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Bond Billionaire Backs Buffett

One of the most respected investors in the world of bonds is going on record supporting higher taxes for the nation's super-wealthy, echoing Warren Buffett's controversial call to 'Tax the Rich.'

Like Buffett, Bill Gross is a billionaire, although his estimated $1.2 billion isn't quite in the same league as Buffett's $52 billion. (Gross is #799 on the latest Forbes list of billionaires. Buffett is #2 behind Bill Gates.) Still, a billion dollars is a billion dollars and you can certainly include Gross among the ranks of the rich.

Gross is Pimco's chief investment officer and founder of Pimco, a firm that describes itself as "one of the largest specialty fixed income managers in the world, with more than $687 billion in assets under management." His pronouncements on financial matters can generate headlines and even move markets. (Earlier today, he made news on CNBC's Street Signs when he told Erin Burnett that stocks could feel the fallout from a "dramatic earthquake" in the high-yield corporate bond market.)

In his August market letter, headlined "Enough Is Enough", Gross comes out strongly in favor of raising taxes on the super-rich to "rectify today’s imbalances." He warns:

"When the fruits of society’s labor become maldistributed, when the rich get richer and the middle and lower classes struggle to keep their heads above water as is clearly the case today, then the system ultimately breaks down; boats do not rise equally with the tide; the center cannot hold."

Gross explicitly puts himself on Warren Buffett's side of the Great Tax Debate, endorsing this quote from Mr. Buffett: "Society should place an initial emphasis on abundance but then should continuously strive to redistribute the abundance more equitably."

Gross rejects as "farce" and "pretense" the arguments that "private equity and hedge fund managers (won't) be properly incented if Congress moves to raise their taxes up to levels paid by the majority of America’s middle class."

He is especially tough on what he calls the "cloying self-justification" of the very wealthy when they cite their philanthropic generosity, "suggesting that they can more efficiently redistribute wealth than can the society that provided the basis for their riches in the first place."

"When millions of people are dying from AIDS and malaria in Africa, it is hard to justify the umpteenth society gala held for the benefit of a performing arts center or an art museum. A thirty million dollar gift for a concert hall is not philanthropy, it is a Napoleonic coronation."

Them's fighting words, and Gross can expect a fight from some of the same quarters that have criticized Buffett for his outspoken views on income equity. MarketWatch points out that the low-tax advocates at The Club for Growth have called efforts to increase taxes on the very wealthy a "war on prosperity." CNBC's Larry Kudlow agrees. On National Review's web site, he warned recently that "willy-nilly changes of the tax rules would have a chilling effect on capital formation, and could constitute the biggest attack on capital since the 1930s."

And in a piece criticizing a Newsweek article on the fight over taxes in Washington, the Business and Media Institute called Buffett "the media’s favorite 'do as I say, not as I do' billionaire", linking to a 2005 New York Sun article contrasting Buffett's general criticism of hedge funds with his $620 million investment in the hedge fund run by a friend's son.

This is shaping up into a serious smackdown.

Questions? Comments? Email me at buffettwatch@cnbc.com