Two towering Wall Street figures have criticised Donald Trump’s tax reform plans.
Warren Buffett, the legendary billionaire investor, hit out at the proposals that would slash business rates and also cut taxes for the richest Americans.
“We have a lot of businesses… I don’t think any of them are non-competitive in the world because of the corporate tax rate,” he told CNBC.
Buffett, who leads multinational Berkshire Hathaway, said a proposal to repeal the ‘death duty’ estate tax would be “a terrible mistake” that would benefit the wealthiest Americans unnecessarily.
Fellow financial giant, BlackRock’s chief executive Larry Fink, joined in the attack, saying the planned corporation tax cut from 35% to possibly as low as 20% was a bad idea.
He said a corporate rate as high as 27% could satisfy U.S. businesses’ need for tax relief, while avoiding an increase in the federal deficit.
“What is being proposed is a pretty large expansion of our deficits,” Fink told Bloomberg TV.
Many multinationals already avoid paying the top rate by taking advantage of abundant tax loopholes.
Buffett used his own situation to illustrate the impact of scrapping the estate tax. It would mean, he said, that he could leave his $75 billion fortune to 35 of his children, grandchildren and great-grandchildren, and they would each have $2 billion.
“They could do anything,” he told CNBC.
“That’s not good for capitalism, I don’t think it’s good for the children, I sure don’t think it’s good for society where there’s a ton of inequality to start with. I think that’s a terrible mistake for example.”
The Republican tax plan unveiled last month contains up to $6 trillion in tax cuts, according to independent analysts, which US president Trump and top Republicans say they would offset by eliminating loopholes, deductions and tax breaks and boosting annual economic growth.
Republicans also insist that cutting the corporate tax rate to 20% will help workers by increasing jobs and raising salaries.
Senator Ron Wyden, the top Senate Democrat on tax policy, accused the Trump administration of removing a research paper from the U.S. Treasury’s website that showed workers would benefit only marginally from a corporate rate cut.
“Apparently, that mainstream economic analysis had to be purged because it basically didn’t jibe with the Trump team’s patter,” Wyden said at a Senate finance committee hearing.
Recent analysis by Bloomberg showed that the top six US companies have about $1.6 trillion stashed overseas. Under the new proposal, firms would pay no US taxes on profits earned abroad.
A study from the Tax Policy Center last week concluded that the top 1% of U.S. earners would benefit most from the tax plan rather than the middle classes, who Trump claims would gain the most.