O'Reilly claims Buffett "being deceptive" on issue of tax disparity between him and his secretary -- but he's been clear

››› ››› BRIAN LEVY

On his Fox News show, Bill O'Reilly stated that Warren Buffett "was not being truthful" when he said that, in Kirsten Powers' words, "he doesn't think his secretary should be paying a higher tax rate than he is." O'Reilly asserted, "His secretary isn't paying a higher tax. ... Mr. Buffett gets no salary. He gets return on his interest. And he gets capital gains tax at 15 percent. That's what it's taxed as," adding that Buffett was "being deceptive because he doesn't make a salary." But Buffett has acknowledged that most of his income is not salary, saying, "Most of my income is taxed at 15 percent, and doesn't pay a payroll. Mainly it's dividends and capital gains."

On the December 10 edition of Fox News' The O'Reilly Factor, host Bill O'Reilly objected to Fox News contributor Kirsten Powers' statement that Berkshire Hathaway chairman Warren Buffett "doesn't think that his secretary should be paying a higher tax rate than he is" by asserting: "His secretary isn't paying a higher tax." Moments later, O'Reilly added: "Warren Buffett was not being truthful when he made that statement, with all due respect to Mr. Buffett. Mr. Buffett gets no salary. He gets return on his interest. And he gets capital gains tax at 15 percent. That's what it's taxed as. ... So any salary person pays more than he does, but he was being deceptive because he doesn't make a salary." In fact, contrary to O'Reilly's suggestion, Buffett has acknowledged that most of his income is not salary. Indeed, while discussing the disparity between his tax rate and those of his employees, Buffett explained to NBC News special correspondent Tom Brokaw: "Most of my income is taxed at 15 percent, and doesn't pay a payroll. Mainly it's dividends and capital gains."

In an interview posted on CNBC.com on October 31 and excerpted on the October 29 edition of NBC's Nightly News, Brokaw mentioned Buffett's previous comments about the disparity between his tax rate and the one paid by his employees. In response, Buffett explained his calculations, saying that he pays a 17.7 percent tax rate because his income exceeds the payroll tax cap and most of his earnings are "dividends and capital gains."

From Buffett's interview with Brokaw posted on CNBC.com:

BROKAW: You've talked about, in your office, for example, you pay a much lower tax rate with all of your wealth than, say, a receptionist does.

BUFFETT: That's exactly right, Tom. And I -- I think the only way to do it is with specifics, and in our office, 15 people cooperated in a survey out of 18. I didn't make anybody do it. And my total taxes paid -- payroll taxes plus income tax -- and the payroll tax is an income tax. It's based on income.

BROKAW: Yeah.

BUFFETT: Mine came to 17.7 percent. That was the -- that was line 61 I think -- or, no, line 43 -- is the percent of taxable income, plus payroll taxes: 17.7 percent. The average for the office was 32.9 percent. There wasn't anybody in the office from the receptionist on that paid as low a tax rate. And I have no tax planning. I don't have an -- I don't have a -- an accountant. I don't have tax shelters. I just follow what the U.S. Congress tells me to do.

BROKAW: Why do you think that there's not more outrage about that?

BUFFETT: I don't think people understand it. For one thing, you'll see a lot of surveys that say the rich -- the top 1 percent -- pay this much of the income tax. Now I think what people don't realize is that almost one third of the entire budget comes from payroll taxes. And payroll taxes are taxes on income, just like income taxes are taxes on income.

And the payroll tax is over 800 billion out of two and a half trillion, or something like that. And people don't understand -- they -- that the rich pay practically no payroll tax. I mean, I paid payroll tax last year on 90-odd thousand, whatever the number is. I paid income tax on 66 million. But my double income tax, one of 'em quits at 90,000, and the remaining 66 million does not get taxed for payroll taxes. So, the person who makes $60,000 in our office gets taxed in full on the payroll tax and taxed in full on the income tax. And all the statistics you read, particularly the ones that don't like taxes, well, now, they totally ignore the payroll tax. And it's huge now.

BROKAW: Of all the tax lines that you've seen proposed over the years, a flat tax, a consumption tax, a more progressive income tax, which is the one that appeals to you the most?

BUFFETT: Well, in theory a progressive consumption tax makes the most sense. I mean, if you tax the people who use the resources of society rather than ones who provide the resources of society, that makes more sense. And a consumption tax can be very progressive.

You can have just an unlimited IRA. As long as you invest money, and don't actually spend it for yourself, or your kids don't spend it, or whatever, you don't get taxed. As soon as you start making withdrawals from society's bank, start using the resources, the sweat of other people to benefit yourself, you would pay on that. That's the one that makes the most sense. I don't -- it isn't gonna happen in all likelihood.

