Trump tax cut fuels record profit for Buffett's Berkshire

By Jonathan Stempel

 

FILE PHOTO: Berkshire Hathaway CEO Warren Buffett talks to reporters prior to the Berkshire annual meeting in Omaha, Nebraska, U.S., May 2, 2015. REUTERS/Rick Wilking/File Photo

 

(Reuters) - Warren Buffett's Berkshire Hathaway Inc on Saturday reported a record quarterly and annual profit, fueled by a big cut in the U.S. corporate income tax rate championed by President Donald Trump.

 

Fourth-quarter net income increased roughly fivefold to $32.55 billion, or $19,790 per Class A share, from $6.29 billion, or $3,823 per share, a year earlier.

 

Quarterly operating profit for the Omaha, Nebraska-based conglomerate fell 24 percent to $3.34 billion from $4.38 billion.

 

Berkshire attributed roughly $29.11 billion of its net income to the reduction of the corporate tax rate, to 21 percent from 35 percent, that Trump signed into law in December. Many U.S. companies' reported results have been skewed by the law's impact.

 

"Buffett has been quick to say that he thinks that the tax policy changes were going to help Berkshire and be positive overall," said Bill Smead, chief executive of Smead Capital Management in Seattle, a Berkshire shareholder. "It is a bit ironic his candidate would not have any interest in this whatsoever."

 

Buffett supported Hillary Clinton, a Democrat, in the 2016 U.S. presidential election. "Buffett doesn't dwell very long on the politics," Smead said.

 

Book value per Class A share, which reflects assets minus liabilities and which Buffett considers a good yardstick for Berkshire's intrinsic worth, also benefited from the tax cut, rising 13 percent in the fourth quarter to $211,750.

 

For all of 2017, Berkshire's net income rose 87 percent to $44.94 billion. Operating profit, however, fell 18 percent to $14.46 billion, hurt by a rare loss from insurance underwriting.

 

Berkshire's Class A shares closed at $304,020.01 on Friday, and its Class B shares closed at $202.76. Both are up a little over 2 percent this year, but are down nearly 7 percent from their record highs set on Jan. 29.

 

 

-- © Copyright Reuters 2018-02-25

Meanwhile, ordinary people in places with a "high" minimum wage earn $11 an hour showing just how well this 'great economy' thing is doing. 

50 minutes ago, rooster59 said:

"Buffett doesn't dwell very long on the politics,"

An extra $29billion in cash lying around can do that. 

1 hour ago, yellowboat said:

An extra $29billion in cash lying around can do that. 

Don't worry according to Republican orthodoxy it will all trickle down 

All of this doesn't matter. As the abomination himself said he could shoot someone in broad daylight and still not lose his base supporters as all they care about is:

MAWA!!!

1 hour ago, Langsuan Man said:

Don't worry according to Republican orthodoxy it will all trickle down 

That is a myth, but if you look at Singapore and Hong Kong low corporate, business taxes, it does create an environment of high employment.  The US bringing down that rate is a good idea.  It was too high before.  Flat taxes are the way to go, but that would put tens of thousands of very well paid accountants, lawyers and so so paid government workers out of work in the US.  

1 hour ago, Langsuan Man said:

Don't worry according to Republican orthodoxy it will all trickle down 

I fear there is some serious mix-up between trickle down and being pissed on.

1 hour ago, Langsuan Man said:

Don't worry according to Republican orthodoxy it will all trickle down 

Of course it will! ....to stockholders of all these companies profitting from the borrowed  money used to finance the recent

Republican tax law.

4 minutes ago, wwest5829 said:

Of course it will! ....to stockholders of all these companies profitting from the borrowed  money used to finance the recent

Republican tax law.

Sadly, both parties do not have good spending habits, and when Rand Paul chose to remind both parties of their physical responsibilities, he was jeered.  He is usually the only  adult in the room, having to lecture the teenagers that run the country, fore which their only response is to roll their eyes.  

1 minute ago, yellowboat said:

Sadly, both parties do not have good spending habits, and when Rand Paul chose to remind both parties of their physical responsibilities, he was jeered.  He is usually the only  adult in the room, having to lecture the teenagers that run the country, fore which their only response is to roll their eyes.  

Please. Democrats actually raise taxes when it's necessary. And the deficit was way down from where it was at the height of the crisis. It's the Republicans who are overwhelmingly the hypocrites here calling for slashing spending in the midst of a recession and then pushing tax cuts when the economy is already growing at a good pace. Exactly the opposite of what most economists know is the way things should be done.

