Warren Buffett & Carol Loomis Pt. 1

  • Aired:  11/27/12
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Carol Loomis collected over 40 years' worth of Warren Buffett's stray thoughts for her book, "Tap Dancing to Work." (5:41)

(CHEERS AND APPLAUSE).

>> Jon: WELCOME BACK!

MY GUEST TONIGHT, HE IS THE C.E.O. OF BERKSHIRE HATHAWAY, SHE IS THE SENIOR EDITOR AT

LARGE OF "FORTUNE" MAGAZINE AS WELL AS AUTHOR OF THE NEW BOOK "TAP DANCING TO WORK: WARREN

BUFFETT ON PRACTICALLY EVERYTHING, 1966 TO 2012." PLEASE WELCOME TO THE PROGRAM

WARREN BUFFETT AND CAROL LOOMIS.

(CHEERS AND APPLAUSE) NICE TO SEE YOU, SIR.

NICE TO SEE YOU.

(APPLAUSE) HOW ARE YOU?

>> NEVER BETTER.

NEVER BETTER.

>> Jon: GREAT TO SEE YOU GUYS.

THE BOOK IS CALLED "TAP DANCING TO WORK." TELL ME ABOUT THIS COLLABORATION FIRST OF ALL.

YOU ARE A VERY RENOWN AND WELL-RESPECTED FINANCIAL WRITER.

YOU RUN --

>> LET'S NOT GET INTO IT.

(LAUGHTER)

>> Jon: HOW DID THIS COME TO BE?

>> HOW DID THE BOOK COME TO BE?

>>> Jon: YES.

>> WELL I GOT THE IDEA WHEN WE HAD BEEN COVERING WARREN FOR 40 YEARS.

I THOUGHT WE OUGHT TO PULL ALL THIS TOGETHER.

BECAUSE WE'D HAD A GREAT COLLECTION OF STORIES, MANY OF THEM WRITTEN BY OTHER WRITERS,

NOT ME AT ALL, AND I THOUGHT WE SHOULD DO IT AND THEN IT ONLY TOOK ME SIX YEARS TO GET IT DONE.

(LAUGHTER).

>> Jon: NOW, ARE YOU A FONT OF WISDOM TO SOME EXTENT?

IS THAT -- WERE YOU AWARE THAT SOMEONE WAS COLLECTING YOUR THOUGHTS FROM 1966 ON UNTIL NOW?

>> I'VE HAD VERY FEW SINCE THEN, ACTUALLY.

(LAUGHTER) BUT CAROL'S BEEN AN OBSERVER FOR A LONG TIME.

WE TALK ALMOST EVERYDAY AND SHE KNOWS MORE ABOUT ME THAN SHE PUT IN THE BOOK.

>> THAT'S FOR VOLUME TWO.

>> Jon: OH, VOLUME TWO, I LIKE THIS.

MORE SALACIOUS, HUH?

(LAUGHTER) NOW WE'RE GETTING SOMEWHERE.

OBVIOUSLY YOU'VE BEEN AT THE FOREFRONT OF THE NEWS LATELY BECAUSE OF THIS ARGUMENT THAT

WE'RE HAVING IN THIS COUNTRY NOW ABOUT TAXATION, HOW TO FUND THE GOVERNMENT WHILE DEALING WITH

THE DEFICIT.

YOU HAVE SUGGESTED SOMETHING WHICH COINCIDENTALLY IS CALLED THE BUFFETT RULE WHICH I THINK,

LIKE LOU GEHRIG'S DISEASE IS VERY UNBELIEVABLE THAT THIS RULE WOULD JUST HAPPEN TO BE PROMOTED

BY --

>> THE DISEASES WERE ALREADY TAKEN.

(LAUGHTER) (APPLAUSE)

>> Jon: I ASSUME BUFFERIN HAS SOMETHING TO DO WITH IT.

YOU HAVE COME OUT AND SAID YOU WOULD PREFER SOMETHING WHERE THE RICH PAY A FLAT -- AT LEAST 30%.

ON THEIR MONEY.

WHY DO YOU SAY THAT?

>> WELL, IF THEY MAKE OVER A MILLION, I SAY ON THE AMOUNT OVER A MILLION THEY OUGHT TO PAY

AT LEAST 30% AND OVER $10 MILLION THEY OUGHT TO PAY 35%.

MOST OF THE PEOPLE -- IN FACT, VIRTUALLY ALL OF THE PEOPLE IN MY OFFICE, 20 OR SO PEOPLE,

BETWEEN PAYROLL AND INCOME TAXES THEY PAY MORE THAN 30%.