Certainly the worst taxes is something like a sales tax. I would say that we've got a pretty bad system, when we tax the person who cleans out my office, the receptionist. They are paying 15 -- payroll taxes over 15 percent now, just for openers.

Most of my income is taxed at 15 percent, and doesn't pay a payroll. Mainly it's dividends and capital gains. And if you look at the Forbes 400 -- a bunch of my fellow rich guys -- they will -- their tax rate overall to the federal government will be less than that of their receptionist. And I challenge anybody; if they want to make me a bet on that. And I've urged Congress -- both the Senate and the House -- to get the figures anonymously from the IRS. Just look at that Forbes 400 -- takes a billion three to get on the Forbes 400 this year. And the aggregate wealth is just staggering. And those people are paying less percentage of their total income to the federal government than their receptionists are.

From the December 10 edition of Fox News' The O'Reilly Factor:

O'REILLY: OK, now, Warren Buffett, the billionaire, now he's hedging his bets, giving [Sen.] Hillary [Rodham Clinton (D-NY)] some money, giving [Sen. Barack] Obama [D-IL] some money. What do you think about Warren Buffett? Now, he's very well respected.

MARGARET HOOVER (Republican strategist): Very well respected and he's very good at making money, but this is a guy who's actually politically naive. And this is the time, if you have that stature, to put your money on a horse. You got to pick a candidate in the race. You can't cover your bases.

It's very unusual that he's doing this. And I also think it shows some political naïveté that he's allowed himself to be used really by the left, as the rich guy who doesn't mind giving his money to the government --

O'REILLY: But he's a true believer now. He's changed into a "I have all this money, Warren Buffett, here I am."

HOOVER: And I don't mind giving it.

O'REILLY: "I'm not giving to my kids because I want my kids to make it on" -- but I don't believe that for a second. I think his kids are well taken care of. "But I want income redistribution in this country." That -- and he believes that the Democratic Party will do that, and they will. So, that's where he is.

HOOVER: Yeah, it just doesn't make a lot of sense for somebody who is shrewd in economic terms and knows how to make money and gets how the system works, that he would impose his beliefs on everybody else.

O'REILLY: He's not imposing.

HOOVER: Everybody else -- but he supports redistribution. He supports -- everybody who has done as well as him should give all their money back to the government.

O'REILLY: Absolutely, but he's not imposing. He's just saying, "This is what I believe. And I'm" --

HOOVER: He is supporting income redistribution --

O'REILLY: Yes, he is.

HOOVER: -- which is tantamount to socialism, which we know doesn't work.

O'REILLY: Oh, Hoover, that's hysterical.

HOOVER: That is politically naive. That's politically naive.

O'REILLY: Powers loves income redistribution, particularly when I'm paying her out of my pocket. She loves that kind of income redistribution.

POWERS: You're so good to me, Bill.

O'REILLY: I am. Come on.

POWERS: You're so good to me.

HOOVER: Sugar daddy.

O'REILLY: You're doing Hannity next, aren't you?

POWERS: I know.

O'REILLY: Are you substituting for [Fox News host Alan] Colmes tonight?

POWERS: Of course I am.

O'REILLY: OK, now why do you think you got that gig?

POWERS: I think because they like me.

O'REILLY: Yeah. And how do they like you? Because you're on this program.

POWERS: I was -- OK, whatever, Bill.

O'REILLY: All right, go ahead.

POWERS: But I'm going to go to this thing -- first of all, Warren Buffett isn't saying anybody should give all their money back to the government.

O'REILLY: No, but he's an income redistribution guy.

POWERS: And he's not -- and to call him naive, he's not naive. He knows what he's doing. This is his issue. He goes and he talks about this issue. He doesn't think --

O'REILLY: It's his issue.

POWERS: -- that you should be paying --

O'REILLY: I don't have any beef with that.

POWERS: He doesn't think that his secretary should be paying a higher tax rate than he is.

O'REILLY: And he's -- but that's deceptive. His secretary isn't paying a higher tax.

POWERS: Well, that's what he says. And he --

O'REILLY: Well, I know, but he's not being truthful.

HOOVER: But his secretary's making six figures.

POWERS: Well, he's saying that his secretary pays a higher tax rate than he does.

O'REILLY: Hold it. No, no. Let me explain. Powers, take a deep breath. This is the deal. Warren Buffett was not being truthful when he made that statement, with all due respect to Mr. Buffett. Mr. Buffett gets no salary. He gets return on his interest. And he gets capital gains tax at 15 percent. That's what it's taxed as. That's why the economy's good. That's why there's money going in, because you get taxed 15 for long term gains. He doesn't make a salary. So any salary person pays more than he does, but he was being deceptive because he doesn't make a salary. OK, go ahead.

Posted In
Economy, Taxes
Network/Outlet
Fox News Channel
Person
Bill O'Reilly
Show/Publication
The O'Reilly Factor
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