4 minutes ago, yellowboat said:

Sadly, both parties do not have good spending habits, and when Rand Paul chose to remind both parties of their physical responsibilities, he was jeered.  He is usually the only  adult in the room, having to lecture the teenagers that run the country, fore which their only response is to roll their eyes.  

And that adult of yours, Rand Paul, voted for the massive tax cuts. I guess he's usually the only adult in the room except when it counts.

2 minutes ago, yellowboat said:

Sadly, both parties do not have good spending habits, and when Rand Paul chose to remind both parties of their physical responsibilities, he was jeered.  He is usually the only  adult in the room, having to lecture the teenagers that run the country, fore which their only response is to roll their eyes.  

I agree that both major parties are responsible for irresponsible spendin/tax policies. I also blame the voting American citizen. I understand the economic squeeze on the working middle class but to be bought off with a slightly larger paycheck (tax withholding deduction) based on borrowed money is very shortsighted. If we want the servive (social programs, military costs, etc. then we need to be prepared to tax ourselves to pay for those services.

 

1 minute ago, wwest5829 said:

I agree that both major parties are responsible for irresponsible spendin/tax policies. I also blame the voting American citizen. I understand the economic squeeze on the working middle class but to be bought off with a slightly larger paycheck (tax withholding deduction) based on borrowed money is very shortsighted. If we want the servive (social programs, military costs, etc. then we need to be prepared to tax ourselves to pay for those services.

 

There is a kind of false even-handedness at work here. Remember, it's the Republicans under George Bush who slashed taxes when the budget was slightly in surplus. Obama and the Democrats actually raised taxes on the wealthy. And once again it's the Republicans who are slashing taxes. And it's only a pittance that's going to the middle class. Most of the tax cut is going to corporations and the wealthy.

We are in agreement. I just have to give credit to Democrats who have supported spending but afraid they will not be re-elected by saying straight out that if you spend, you have to pay (allowing for covering emergencies). I am thinking on the state level also where they are attacking teacher pensions after years of the legislature not funding as needed. 

 

3 hours ago, yellowboat said:

An extra $29billion in cash lying around can do that. 

 

http://www.bbc.com/news/world-us-canada-43183737

 

Mr Buffett, who believes in higher taxes for the rich, has said he would have preferred a different tax bill.

 

Higher taxes on the rich is what he would prefer which would hurt him far more than most people.

 

According to Fortune magazine's ranking of world billionaires, he is worth $87bn, behind only Bill Gates and Jeff Bezos, the founders of Microsoft and Amazon respectively.

Don't "trickle down" on Buffet...NOT his fault. Buffet and Berkshire have made a lot of people a lot of money. BTW...the largest economy in the world is expanding at 2.5 - 3% with unemployment at 45 year low. Not too shabby. 

It’s so heartwarming to see those that need government assistance, get the government assistance that they are due.

4 hours ago, ilostmypassword said:

And that adult of yours, Rand Paul, voted for the massive tax cuts. I guess he's usually the only adult in the room except when it counts.

Really, who kept those 534 children up way past their bed time reminding them not to spend too much money?  Senate was working until 2am and Congress had to work all night due to his lecture.  If that doesn't count and send a message, I would like to know what you think does.  His ideals are with the people, not the government.  It is not only about tax cuts but government waste and caps on spending. 

https://www.cnbc.com/2018/02/08/shutdown-news-rand-paul-holds-up-senate-budget-vote.html

Ah, the rich get richer and the poor get...well, the poor get whatever the rich decides what is left over by grace of their oh so charitable nature.

 

Trickle down has never worked and never will work. It is a terrible economic system designed and pushed by the rich (read the Koch brothers, etc...).

 

I have sleepless nights worrying whether Warren  might have to miss a hot meal ........after all a billion dollars ain't what it used to be .....

3 hours ago, yellowboat said:

Really, who kept those 534 children up way past their bed time reminding them not to spend too much money?  Senate was working until 2am and Congress had to work all night due to his lecture.  If that doesn't count and send a message, I would like to know what you think does.  His ideals are with the people, not the government.  It is not only about tax cuts but government waste and caps on spending. 

https://www.cnbc.com/2018/02/08/shutdown-news-rand-paul-holds-up-senate-budget-vote.html

He voted for the tax cut bill even though he knew it would accelerate the increase of deficits. What are words if they're not backed up by action? Empty.

25 minutes ago, Jim1000 said:

I have sleepless nights worrying whether Warren  might have to miss a hot meal ........after all a billion dollars ain't what it used to be .....

 

Yes, the man is in an awful predicament;       In his annual letter to Berkshire shareholders, Buffett said finding things to buy at a “sensible purchase price” has become a challenge and is a major reason Berkshire is awash with $116 billion of low-yielding cash and government bonds.                                                    In a country with 30m children in poverty, a place the United Nations has sent two reps to investigate poverty and homelessness he is desperate to spend $116b. maybe these UN people could share some ideas.          

