Warren Buffett, the billionaire calling for more taxes on the rich, said Mitt Romney’s U.S. rate of about 15 percent reflects poor laws rather than failings by the candidate for the Republican presidential nomination.
“It’s the wrong policy to have,” Buffett told Bloomberg Television’s Betty Liu in an interview today. “He’s not going to pay more than the law requires, and I don’t fault him for that in the least. But I do fault a law that allows him and me earning enormous sums to pay overall federal taxes at a rate that’s about half what the average person in my office pays.”
Buffett, chairman and chief executive officer of Berkshire Hathaway Inc., supports Democratic President Barack Obama and said Congress needs to raise taxes on the wealthiest Americans to close the budget deficit. Romney has agreed to release his 2010 tax return tomorrow, under pressure from Republican opponents, after saying he pays about 15 percent. Romney co-founded Boston-based private-equity firm Bain Capital LLC.
“He makes his money the same way I make my money,” said Buffett, 81. “He makes money by moving around big bucks, not by straining his back or going to work and cleaning toilets or whatever it may be. He makes it shoving around money.”
Romney, a multimillionaire, reversed course and promised to speed up release of his tax disclosures after being dogged by questions during the South Carolina primary campaign. Former House Speaker Newt Gingrich, one of Romney’s rivals for the nomination, earned $3.1 million in 2010 and paid an effective federal tax rate of about 32 percent, returns released by the candidate on Jan. 19 show. In a debate that day, Gingrich called on Romney to be more forthcoming.
Buffett said Romney “hurt himself” in his debate performance before the South Carolina vote and was unable to effectively answer the criticism about his taxes and disclosure. Romney, who won the New Hampshire primary this month, was second to Gingrich in South Carolina on Jan. 21.
“It was more Romney losing ground in the last 10 days than it was Newt gaining, although Newt made the most of it,” Buffett said. Romney “did not have a good answer on taxes and obviously the question was coming.”
“I don’t think that determines who should be president,” Buffett said.
“We just made a mistake in holding off as long as we did,” Romney said yesterday on “Fox News Sunday.”
Romney has also been criticized by rivals for his role at Bain, which made profits by buying and selling companies. Texas Governor Rick Perry, who dropped out of the race this month, said Romney had practiced “vulture capitalism.” Winning Our Future, a political action committee backing Gingrich, depicted Romney as “more ruthless than Wall Street” in a 30-minute film.
“I think that Mitt Romney did things in the private sector that lots of people do, and it’s perfectly legitimate to buy businesses,” Buffett said. “I don’t like buying businesses with lots of debt, but there’s nothing immoral about it or anything of the sort.
“In some businesses, they hired more people, in some they let people go,” Buffett said of Bain. “I don’t believe in businesses having more people than are needed, so I see nothing specific about him.”
Buffett has said his tax rate is the lowest among the about 20 employees at Berkshire’s headquarters in Omaha, Nebraska. Capital gains from most assets held for longer than a year are taxed at a top rate of 15 percent, while wage income is taxed at a top rate of 35 percent. The difference between those two accounts for Buffett’s lower rate.