Every year, the world’s third-richest man pens a much-anticipated letter (pdf) to shareholders of his company, Berkshire Hathaway. This year, that letter opened with news that 2017 had proven far from normal.
Warren Buffett wrote that his multinational conglomerate could report $65.3 billion in gains of its net worth for the year. It’s a number that sticks out like a sore thumb compared to gains from previous years.
There’s one major reason 2017 looked like such a banner year when measured against the prior five years.
“A large portion of our gain did not come from anything we accomplished at Berkshire,” Buffett assured shareholders. No, it was the Republican-led rewrite of the American tax code. As explained by Buffett, without the tax code rewrite, Berkshire would have added about $36 billion—a more typical year of standard gains for the company. Thanks to legislation, signed by US president Donald Trump in late December, Berkshire Hathaway was able to add an extra $29 billion to its net worth gains.
Buffett himself earlier this year expressed some reservation about the tax-code rewrite cobbled together by federal lawmakers. The Oracle of Omaha, as he is often called, said in January that he would have supported the bill in his capacity as a representative of Berkshire Hathaway investors. And yet, his personal view was that a different bill would have been more ideal.
Buffett has believed higher taxes should be imposed on the wealthy. Indeed, in 2011, Buffett penned a New York Times op-ed (paywall) in which he characterized Washington’s propensity to “shower” the ultra-rich with tax breaks as unnecessary coddling.
“I know well many of the mega-rich and, by and large, they are very decent people,” he wrote. “They love America and appreciate the opportunity this country has given them. Most wouldn’t mind being told to pay more in taxes as well, particularly when so many of their fellow citizens are truly suffering.”