Weeks prior to the passage of the Tax Cut and Jobs Act (TCJA) in President Donald Trump’s first year in office, Warren Buffett criticized the move saying, “I don’t think I need a tax cut.” Turns out some of the Fortune 500 companies he has in his portfolio do, though.
According to the Institute of Taxation and Economic Policy (ITEP), a left-leaning think tank, the tax subsidies received by the top 25 companies amounted to slightly over $37 billion .
More than half of these tax subsidies went to companies in Berkshire Hathaway’s portfolio .
Per the ITEP report, nine firms in Berkshire Hathaway’s portfolio featured among the top 25 companies that received the largest subsidies following the tax cuts.
Three of the companies are in the Dow index: American Express, Apple and JPMorgan Chase. The others are Bank of America, Wells Fargo, Amazon, Delta Airlines, United Parcel Services and General Motors. Combined, the nine firms received $20.42 billion in tax subsidies in 2018.
According to ITEA, which defines tax subsidies as the difference between what firms would theoretically pay at 21% corporate tax rate and what they actually paid, the nine companies managed to take advance of new TJCA “breaks and loopholes.” Consequently, the effective federal income tax rate paid by U.S. firms average just 11.3%.
Before the passing of the TJCA, Buffett had argued that the previous corporate tax rate (35%) did not make any of the businesses he was invested in “noncompetitive in the world.” He welcomed the lowering of the rate for the benefit of “a million shareholders of Berkshire in terms of their returns.”
The Berkshire Hathaway Chairman has been supportive of the ultra-wealthy being charged higher taxes. Earlier this year, Buffett stated that higher taxes on the rich would assist in reducing income inequalities , a view he has expressed for years now. A tax plan proposed by Democrats in 2011 placing a minimum tax rate of 30% on individuals earning over $1 million a year was even named the Buffett Rule.
The billionaire investor is yet to comment publicly on the wealth tax proposals championed by Democratic presidential candidates Elizabeth Warren and Bernie Sanders though. The wealth taxes, if they came into effect, would significantly dent Warren Buffett’s fortune as previously reported by CCN.com.