Billionaire investor Warren Buffett speaks in Omaha, Neb., Monday, Nov. 14, 2011, at an event to raise money for the Girls Inc. charity organization. (AP)
Corporations, like the rich, aren't paying their fair share in taxes, billionaire investor Warren Buffett told CNBC on Monday.
Even while enjoying record profits, corporations last year paid just 12.1 percent of those earnings in taxes, their lowest tax rate since 1972, according to the Congressional Budget Office. At least thirty of the country's most profitable companies had a negative tax rate between 2008 and 2010.
Buffett, for one, says it's time to take notice.
"It's a myth that American corporations are paying 35 percent or anything like it," Buffett said, referring to the top marginal corporate tax rate. "Corporate taxes are not strangling American competitiveness."
Buffett's comments come alongside a larger debate over the tax rates of corporations and individuals. President Obama recently announced a corporate tax reform plan that would look to eliminate loopholes while lowering the top marginal tax rate. In addition, Obama's budget proposal includes a provision, named after Buffett, that would require Americans making more than $1 million to pay at least a 30 percent tax rate.
Buffett said that current corporate tax rates are low both by historical standards and compared to other industrialized countries, or "far, far, far below what we’ve seen in the United States."
Many corporations pay a tax rate far below the top marginal rate. Industrial machinery companies, led by General Electric, paid a negative tax rate of minus 13.5 percent of their profits in federal income taxes between 2008 and 2010, according to a recent analysis. Information technology companies paid taxes at a 2.5 percent rate, utilities companies at a 3.7 percent rate, and financial corporations at a 15.5 percent rate.
Buffett disclosed that his company, Berkshire Hathaway, paid a corporate tax rate of between 15 and 16 percent of its income in 2011, higher than the national average. Though raising the corporate tax rate would cost Berkshire Hathaway more money, Buffett said it was crucial to put aside special interests.
"Once you start cherry-picking, the whole thing disintegrates," he said. "Why not have a code we don't like that at least is sustainable as opposed to one that's unsustainable?" he added.