Buffett talks tax reform with Sen. Clinton

NEW YORK (CNNMoney.com) -- Presidential hopeful Hillary Rodham Clinton was all ears at a fundraiser Tuesday evening when famed billionaire investor Warren Buffett suggested ramping up the tax code on big businesses and the super rich.

The Berkshire Hathaway (Charts, Fortune 500) chairman touched on a variety of issues in a question and answer session with Clinton, including his disdain for private equity firm power brokers.

Berkshire Hathaway Chairman Warren Buffett

"The people that earn their living doing that should be subject to taxes that reflect their labors," he said in the gathering at a hotel in midtown Manhattan.

Recently private equity firms have become targets of Congress, who claim that fund managers benefit from unfair tax advantages. One Senate committee has proposed raising taxes on publicly traded private equity firms such asBlackstone Group (Charts).

Speaking to several hundred supporters of the U.S. Senator from New York, Buffett revealed his puzzlement that he was taxed at a lower rate than many of the lesser-paid individuals working for his company.

Buffett said he makes $46 million a year in income and is only taxed at a 17.7 percent rate on his federal income taxes. By contrast, those who work for him, and make considerably less, pay on average about 32.9 percent in taxes - with the highest rate being 39.7 percent.

To emphasize his point, Buffett offered $1 million to the audience member who could show that one of the nation's wealthiest individuals pays a higher tax rate than one of their subordinates.

"I'm willing to bet anyone in this room $1 million that those rates are less than the secretary has to pay," said Buffett.

The Berkshire Hathaway chairman remained relatively positive about the U.S. economy overall, and remained doubtful that the recent woes in the subprime mortgage market would spread to the rest of the housing sector and the larger economy.

"Overall if the unemployment rate doesn't increase and interest rates don't increase then I don't think it will have an effect on the rest of the economy," he said.

Buffett, however, did not explicitly back Clinton in her bid for the White House during Tuesday night's event - although he has made a number of contributions to her different political campaigns, according to the Federal Election Commission.