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America should stand for more than just wealth, says Warren Buffett
Now to the second part of my conversation with billionaire Warren Buffett.
I spoke with him last week in Omaha last week at the Nebraska Furniture Mart, the largest furniture store in America. It is just one small piece of a huge portfolio of investments owned by his company, Berkshire Hathaway, but one that Buffett takes particular pride in as part of his legacy.
Both the Senate and House Republican health care reform bills would roll back taxes that are part of Obamacare. Buffett has taken issue with that.
And that's where my conversation picks up.
One of the things the Republicans are looking at, as you know very well, is doing away with the so-called Obamacare surcharge on people earning a higher income.
WARREN BUFFETT, Chairman and CEO, Berkshire Hathaway: Yes.
So, Republicans are looking at taking that away, or doing away with that, which would mean a tax cut, you have said …
… for people like you.
Well, I brought my tax return along for the last year. I filed this on April 15. And if the Republican — well, if the bill that passed the House with 217 votes had been in effect this year, I would have saved — I can give you the exact figure. I would have saved $679,999, or over 17 percent of my tax bill.
There's nothing ambiguous about that. I will be given a 17 percent tax cut. And the people it's directed at are couples with $250,000 or more of income. You could entitle this, you know, Relief for the Rich Act or something, because it — I have got friends where it would have saved them as much as — it gets into the $10-million-and-up figure.
But I might point out — it might be an interesting question. I think members of the Senate and the House get $174,000 a year. But most of them have — if you look at the disclosures, they have substantial other income. If they get to higher than $250,000, as a married couple, or $200,000 as a single person, they have given themselves a big, big tax cut, if they — if they voted for this.
Well, speaking of taxes, let's just use that as an entry point to talk about it.
You shared some of your tax return with us for 2016. Thank you very much.
But before I ask you about that, how wealthy are you? I mean, I'm reading that you're $77 billion?
Ninety-nine percent of my net worth is in Berkshire Hathaway stock. Every share of that stock has been pledged to philanthropy.
So, I'm a trustee for that stock. So, it will go to society. And then the rest will as well. But if you add up what's in my name, if we go down to my safe deposit box, we will find some stock certificates that are worth that much.
But as I — you know, I have written, they have no utility to me. They can't do anything to make me happier. I'm already happy. I would be happy with, you know — certainly with $100,000 a year, I could be very happy. And they can't buy anything for me that I want. If they did, I would buy it.
And they do have utility to others, so I have got this system to essentially try and translate that into vaccines and education and all of that sort of thing.
The reason I bring that up, Warren Buffett, is that that's your wealth, your worth. And yet, on your tax return, you earned $19 million-something.
Nineteen-and-a-half million last year.
Your effective tax rate was 16.3 percent, which — we looked it up. This is what an average couple, a married couple, no children, taking the standard deduction would pay on an income of $136,000. In other words, a couple who earned — you earn 143 times more than they do, but your tax rate is the same as theirs.
Yes, I have pointed that out in past, in the past.
And it's even worse than you say, Judy, because you're looking at what that couple would pay in federal income tax. But they are also paying payroll taxes, in overwhelming cases. And my cleaning lady has a 15 percent tax, you know, just from Social — just from the Social Security that she and her employer pay, but it's kind of incredible.
And now they want to cut it. No, they want to cut it for me. I mean, you know, they — I don't look like somebody that deserves a cut.
Well, they — the Republicans are talking about lowering taxes …
… on the …
They want to cut my tax 17 percent. They saw those figures and were shocked that I was paying that much, apparently.
But, among other things, they're talking about doing away with some of the — some of the deductions, charitable deductions, maybe, mortgage deductions, maybe, state and local tax — taxes paid as deductions.
Do you have a thought about all those?
Well, you can't really talk about specifics without looking at the whole thing.
But if they're talking about making it revenue-neutral, you know, I think if they're going to make it revenue-neutral, it ought to be — it ought to be something other than revenue-neutral to the guys like me. Our rates should go up, allowing others to go down somewhat.
I think there ought to be minimum taxes for people that make $10 million a year, and a different one at a million a year, but certainly at $10 million a year.
They also, as you know, want to tackle business corporate tax rates. They're talking about the current corporate rate, lowering it from 35 percent to 15 percent? The president has talked about — I guess Speaker Paul Ryan this week said 20 percent.
What would that mean for you if …
Well, it would mean, for Berkshire, in all probability, that we would pay less in U.S. federal income taxes.
But until you see the final thing, you can't tell. Berkshire Hathaway is the second largest corporation on the Fortune 500 this year. I don't know any case where our competitiveness is being hurt by the federal income tax rate on corporations.
Estate taxes, a thought about that?
Oh, estate taxes, I mean, I — you hear people call it the death tax.
There are going to be two-and-a-half million people die in the United States this year. How many estate tax returns are there going to be? Probably about 5,000. And the interesting thing is, if I talked to somebody about welfare mothers or something like that, they say how debilitating it is to have these food stamps, and it takes away their incentive to do anything.
