Who Represents the Cleaning Lady?

11/01/07 “The Guardian” — — Warren Buffett, the famous investor known as the “Sage of Omaha”, has complained that he pays a lower rate of tax than any of his staff – including his receptionist. Mr Buffett, who is worth an estimated $52bn (£25bn), said: “The taxation system has tilted towards the rich and away from the middle class in the last 10 years. It’s dramatic; I don’t think it’s appreciated and I think it should be addressed.”

During an interview with NBC television, Mr Buffett brandished an informal survey of 15 of his 18 office staff at his Berkshire Hathaway empire. The billionaire said he was paying 17.7% payroll and income tax, compared with an average in the office of 32.9%.

“There wasn’t anyone in the office, from the receptionist up, who paid as low a tax rate and I have no tax planning; I don’t have an accountant or use tax shelters. I just follow what the US Congress tells me to do,” he said.

Mr Buffett also took a pot shot at hedge fund managers. He said: “Hedge fund operators have spent a record amount lobbying in the last few months – they give money to the political campaigns. Who represents the cleaning lady?”

His intervention comes amid an increasingly rancorous debate on Capitol Hill about tax. Shortly after taking office, President Bush pushed through $2 trillion in temporary tax cuts, including sharp reductions for high-earners. These expire at the end of 2010 and the White House wants to renew them.

A leading Democrat, the Harlem congressman Charlie Rangel, published alternative plans this week that would impose a 4% surcharge on people earning more than $200,000 a year, while delivering tax relief to 90 million working families.

Republicans say the net effect would be a $2 trillion tax increase that would hurt small businesses and farmers. Meanwhile, Mr Buffett’s remarks drew a robust response from the US Chamber of Commerce, which said the top 1% of US earners accounted for 39% of tax revenue – and the highest earning 25% of the population delivered 86% of the tax-take.

The chamber’s chief economist, Martin Regalia, said: “Mr Buffett has made an awful lot of money and if he wants to pay more taxes, I think that’s fine. But I think he should get his facts straight.”

He added: “There’s no question in my mind: if you were to impose [the Democrats’] tax increases, you would see the US go into a recession.”