However, Buffett expects a deal to be reached shortly after that deadline, and he is not concerned with going over the infamous fiscal cliff.
"The fiscal cliff does not enter into my long-term investment decisions… and it wouldn't surprise me if we go past January 1," Buffett said on CNBC's Squawk box Wednesday morning. "[If that happens] I don't think the world will come to an end."
Buffett is in the minority with that sentiment, as investors have been fretting over the fiscal cliff since the election and will continue to do so until Washington finalizes a deal.
Warren Buffett on How to Fix the Fiscal Cliff
Buffett has been active in the media this week, most notably with his op-ed in Monday's The New York Times.
There he reiterated his stance for higher taxes on the wealthy, but recommended raising taxes at the $500,000 threshold, instead of U.S. President Barack Obama's $250,000 suggestion.
And that's not his only suggestion for dealing with the fiscal cliff.
While Buffett did not outline a concrete plan for handling the dilemma, he said he could, "go with a number of plans."
Specifically, he suggested the end result of a compromise should create U.S. revenue at 18.5% of GDP and expenditures at 21%.
The "Oracle of Omaha" said that he has no problem having capital gains and dividends taxed at ordinary rates, as long as the plan involves moving towards those stated goals for revenue and spending as a percentage of GDP.
Buffett said those objectives have basically been in place since World War II, but they've moved around a bit. Ultimately he thinks that a plan that incorporates these benchmarks will not increase the national debt-GDP level, and overtime Buffett thinks it will bring down the debt-GDP level and encourage growth.
Buffett on the Fairness of Taxes
The "Buffett Rule," which would place a minimum tax of 30% on individuals making more than $1 million a year, has been criticized as not actually making a dent in the deficit, yet Buffett is still a very strong advocate of the idea.
In today's interview he made clear that he is a proponent of paying a 35% tax rate on all his income, whether it's from investments or not. He went as far to say that the super-rich are a small minority who don't pay any taxes and are among the "moochers" Mitt Romney referenced in his "47%" comments.
Besides having the wealthy paying their "fair share" of taxes, Buffett wants to see corporations, such as Apple Inc. (Nasdaq: AAPL) and General Electric Co. (NYSE: GE), which have sometimes paid no corporate taxes, pay a higher amount.
"The biggest beneficiary of reductions in tax rates in the last 30 or 40 years has been corporations, and the biggest increase has been in the payroll tax," Buffett said when asked about the fairness of corporate taxation.
"If you go back to the 1950s and 1960s, about 4% of GDP was paid in corporate taxes and tax rates were 52% for a long period and then 48%. So it's fallen from 4%, over 4% of GDP, to the 1.5% range."
Speaking of the payroll tax, which many expect to see raised back to its pre-2010 level of 6.2%, Buffett wants to abolish its income cap (currently at $110,100) . This is a subject that rarely gets mentioned in Washington and could generate billions in revenue, fixing what he calls the most "regressive" tax in the country.
Lastly, Buffett the eternal optimist, says that if Jan. 1 comes and the fiscal cliff is not resolved he will not be laying off any workers and if a cap on charitable deductions were put in place, he would not give away any less to charity.
Warren Buffett may be calm heading into the fiscal cliff, but having billions stored away helps just a little. For those who want more guidance on handing the current economic uncertainty, check out this article by Money Morning Chief Investment Strategist Keith Fitz-Gerald on five ways to beat the fiscal cliff.
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