Washington, May 20 (Bloomberg) -- Billionaire Warren Buffett, the world's second-richest man, criticized President George W. Bush's proposed dividend tax cut because it promotes ``class welfare'' for the rich.

The tax cut would ``supply major aid to the rich in their pursuit of even greater wealth,'' Buffett, the chairman of Berkshire Hathaway Inc., an insurance and investment company, wrote in an article in the Washington Post today. ``If enacted, these changes would further tilt the tax scales toward the rich.''

Senate Finance Committee Chairman Charles Grassley, who pushed a $350 billion tax cut bill through the Senate last week, said Buffett doesn't appreciate how much the legislation would help the middle class.

Buffett criticized the tax cut proposal as lawmakers are reconciling two versions of the legislation passed by the Senate and the House of Representatives. The Senate bill proposes a $350 billion tax cut over 10 years, including a three-year suspension of the tax shareholders pay on dividend income. The House backed a $550 billion tax cut that would reduce the dividend tax.

If the dividend tax cut approved by the Senate is enacted, the receptionist at Berkshire Hathaway will pay a federal tax rate 10 times higher than his, Buffett wrote.

As owner of 31 percent of Berkshire, Buffett would receive $310 million in extra income if the company decided to pay $1 billion in dividends next year; his tax rate would plunge to 3 percent, while the rate of Berkshire's receptionist would remain at 30 percent, he wrote in the article.

``Give reductions to those who both need and will spend the money gained,'' wrote Buffett, known as ``the sage of Omaha'' because of his success at investing. ``Putting $1,000 in the pockets of 310,000 families with urgent needs is going to provide far more stimulus to the economy.''

Bill Gates

Buffett's fortune is estimated at $36 billion by Forbes magazine in its annual survey, placing him second after Bill Gates, the founder of Microsoft Corp. who is worth $43 billion.

``Warren Buffett is one of the richest men in the world and can't have any appreciation for middle class Americans, for a husband and wife who work to put food on the table, send kids to college or maybe even take care of their mother and father in retirement,'' Grassley said in an appearance on CNBC.

``He should not denigrate efforts to give a family with two children an additional $800 a year they would find very useful for raising those kids,'' Grassley said.

Steve Forbes, chief executive of publisher Forbes Inc. which produces an annual list of the 400 richest people in America, also disagreed with Buffett's view.

Forbes said on CNBC that Buffett's opinion results from ``guilt and part of it is a misunderstanding that the dividend income shouldn't be taxed twice.''

Forbes said that getting rid of a layer of taxation on dividends ``increases people's ability to take more risks and get that money back to work.''

Last Updated: May 20, 2003 16:28 EDT