Billionaire investor Warren Buffett says that it’s a “myth” that high taxes are “strangling” U.S. corporations.
In a Monday op-ed for The Wall Street Journal, Republican presidential candidate Rick Santorum called for the corporate tax rate to be halved from 35 percent to 17.5 percent to “[r]estore America’s competitiveness.”
CNBC’s Andrew Ross Sorkin asked Buffet what he thought the highest rate should be.
“What the rate should be are rates that bring in about 18.5 or so percent of GDP [gross domestic product] as revenue,” the Oracle of Omaha explained. “The interesting thing about the corporate rate is that corporate profits, as a percentage of GDP last year were the highest or just about the highest in the last 50 years. They were 10 and a fraction percent of GDP. That’s higher than we’ve seen in 50 years.”
He continued: “The corporate taxes as a percentage of GDP were 1.2 percent, $180 billion. That’s just about the lowest we’ve seen. So our corporate tax rate last year, effectively, in terms of taxes paid for the United States, was around 12 percent, which is well below those existing in most of the industrialized countries around the world.”
“So it is a myth that American corporations are paying 35 percent or anything like it. Incidentally, 1.2 percent of GDP or 12 or so percent of corporate profits actually paid, that is a rate far, far, far below what we’ve seen in the United States. … Corporate taxes are not strangling American competitiveness.”