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Berkshire Hathaway Now Pays 5% of All Corporate Income Taxes in America
- ericpauley 1y agoNit from the end-note: > On the date of publication, Caleb Naysmith did not have (either directly or indirectly) positions in any of the securities mentioned in this article. Hard to imagine someone who invests would have no indirect positions in BRK. Any broad-market ETF would have substantial exposure.
- rtkwe 1y agoI think that's still fair, market following ETF/mutual funds are kind of the gold standard for avoiding conflict of interest issues. It's what my job forces me into to make avoiding insider training easier.
- ameliaquining 1y agoIf you click through to the fine print, it says, "THIS DISCLOSURE POLICY DOES NOT EXTEND TO BROAD-BASED ETFS / ETPS OR MUTUAL FUND HOLDINGS."
- strangattractor 1y agoWow and they still make money despite paying their fair share. Who would have ever thought.
- gruez 1y agoBut corporate taxes are on profit, not revenue, so almost by definition any company that "paying their fair share" is "still makes money".
- vel0city 1y agoImagine if a household was only taxed on the money they managed to put away in savings and could count housing expenses, food expenses, education costs, healthcare, entertainment, vacations, vehicle purchases, etc. 100% against their income.
- deleted 1y ago[deleted]
- learn-forever 1y agoare you agitating to tax companies that lose money?
- cynicalkane 1y agoUnironically yes. The reason people want taxes on profits is they think large, powerful companies are a threat... but if you think that, why tax money that large, powerful companies don't waste? The other reason is to tax the rich, but you can do that by simply taxing the rich directly. If we fear powerful companies, we can put some sort of scaling size tax on the largest ones.
- sieabahlpark 1y ago[dead]
- crazygringo 1y ago> Unironically yes. Do you realize that won't produce more revenue, it will just bankrupt companies and produce less revenue? Companies are already incentivized not to waste by competition. That's the whole point of capitalism. You don't need taxes for that.
- const_cast 1y agoA lot of companies are essentially on the welfare of their investors, who may or may not be stupid. Many companies purposefully do not turn a profit, because they're aiming to cheat the market and sell at a loss to push competitors out. A lot of very successful companies operate or have operated this way, and it's incredibly dangerous for the market. It causes the erosion of small businesses and further promotes monopolization. We can try to disincentive that by saying, "hey, you don't want to turn a profit, that's fine, but you still have to pay up". This is part of the reason why if you look around America today it's going to be 99% big corporate players dominating markets and 1% small businesses barely staying afloat.
- PaulDavisThe1st 1y ago> But corporate taxes are on profit, not revenue They are taxes on revenue, but with a set of allowed deductions (e.g. labor costs, R&D, capital expenditure, etc. etc.) Whether you call that a tax on profit or a tax on revenue with business related deductions is really just a matter of perspective.
- strangattractor 1y agoI think Berkshire keeps a lot of money parked in T Bills and other Dividend paying investments so they get a lot of cash. They don't seem to play the Tax evasion game as much as some other companies IMO.
- bobxmax 1y agoI always find "fair share" to be an odd argument. Who decides what's a fair share?
- kristopolous 1y agoIt means they're not exercising loopholes and legal sleight of hand to pay less.
- loloquwowndueo 1y ago*sleight
- tekla 1y agoDamn, people who pay into their 401Ks are fucking evil.
- kristopolous 1y agohttps://itep.org/55-profitable-corporations-zero-corporate-tax/ https://itep.org/55-profitable-corporations-zero-corporate-t... Some examples: > Food conglomerate Archer Daniels Midland enjoyed $438 million of U.S. pretax income last year and received a federal tax rebate of $164 million. > The delivery giant FedEx zeroed out its federal income tax on $1.2 billion of U.S. pretax income in 2020 and received a rebate of $230 million. > The shoe manufacturer Nike didn’t pay a dime of federal income tax on almost $2.9 billion of U.S. pretax income last year, instead enjoying a $109 million tax rebate. If you think this is the same as someone putting $7k into a 401k then you are acting in bad faith and we have nothing productive to discuss.
