Warren Buffett has always been a massive supporter of (and investor in) US based businesses, and as such – he stands to reap an immense boon from the US corporate tax cuts.
Warren Buffett’s investment holding company, Berkshire Hathaway stands to reap a massive benefit from Donald Trump’s cutting of the US Corporate tax rate.
Berkshire will see an increase in its book value by around $37 billion, according to Barclays Capital analysts, who added that the lower taxes could also boost earnings of the company by 12 percent.
Warren himself has previously been critical of tax cuts for corporations and wealthy individuals, rejecting the rhetoric that the comparatively high US corporate tax rate was detrimental to US businesses. He stated as recently as October, "We have a lot of businesses… I don’t think any of them are non-competitive in the world because of the corporate tax rate,"
Despite this, when asked if he would have pushed lawmakers to vote for or against the legislation, he answered that he would have had a different bill. However, he stated that if he were representing his shareholders, he would have to vote for the bill.
This is perhaps due to his famous devotion to generating shareholder value, even to the point of refusing to pay his shareholders a dividend – because he believes he believes he can do better reinvesting his returns than his shareholders. He is probably right as well.
Donald Trump last month signed a law reducing US corporate tax rates to 21 percent from 35 percent, helping US equity markets to continue their strong bullish rally. Berkshire Hathaway shares have certainly participated in the rally, rising 22 percent in 2017.
Berkshire Hathaway’s class A shares hit a milestone of $300,000 a share in December of last year, and are currently trading around $315,000 a share. They have returned an annualised of 19 percent between 1965 and 2016.