agree wholeheartedly that our tax system is insufficiently progressive. I also agree that the estate tax at levels above $10 million should be retained. Higher tax rates for higher levels of income [up to at least 50%, maybe higher] not only are socially responsible but also would encourage more charitable giving."

Kenneth Fisher $1.8 billion Investments, FORBES Columnist

"He should stick to his area of expertise. It's a little late to be trying to learn and teach social policy. The fact is that most rich people have an impossible time avoiding high taxes, even if they are purely invested in instruments that are solely subject to capital gains. Rich people are still subject to alternative minimum tax on the federal level and still have to pay state income taxes. "

RANDAL J. KIRK $1.6 billion Pharmaceuticals

"While I admire Mr. Buffett greatly, his thesis here seems grossly simplistic. There are good reasons why investment returns are not taxed at the 'ordinary' income tax rate. If investment returns in the U.S. are reduced through the imposition of additional taxes, people will 'buy' less investment (because the price would have gone up)."

B. Thomas Golisano $2 billion Paychex (NasdaqGS:PAYX - News)

"There are some facts I'd like to remind Mr. Buffett of. The top 1% of earners in this country pay 30% of the income taxes, and the top 5% pay 50% of the income taxes. Other than that, I don't think he's crazy."

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