Berkshire Hathaway vice chairman Charlie Munger lauded Vermont Sen Bernie Sanders as the victor in the fight against income inequality in the US.
Munger joined billionaire Warren Buffett for Berkshire’s annual meeting on Saturday when he made the remarks.
‘With everything boomed up so high and interest rates so low, what’s going to happen is the millennial generation is going to have a hell of a time getting rich compared to our generation,’ Munger said during the meeting.
‘The difference between the rich and the poor in the generation that’s rising is going to be a lot less,’ he adds. ‘So Bernie has won. He did it by accident, but he won,’ Munger said.
Berkshire Hathaway vice chairman Charlie Munger (right) lauded Vermont Sen Bernie Sanders as the victor in the fight against income inequality in the US
In 2019, when Sanders was a presidential candidate, he proposed raising taxes 0.5 percentage points on companies paying top executives more than 50 times the median salaries of workers.
Tax penalties would’ve risen from there, up to a maximum of 5 percentage points for firms whose highest-paid official earns 500-plus times median worker pay.
His policy contrasted with Sanders’ rival for the presidency, Massachusetts Sen Elizabeth Warren.
She had also decried skyrocketing top executive pay, but proposed legislation that would bar CEOs from selling company shares for five years after receiving them or three years after a stock buyback — while also letting workers elect 40 per cent of the board at large corporations.
Both Sanders and Warren proposed sweeping plans to increase taxes on the fortunes of some of America’s wealthiest families, proposals that would have affected CEOs outside their corporations had they been elected president.
Sanders said his income inequality tax plan would’ve apply to all private and publicly held corporations with annual revenues of $100million. His campaign estimated that it would’ve raised $150billion over a decade, which could’ve been used to eliminate medical debt nationwide.
However, Munger’s recent remarks are a stark contrast from what he said about Congresswoman Alexandria Ocasio-Cortez and Sen Warren in 2019.
‘I don’t think [Ocasio-Cortez] knows who Adam Smith was,’ Munger told Yahoo at the time. ‘The people screaming about it are idiots. It’s going to go away by itself.’
Munger said it’s ‘a problem if enough politicians are screaming about it. That makes it a problem’.
President Joe Biden is in the process of implementing his own tax plan to combat income inequality. The idea is twofold: First, to help pay for Biden’s trillions in proposed spending — for everything from roads and bridges and green energy to internet access, job training, preschool and sick leave.
Munger said of Sanders (pictured): ‘The difference between the rich and the poor in the generation that’s rising is going to be a lot less. So Bernie has won. He did it by accident, but he won’
And second, to shift more of the federal tax load onto companies and narrow America’s vast income inequality. Affluent investors reap the biggest windfalls when after-tax corporate profits accelerate.
‘The burden,’ said Thornton Matheson, senior fellow at the Tax Policy Center, would ‘fall predominately on wealthier individuals.’
The president wants to stop companies from stashing profits in countries with low tax rates. To do so, he’s proposed a 21 per cent minimum tax on multinationals’ foreign earnings and is urging other countries to follow suit.
His plan would also rescind what the administration sees as international loopholes in Trump’s 2017 tax legislation.
To strengthen its ability to root out tax cheating, the administration has proposed adding $80billion to the IRS budget over a decade to bolster the agency’s underfunded enforcement team. As part of his effort to reduce America’s wealth gap, he’s also proposed raising the tax rate on long-term capital gains for Americans who earn over $1million a year.
Many analysts see Biden’s corporate tax plan as a gamechanger — if Congress embraces it.
If adopted, the 21 per cent minimum global tax ‘effectively spells the end of the tax haven as we have come to know it,’ said Alexander Arnon, an analyst at the nonpartisan Penn Wharton Budget Model, a research organization associated with the University of Pennsylvania.
Munger downplayed concern that Congress and the White House might raise the corporate tax rate to 25 per cent or 28 per cent, saying it wouldn’t be ‘the end of the world’ for Berkshire.
Meanwhile, Buffett, Berkshire’s CEO, said the US economy has been ‘resurrected in an extraordinarily effective way’ by monetary stimulus from the Federal Reserve and fiscal stimulus from Congress.
‘It did the job,’ Buffett said. ‘This economy, right now, 85 per cent of it is running in super high gear.’
Buffett has run Berkshire since 1965, and Munger has been vice chairman since 1978.