A NUMBER OF THE EXTREMELY WEALTHY PEOPLE PAY LESS THAN 15% AND SOME PAY LESS THAN 10% AND

SOME PAY NOTHING.

>> Jon: THIS IS BECAUSE OF CAPITAL GAINS AND THE CAYMAN ISLANDS.

>> THE WHOLE WORKS.

>> Jon: AND BAGS THAT ARE KEPT DANGLING.

(LAUGHTER)

>> YOU'RE GETTING WARM.

>> Jon: EXACTLY.

WHAT THEN ABOUT THE ARGUMENT WHERE THEY SAY THAT'S DOUBLE TAXATION IF YOU DO CAPITAL GAINS

AND THAT WILL HURT INVESTMENT.

THIS IS CLEARLY SOMETHING YOU ALSO HAVE TO DEAL WITH AT THE MAGAZINE.

>> WELL, WE HOPE SO, DOUBLE TAXATION.

>> Jon: BUT IS THAT A VALID --

>> WELL, IF SOMEBODY OUT THERE IS MAKING $70,000 A YEAR AT WHATEVER THEIR JOB THEY'RE

PAYING INCOME TAX AND PAYROLL TAXES.

THEY'RE GETTING TAXED TWICE, TOO.

AND IN MY OWN CASE I PAID A VERY LOW RATE IN 2009 WHICH I WROTE ABOUT.

PRACTICALLY ALL MY CAPITAL GAINS CAME FROM BOND, THERE WAS NO DOUBLE TAXATION THERE.

>> Jon: THEY'RE SAYING THAT UNLESS THE RICH CAN PAY LESS THEY WON'T INVEST IN COMPANIES

AND AMERICA.

THAT THE JOB CREATORS MUST BE -- AND WE SHOULD ALSO GET THEM -- I GUESS IT'S CALLED FEATHER BEDS.

(LAUGHTER)

>> I'LL DO THIS.

I'LL CALL YOU AT 1:00 TONIGHT AND I WILL TELL YOU, "JON, I'VE GOT THE BEST IDEA I'VE EVER HAD,

I'M GOING TO PUT EVERY PENNY I'VE GOT IN IT.

DO YOU WANT TO COME ALONG." WILL YOU SAY "HOW MUCH TAX DO I HAVE TO PAY BEFORE I MAKE A

FORTUNE?"

>> Jon: I THINK THE FIRST THING I WOULD SAY IS "WHY ARE YOU CALLING ME AT 1:00 A.M.?

WHAT'S GOING ON WARREN?" (LAUGHTER) I WOULD SAY "WARREN, WHAT'S THIS REALLY ABOUT?"

(LAUGHTER) HERE'S WHAT'S BEEN FASCINATING ME.

SORT OF NOW THE TRADITIONAL CONSERVATIVE ARGUMENT IS WE MUST HAVE LOW TAXES OR THE ECONOMY

WON'T FLOURISH, BUT I GUESS IN MY MIND I THINK OF TRADITIONAL ECONOMY BEING THE POST-NEW DEAL

ECONOMY OF RELATIVELY ROBUST HIGH TAX RATES ON HIGH EARNERS AND A SOCIAL SAFETY NET THAT IS

PART OF THE SOCIAL COMPACT.

TO ME THAT'S TRADITION.

THAT'S 80 YEARS.

>> THAT'S AMERICAN.

AND I'VE -- YOU KNOW, I'VE BEEN WORKING AT INVESTMENTS -- WELL, REALLY I BOUGHT MY FIRST STOCK

WHEN I WAS 11 BUT I STARTED SELLING STOCKS WHEN I WAS 20 AND I SOLD STOCKS WHEN PERSONAL

INCOME TAX RATES GOT AS HIGH AS 91%.

I'VE SOLD THEM WHEN CAPITAL GAINS RATE GOT AS HIGH AS 39.6% AND WE HAD SOME WONDERFUL

PERIODS OF GROWTH AND G.D.P.

AND THE MIDDLE-CLASS AS WELL AS THE RICH PROSPERED WHEN TAX RATES WERE MUCH HIGHER THAN THEY

ARE NOW.

>> Jon: WELL, WE'LL TAKE A COMMERCIAL AND COME BACK AND TALK ABOUT AN OP-ED THAT YOU

WROTE WHICH LAID OUT SOME OF THE MATH OF THIS AND SOME OTHER FINANCIAL GOING ON IN THE WORLD.

WE'LL BE RIGHT BACK.

MORE FROM WARREN BUFFETT AND CAROL LOOMIS RIGHT AFTER THIS.

(CHEERS AND APPLAUSE)

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