If a kid comes out of the right womb in this country, they have got food stamps for their rest of their life. They just call them stocks and bonds. And their welfare officer is their trust officer.
I mean, I think I — I think having a significant estate tax that starts at a fair-sized level is — if you're going to have to raise $3.5 trillion, I think that's a good source of revenue, and that I — it shouldn't apply to, you know, 99 percent of the people.
You have been very — I mean, very open about your own taxes, and people have taken a look at that, and they have also looked at Berkshire Hathaway. It has been pointed out that Berkshire Hathaway does take advantage of the legal ability to defer taxes, and …
Sure. Well, that's because …
And I saw a number, something like $75 billion in deferred taxes?
Well, that's we haven't cashed things that we — just like you, if you have got a stock that's gone up a whole lot, until you sell it.
But that's just the law. And we're going to — we don't have any of the Cayman Islands or anything like that stuff. But we follow the law, and we got a million shareholders. And I think they probably expect us to do that. That doesn't mean I don't think the law shouldn't be changed in some way.
But I follow the law in terms of my personal return. I do not send an extra $5 million to the Treasury.
Your philanthropy, we have talked about it a little bit. It's legendary. You and Bill Gates, Melinda Gates have come together and, I guess, broken all records imaginable for giving.
At the same time, it's being pointed out that you're also making — you first made that pledge, what, 10, 11 years ago.
You're now making so much more even than you did then. People are saying, well, wait a minute, you know, is he going to be giving more away?
How do you think about that?
Well, I have got it set up so that, if I make more, I do give more, because I'm giving on a schedule, and that schedule ends 10 years after I die.
So, it's all — so I'm not setting up — and, actually, they can't use it for endowments or anything. It has to be spent within 10 years, really, after my estate's closed, but call it after I die.
How much influence do you think you had on other, others with wealth, with means to give, to be as generous as you have been?
Well, a lot of people come back to me on that.
And basically, I said, you know, if you're extremely rich, and you have got children, my theory was, you give them enough so they can do anything, but not enough so they can do nothing. And I have had more people come back to it, so, apparently I was smarter in 1980, whatever it was, than I am now. But that seemed to have some influence.
Are you comfortable today with what you're giving? I mean, does it feel …
It's exactly what I wanted to do.
Does it feel like the right thing to be doing right now?
It's the right thing. It's the right thing, because it's going — it's going to people who believe, as the Gates, for example, that every life is of equal value.
I mean, the truth is, I have got a lot of wealth, little pieces of paper, says Berkshire Hathaway on it. They are claim checks on all kinds of goods and services in the world. They can buy anything. I can buy 400-foot yachts and have 20 homes and all that. I wouldn't be happier. But they can buy anything.
And once they move into the hands of people who are working like hell on getting something accomplished in areas I want them to — you know, I love the idea of getting them used, and that's what they're doing.
You said it wouldn't make you happy to have a hundred, 200 homes and yachts and so forth. What does make Warren Buffett happy?
I just have a lot of fun doing my job.
I mean, I can do anything I want, basically, as long as it doesn't involve athletic ability, or something like that.
But if it's something I can buy, I can buy anything, basically.
I have been on 400-foot yachts, and I have — I have lived the life a little bit with people that have 10 homes and everything. And I live in the same house I bought in 1958. And if I could spend $100 million on a house that would make me a lot happier, I would do it.
But, for me, that's the happiest House In the world. And it's because it's got memories, and people come back, and all that sort of thing. So, I am doing what I love to do with people I love. And it doesn't get any better than that, Judy.
And — but I should be. I mean, why in the hell — why should I be working at 86 at something that I don't like or with people I don't like?
And I see you're drinking a Cherry Coke.
How do you stay healthy?
Well, I think I stay healthy partly by being happy, actually.
I think that — I think it really helps if your stomach isn't grinding all the time, and you're doing things you don't want to do, or you're working with people that — you know? So I have gone very light on the diet advice.
I eat like a normal 6-year-old, but if you look at the mortality statistics, I mean, 6-year-olds don't die very often.
I mean, the diet's doing something for them.
How much sleep do you get?
I get quite a bit of sleep. I like to sleep.
So I will usually sleep eight hours a night, and that — no, I have no desire to get to work at 4:00 in the morning.
So many people look at you and they think, oh, my goodness, this man, he's accomplished so much. He's been so successful. He's 86 years old, and he's still going strong.
I love it.
So, what do they — so, what's the secret?
The secret is to find what you love to do.
I mean, I tell the students look for the job that you would take if you didn't need a job. I mean, it's that simple. And I was lucky enough to find it very early in life. And then the second thing is to have people around you that make feel good every day, and make you a better person than you otherwise would be.
I have more fun doing this than anything else I can think of in the world, and I have seen a lot of other things you could do in the world.
Warren Buffett, thank you very much.
Thank you, Judy.
And he does come across as a happy man.
And, for the record, Warren Buffett is CEO of Berkshire Hathaway, which owns BNSF Railway. It is one of the funders of the NewsHour.
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