- tekla 1y agoHow is it a loophole when it was literally legally allowed, not even as a slight of hand.
- robinson7d 1y ago
- cadamsdotcom 1y agoWhat a PR powerhouse. Publicly saying "we paid lots of tax" would be career suicide for a tech CEO.
- paxys 1y agoI'm trying to imagine what would happen to the random Berkshire board member who floats the idea of replacing Buffett.
- colechristensen 1y agoBuffet still has 30% of the voting rights which makes him pretty hard to replace in the theoretical situation where someone would have wanted to. He's retiring at the end of the year and remaining chairman of the board.
- prewett 1y agoHe's something like 96, and has been working on replacing himself for at least 10 years, maybe longer. He announced his retirement a few months ago. It would be irresponsible to not plan for his succession; training your replacement is arguably the first responsibility of a leader, especially when your timeline is long-term.
- MichaelZuo 1y agoThe corporate tax system is so complex it seems impossible to actually figure out what that 5% means though. e.g. They could be highly concentrated in industries where tax accounting tricks are too hard to do effectively.
- twoodfin 1y agoInsurance. It’s pure inflow vs. outflow margin. There’s not a lot of capital or operating expense to invest in relative to the massive cash flows.
- TZubiri 1y agoCorp income tax means the tax (30%) on profit(income-expenses) retained (not withdrawn to shareholders) year over year. Berkshire hathaway is famous for not paying dividends and keeping profits and never selling shares, so this makes sense. Most companies withdraw or reinvest as much profit as possible to reduce this tax.
- MichaelZuo 1y agoHow does this relate to my comment? The 5% is a relative measure against all other corporations in the USA.
- TZubiri 1y agoOh that would be pretty clear to me: Corporate tax paid by Berkshire Hathaway / Sum of Corp Tax paid by all US corps = 5/100 = 1:20 It's clear what it means, how they measure it would be another story, but I'm sure there is public budget information that clearly indicates what the 2024 taxation for that type of tax was.
- MichaelZuo 1y agoYou need to re read my comment… I’m not asking about doing basic fractions.
- atbpaca 1y agoThis number is actually a shame in the sense that it shows how little taxes are paid by other big companies.
- sieabahlpark 1y ago[dead]
- crazygringo 1y agoNo it's not. It shows how much more profitable Berkshire Hathaway has been than other big companies. Which is what it's known for. You'd never want other companies paying as much tax if they didn't have the profit to back it up. It would bankrupt them.
- paxys 1y agoNow apply that same logic to people.
- colechristensen 1y ago>You'd never want other companies paying as much tax if they didn't have the profit to back it up. It would bankrupt them. They do have the profit in that the money they make doing things exceeds the money they spend to do the thing, but though a series of tricks of varying legality and ethics they make it so on paper they do not have "profit" and therefore successfully avoid taxes. Amazon reported losses for the first 10 years while growing to billions in yearly revenue. >It would bankrupt them. It really wouldn't have. While Amazon was growing to dominate retail and putting very many competitors out of business, they were paying 0 corporate taxes. Many companies play these tricks and many people want them to pay fair taxes. If you need to be tax free to break even, you should go bankrupt. Especially in the Fortune 500 region.
- readthenotes1 1y agoIt appears that Berkshire Hathaway accounts for ~ 0.002% of income.
- almosthere 1y agoIf you include the income tax of employees it is a lot higher. Perhaps we need window dressing to make people happy. Stop doing "income" tax and convert it to "payroll" tax. Gov gets the same amount, people can stop complaining about companies not paying tax. But at the end of the day, it's all window dressing.
- TZubiri 1y agoBut that's not paid by the corp, it's paid by the employee.
- almosthere 1y agoits window dressing - either way it's going to be paid. no one is going to win out either way if its moved, the gov still gets its money.
- TZubiri 1y agoIt is what it is, and it's not what it is not
- UmGuys 1y agoDon't forget sales tax. There are many forms of taxation. How fascinating.
- peterbecich 1y agoWhy is a corporate tax necessary? It would be simpler to increase the income tax. EU has low corporate taxes and higher income taxes i.i.r.c.
