Two U.S. chief executive officers have finally jumped into the debate over how to tame the federal deficit. Warren Buffett, the chairman and CEO of Berkshire Hathaway Inc., is calling for tax increases on the rich. Howard D. Schultz, the chairman and CEO of Starbucks Corp., is urging his peers to withhold campaign contributions until Congress deals with the fiscal crisis.
Buffett, in a New York Times op-ed yesterday, said the mega-rich had been “coddled long enough by a billionaire-friendly Congress.” He wrote that his total tax bill -- payroll taxes as well as federal income taxes -- came to just 17.4 percent of his total income in 2010. The reason: He makes most of his money from investments, which are taxed at the low capital gains rate of 15 percent. And nothing is deducted for Medicare and Social Security.
Buffett urged the 12-member super-committee, which congressional leaders recently named to produce at least $1.2 trillion in cuts over the next decade, to raise tax rates, including for capital gains and dividends, on wealthy American households earning more than $1 million a year. There were 236,883 such households in 2009, he wrote.
For his part, Schultz called on other CEOs to boycott donating to U.S. political campaigns to encourage leaders to reduce the budget deficit. “I am asking that all of us forego political contributions until the Congress and the President return to Washington and deliver a fiscally disciplined long-term debt and deficit plan to the American people,” Schultz wrote in an Aug. 15 e-mail to business leaders. Over the last four years, Schultz has contributed to a handful of Democratic candidates, including both U.S. senators from his home state of Washington, Maria Cantwell and Patty Murray, as well as Barack Obama's 2008 presidential campaign.
These are good suggestions from two respected corporate leaders. But they don't go far enough -- and many more U.S. corporate executives ought to be weighing in with similar thoughts, instead of paying lobbyists to wrangle special tax breaks and loopholes that add to the deficit. So here's a short list of orphan deficit-cutting ideas, in search of well-heeled corporate sponsors:
• Instead of seeking a permanent extension of the Bush-era income tax cuts, push Congress to eliminate the lower rates for households earning more than $250,000.
• Rather than lobby for lower corporate taxes, encourage lawmakers to overhaul the entire corporate tax code by getting rid of all loopholes and deductions.
• Instead of pushing for a tax break on some $1 trillion in corporate profits stockpiled overseas, ask Congress to lower the tax on repatriated profits only for companies that have added workers to payrolls.
• Rather than calling for across-the-board cuts in the big-ticket entitlement programs, beseech Congress to raise the contributions the affluent must pay toward Medicare and Social Security -- and to reduce their benefits, too.
(Paula Dwyer is a member of the Bloomberg View editorial board.)