5 hours ago, Skeptic7 said:

Don't "trickle down" on Buffet...NOT his fault. Buffet and Berkshire have made a lot of people a lot of money. BTW...the largest economy in the world is expanding at 2.5 - 3% with unemployment at 45 year low. Not too shabby. 

Those unemployment numbers are collected by 'new' methods every few years and all adjustments made just happen to bring the number down. Political counting. Check the numbers at work instead. You will find that has gone down. Fire a full time employee on a minimum wage who gets some govt benefits, replace with 3 part time low paid workers and heh presto you have created 2 jobs! Easy when you know what makes it look good.

32 minutes ago, ilostmypassword said:

He voted for the tax cut bill even though he knew it would accelerate the increase of deficits. What are words if they're not backed up by action? Empty.

Rand Paul's holding the government to account instead burdening the tax payer is far more just.  The US government needs to stop flying airplanes that cost US$42,000 an hour where a WW2 type aircraft is as capable.  The government needs to cut back.

 

2 hours ago, yellowboat said:

Rand Paul's holding the government to account instead burdening the tax payer is far more just.  The US government needs to stop flying airplanes that cost US$42,000 an hour where a WW2 type aircraft is as capable.  The government needs to cut back.

 

Please. Cherry pick all you like. He voted for a hastily constructed bill that will add massively to the deficit in order to enrich mainly the super-wealthy and powerful. Talk is cheap. He had his chance to make a stand. He's a fraud.

In your mind it only counts when you cut spending, not when you cut revenue. I don't know if your claim should be called doublethink or half-think.

Edited February 25, 20188 yr by ilostmypassword

There is a plethora of Trump haters on TV. Not to mention congenital European socialists and British Fabians. I find them entertaining in their oft delusions. How about this: if Buffet dislikes the tax cut so much, he can always give it back! (as does Trump his salary).

 

Disclaimer- I did NOT vote for Trump

18 minutes ago, bedouin1990 said:

 

 

Disclaimer- I did NOT vote for Trump

Evidence?

9 hours ago, Skeptic7 said:

Don't "trickle down" on Buffet...NOT his fault. Buffet and Berkshire have made a lot of people a lot of money. BTW...the largest economy in the world is expanding at 2.5 - 3% with unemployment at 45 year low. Not too shabby. 

People can joke about trickle down economics but where do they think the money goes?  Generally speaking it goes into the economy. It is reinvested, it is spent, it buys new equipment, consumer goods. Because of that it creates jobs with paid wages. With lower unemployment, the wage scales tend to be driven up. That may not work for the worker at McDonalds but it does work for a lot of people in factories and business across the nation.  That money that Berkshire Hathaway netted in profit will surely be used for investment.  Investment creates growth.  The alternative is to tax at ever higher rates, drive business overseas, create unemployment and people on public assistance. It may not all "trickle down" to the McDonald's worker but it's not like Buffet will put the money in the bank and sit on it.

4 minutes ago, Trouble said:

People can joke about trickle down economics but where do they think the money goes?  Generally speaking it goes into the economy. It is reinvested, it is spent, it buys new equipment, consumer goods. Because of that it creates jobs with paid wages. With lower unemployment, the wage scales tend to be driven up. That may not work for the worker at McDonalds but it does work for a lot of people in factories and business across the nation.  That money that Berkshire Hathaway netted in profit will surely be used for investment.  Investment creates growth.  The alternative is to tax at ever higher rates, drive business overseas, create unemployment and people on public assistance. It may not all "trickle down" to the McDonald's worker but it's not like Buffet will put the money in the bank and sit on it.

Unfortunately for that model, it depends on how much liquidity there is in the economy. There's lots of liquidity out there. That's the reason that interest rates are so low. So, what happens when there's too much liquidity? Too much money and not enough investment opportunities? We saw what happened in 2008 in the USA thanks in large part to the Bush tax cuts.. Similar things happened in Europe. No, when the rich accumulate too big a share of the wealth, bad things inevitably follow. Especially when banks, quasi-banks, and hedge funds can count on a complaisant government to look the other way.

There is a plethora of Trump haters on TV. Not to mention congenital European socialists and British Fabians. I find them entertaining in their oft delusions. How about this: if Buffet dislikes the tax cut so much, he can always give it back! (as does Trump his salary).
 
Disclaimer- I did NOT vote for Trump

Blinded to reality by their hatred.

Lower corporate tax rates can only be good for any economy.

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