Photograph by Scott Eells/Bloomberg
“The rest of the world may think we’re idiotic ... they don’t think we’re going to commit suicide”
I want to start with your recent opinion piece on a minimum tax for the wealthy. You take a stand against the idea of taxes curbing investment. I’m going to call you tonight at midnight, and I’m going to be panting, and I’m going to say, “This is the best investment idea I’ve ever had.” Are you going to say, “How much will the tax be?”
So where do you set the rate?
On incomes of over $1 million, the excess $1 million should have a minimum tax of 30 percent. And then over $10 million, 35 percent. The reason I’m suggesting that is because the 400 highest taxpayers in the most recent year we have figures for, 2009, who had average incomes of $202 million, half of those people paid at a rate below 20 percent. A quarter paid at a rate below 15 percent. And believe it or not, six, average income of $202 million, paid nothing. I mean, they were members of Romney’s 47 percent, and I suspect he got their vote. That’s just a bunch of moochers. I think tax law should be progressive. And I think that when people make $15 million or $20 million or $200 million and pay a 10 percent rate, something should be done about it.
Do you think the president will listen?
I hope the president and Congress are responsive to it. There are all kinds of things wrong with the tax code, and reform is called for, but I don’t want to wait around until all of that stuff is done to do some things that are obvious now.
How dangerous is the fiscal cliff?
I don’t think it will do that much. People assume that a solution will be found quite promptly. It’s a little like the debt ceiling. The rest of the world may think we’re idiotic at times, but they don’t think we’re going to commit suicide.
You’re confident about the U.S. economy?
It’s getting better. It’s been getting better since, really, the summer of 2009. We’ve got four years straight now where the stock market has given a positive return. We had a tremendous bubble, and when it burst it had ramifications for all aspects of society. And it was magnified by the abuses that had taken place on Wall Street. So the dominoes were lined up, but we’ve been on the mend now for three years.
What would you tell investors?
Overwhelmingly, for people that can invest over time, equities are the best place to put their money.
Not bonds?
Bonds might be the worst place to put their money. They are paying very, very little, and they’re denominated in a currency that will probably decline in value. Other than that, they’re terrific.
You’re adept at valuing companies. Why are you so good at it?
I only get into situations where I know the value. There are thousands of companies whose value I don’t know. But I know the ones that I know. And incidentally, you don’t pinpoint things. If somebody walks in this door and they weigh between 300 and 350 pounds, I don’t need to say they weigh 327 to say that they’re fat.
You’ve said you’re hunting for a big elephant. How do you choose a company to acquire?
If you’re talking about buying an entire business—which we’re talking about in this case—I’m familiar with all the companies when you get to that size. It’s really a question of when the CEO, the board, is actually thinking about doing something. The initiative really has to come from them because Coca-Cola (KO) isn’t for sale, Wells Fargo (WFC) isn’t for sale, 99 percent of the companies are not.
In international terms, where do you see the best economic prospects?
Europe is still drifting downward to some degree. And Asia’s coming off the best rate of growth, but they’re coming down somewhat. The U.S., actually, is strongest relative to where it was six months ago or nine months ago. Housing is coming back big-time. But five years from now, 10 years from now, the world everywhere will be doing better.
Why?
Just because capitalism and market systems work. It’s been working, you know, since 1776 here. And it wasn’t because we had stimulus programs in 1794. Our system unleashes people’s potential. And we’ve got 312 million people that want to do better tomorrow than today. Over time, that works. This country goes forward, and it’ll continue to go forward. The luckiest person in history on a probability basis is the baby being born in the United States today.
So where do you set the rate?
On incomes of over $1 million, the excess $1 million should have a minimum tax of 30 percent. And then over $10 million, 35 percent. The reason I’m suggesting that is because the 400 highest taxpayers in the most recent year we have figures for, 2009, who had average incomes of $202 million, half of those people paid at a rate below 20 percent. A quarter paid at a rate below 15 percent. And believe it or not, six, average income of $202 million, paid nothing. I mean, they were members of Romney’s 47 percent, and I suspect he got their vote. That’s just a bunch of moochers. I think tax law should be progressive. And I think that when people make $15 million or $20 million or $200 million and pay a 10 percent rate, something should be done about it.
Do you think the president will listen?
I hope the president and Congress are responsive to it. There are all kinds of things wrong with the tax code, and reform is called for, but I don’t want to wait around until all of that stuff is done to do some things that are obvious now.
How dangerous is the fiscal cliff?
I don’t think it will do that much. People assume that a solution will be found quite promptly. It’s a little like the debt ceiling. The rest of the world may think we’re idiotic at times, but they don’t think we’re going to commit suicide.
You’re confident about the U.S. economy?
It’s getting better. It’s been getting better since, really, the summer of 2009. We’ve got four years straight now where the stock market has given a positive return. We had a tremendous bubble, and when it burst it had ramifications for all aspects of society. And it was magnified by the abuses that had taken place on Wall Street. So the dominoes were lined up, but we’ve been on the mend now for three years.
What would you tell investors?
Overwhelmingly, for people that can invest over time, equities are the best place to put their money.
Not bonds?
Bonds might be the worst place to put their money. They are paying very, very little, and they’re denominated in a currency that will probably decline in value. Other than that, they’re terrific.
You’re adept at valuing companies. Why are you so good at it?
I only get into situations where I know the value. There are thousands of companies whose value I don’t know. But I know the ones that I know. And incidentally, you don’t pinpoint things. If somebody walks in this door and they weigh between 300 and 350 pounds, I don’t need to say they weigh 327 to say that they’re fat.
You’ve said you’re hunting for a big elephant. How do you choose a company to acquire?
If you’re talking about buying an entire business—which we’re talking about in this case—I’m familiar with all the companies when you get to that size. It’s really a question of when the CEO, the board, is actually thinking about doing something. The initiative really has to come from them because Coca-Cola (KO) isn’t for sale, Wells Fargo (WFC) isn’t for sale, 99 percent of the companies are not.
In international terms, where do you see the best economic prospects?
Europe is still drifting downward to some degree. And Asia’s coming off the best rate of growth, but they’re coming down somewhat. The U.S., actually, is strongest relative to where it was six months ago or nine months ago. Housing is coming back big-time. But five years from now, 10 years from now, the world everywhere will be doing better.
Why?
Just because capitalism and market systems work. It’s been working, you know, since 1776 here. And it wasn’t because we had stimulus programs in 1794. Our system unleashes people’s potential. And we’ve got 312 million people that want to do better tomorrow than today. Over time, that works. This country goes forward, and it’ll continue to go forward. The luckiest person in history on a probability basis is the baby being born in the United States today.
Published in Bloomberg BusinessWeek, December 3, 2012
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