Above Photo: By Alex Wong/Getty Images
Remember how excited Paul Ryan was about that public school employee getting an extra $1.50 per week?
Warren Buffett’s multinational conglomerate, Berkshire Hathaway, made an extra $29 billion in 2017 thanks to the Republican tax bill, the billionaire investor said in his annual letter to shareholders released on Saturday. For reference, that’s nearly half of the conglomerate’s entire net gain last year.
“A large portion of our gain did not come from anything we accomplished at Berkshire,” Buffett, 87, wrote. Of the $65 billion the company made last year, $36 billion was from its operations. The rest was thanks to the GOP tax cut, passed in December, which dropped the corporate income tax rate to 21 percent from 35 percent.
That the tax bill would make such an enormous difference for Berkshire Hathaway, which as of 2017 has $702 billion in total assets, is not a surprise: That is largely how it was designed. The bill is most beneficial to corporations, including Berkshire, and the wealthy, particularly the ultra-wealthy, such as Buffett, who according to Forbes has an estimated personal net worth of $86.9 billion.
Buffett, who supported Hillary Clinton during the 2016 election, was critical of the Republican tax plan before it was passed, even though he acknowledged it would be good for him and for his company. “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,” Buffett told CNBC in October. Of the personal benefit the tax cut would give to him, he said, “I don’t think I need a tax cut.” According to the Tax Policy Center’s analysis of the tax bill, the top 0.01 percent of earners would see an average tax reduction of $193,380 in tax savings in 2018. Buffett, one of the richest men in the world, is at the top of that group.
Remember that public school employee Paul Ryan liked so much who could now pay for her Costco membership?
In February, House Speaker Paul Ryan (R-WI) tweeted an item about a public school employee seeing an extra $1.50 in her weekly paycheck thanks to the Republican tax bill. He cited an Associated Press report detailing how Julia Ketchum, a Pennsylvania high school secretary, would now be able to cover her Costco membership for the year as a result of her pay bump. (Ryan deleted the tweet after being dragged on social media.)
But the case of Julia’s minuscule tax savings and Berkshire’s windfall are more closely related than they might initially seem. Berkshire actually owns some of Costco — about $800 million worth of the company’s shares as of December 31. (It’s a small stake in the company, less than 1 percent of its total shares.)
So not only does Berkshire get millions times more what Julia does in tax savings, but it also gets a bit of that Costco card — the cheapest one, that is. Julia’s $78-a-year raise only covers the basic $60 Costco Gold Star card. Berkshire’s $29 billion goes a lot further.