Remember when then-Senator Obama was running for President how excited the left was that ‘The Wizard of Omaha,’ Warren Buffet, one of the wealthiest people in America would be advising President Obama? Well, fast-forward a couple years and we find President Obama in what one of his top political advisors described as a ‘Titanic Battle’ for re-election, and he appears to not be listening to his advisors, at least not Mr. Buffett.
Mr. Buffett has come out publicly against (or perhaps confused is a better word) this administration’s decision to rescind a generous tax deduction for corporate jet purchases made during this downturn in the economy. The tax deduction was put in place during the Bush administration, but once President Obama took office he not only extended the deduction, but increased it from 50% to 100%. But once this administration learned how well the American public reacted to the heads of the failing automakers being attacked for taking corporate jets to ask congress for a bailout, the President apparently rethought his attempts to stimulate the corporate jet industry – and held corporate jet owners out as examples of excess, and wanted to rescind the very deductions he implemented. That same deduction for corporate jets (not personal) also applied to other capital investments by American companies, but this administration is willing to hurt the jet industry to score political points. As Mr. Buffett said, why does it make sense for a company to be able to deduct the price of a new locomotive, but not a corporate jet? Both are pieces of equipment used by businesses to make money.
Now the President has set his sights on high-income earners (over $1M/year) that pay a ‘lower tax rate than their secretaries.’ this is based in part on a famous line Mr. Buffett used in a WSJ op-ed piece. First off, I thought the issue was revenue, not rates, and millionaires pay more than their secretaries, but let’s put that aside. The President has rolled-out what he calls “The Buffett Plan” – an alternative minimum tax for people that earn over $1M in income. Mr. Buffett, despite allowing the administration to name the proposal after him has come out against it. Mr. Buffett wanted the very high-earners to be subject to a higher rate than they currently are. The President’s ‘Buffett Plan’ does nothing to increase the taxes owed by say a person who earns millions a year playing a sport or in the entertainment industry – their compensation isn’t covered by the proposed change. Mr. Buffett wanted a tax on them.
Maybe President Obama should start meeting with, and listening to, the advisors he touted on the campaign trail, not reacting to polls and working on his re-election…