Warren Buffett might want to pay more taxes, but if Republican presidential candidate Herman Cain gets elected, Buffett might not pay any taxes at all.
If implemented, Cain's "999" tax plan would eliminate taxes on capital gains, significantly reducing Buffett's tax rate because his ordinary income, outside of capital gains, comes to about $4.9 million. Cain's plan would cap corporate, income and sales tax at 9 percent. According to an analysis prepared for Yahoo's Lookout by the American Institute of Certified Public accountants, the 999 plan would leave Buffett paying around $440,000 in income tax, or 1.1 percent of his approximate $40 million in currently taxable income.
As ThinkProgress notes, after deducting charitable deductions, which Cain plans to preserve in his tax plan, Buffett would likely pay no income taxes at all under 999. While the Berkshire Hathaway CEO hasn't disclosed all of charitable donations, it seems likely they would surpass his taxes.
The prospect of Buffet paying no taxes might shock, especially in the face of his recent commentary. In his August New York Times op-ed, he stated that the $6,938,744 (or 17.4 percent of his taxable income) he paid in taxes last year wasn't enough.
Melissa Labant, the accountant who prepared the analysis for Yahoo, did note some potential flaws in the calculations. However, the rough estimate is pretty accurate, based upon the information Buffett has released, and the scarce details of the plan Cain has touted:
For instance, Buffett may or may not be subject to the alternative minimum tax, and he may or may not have foreign tax credits created by taxes he paid in other countries. We also don't know the exact amount of his charitable giving. Nor do we know whether Cain's plan would exempt all such giving, or make distinctions between different types of contributions, as some tax systems do.
This latest revelation is just one of the ways critics have derided the 999 plan as Cain has risen in the polls. Critics have been quick to point out that under this plan, some, especially less affluent Americans, would see a rise in taxes.
Currently, tax cuts for the rich cost Americans about $11.6 million every hour. Under "999" it's possible that that expense could get even larger wealthy, though federal corporate and sales tax percentages set at 9 percent may offset the number to some degree.
The possibility that millionaires and billionaires such as Buffett may pay no income taxes is coming at a time when many Americans are calling for higher taxes on the wealthy. A recent study showed that a quarter of millionaires actually pay less in taxes than some of the middle class.
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