- merth 1y agoI think because they don't get any dividend to trigger income tax, instead they get a loan against their shares and spend that and roll over the debt to infinity.
- jazzyjackson 1y agoI feel like this is a myth people share without ever looking into. You service the debt with income that you make and pay tax on the income you service the debt with
- merth 1y agoThey do not need to service debt using taxable income, they can roll it over indefinitely or until death, at which point the tax obligation disappears due to the stepped-up basis (capital gains reset on death)
- jazzyjackson 1y agoI don't know what you mean by "roll it over", take out more loans to pay the previous ones? Just not make payments?
- _DeadFred_ 1y agoBro, this is HN. Most of us here know at least one person who does this. It seemed pretty popular with the early Facebook folks. So this talking point that this is a myth isn't going to work here.
- jazzyjackson 1y agoWell by all means educate me, do these people just not make payments on the loan? Take out another loan to pay the first one? I just don't see how taking out loans prevents you from paying taxes on income, assuming you have to make payments with some income somewhere.
- andrewl 1y agoHere's a short (2:46) video called Warren Buffett: No one would owe 'a dime' of federal taxes if other companies paid fair share. https://www.youtube.com/watch?v=VJzTsTU1xL8 https://www.youtube.com/watch?v=VJzTsTU1xL8
- jekwoooooe 1y agoAnd Amazon pays 0%
- cpburns2009 1y agoIf you're going to lie at least make it believable. > Amazon annual income taxes for 2024 were $9.265B, a 30.13% increase from 2023. > > https://m.macrotrends.net/stocks/charts/AMZN/amazon/total-provision-income-taxes https://m.macrotrends.net/stocks/charts/AMZN/amazon/total-pr...
- FredPret 1y agoHere's some interesting thinking about different kinds of tax: https://economicsobservatory.com/which-taxes-are-best-and-worst-for-growth https://economicsobservatory.com/which-taxes-are-best-and-wo... > "Raising the income tax rate has by far the least negative effect on GDP. In the long run, the simulation shows that the economy pretty much returns to baseline levels, with a slight increase in potential output. The opposite is true for corporation taxes. A rise in the corporation tax rate leads to a severe and negative initial fall in GDP. Potential output also decreases. This leads to lower productivity, higher inflationary pressures and deteriorating economic circumstances in the long run. A rise in indirect taxes (such as VAT) does not affect GDP quite as badly as a rise in corporation taxes, but it does affect GDP more substantially than a rise in income taxes. Indirect taxes operate largely through the price channel, increasing the prices of goods. By artificially raising prices, demand is curtailed."
- jshier 1y agoI really need a good explanation for the assertion about corporate taxes, as it makes no real sense. Frankly, it sounds like corporate propaganda.
- lesuorac 1y agoI don't think the studies account for a 0% tax rate and $0 government subsidy. If you're running a large deficit then adding in a tax rate is like having a fire that you're pouring lighter fluid on. Of course when you take away the lighter fluid the fire gets smaller. However, how are you getting that lighter fluid in the first place? It also doesn't mean that 0% is the correct tax rate. This gives pretty strong evidence that during boom (bull) years you should increase the corporate tax rate to prevent the formation of bubbles and then during bane (bear) years you should decrease it to stimulate growth. I think the easy way to think about this is that individuals tend not to spend all of their income especially at the higher income brackets. While companies are not as severe in that effect. So if you increase taxes on a business in order for the government to pay back debt to an individual who then saves the money instead of consumes it, you're going to decrease overall consumption.
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- djoldman 1y agoInteresting. Also, Apple reports paying more than this for the 12 months ending in September 2024: $29.749 billion. https://www.apple.com/newsroom/pdfs/fy2024-q4/FY24_Q4_Consolidated_Financial_Statements.pdf https://www.apple.com/newsroom/pdfs/fy2024-q4/FY24_Q4_Consol...
- hnburnsy 1y agoIronically, owners of the Berkshire Hathaway stock pay no capital gains or dividends taxes while holding it, unlike almost every ETF or mutual fund.
- StochasticLi 1y agoBerkshire Hathaway can't change this.
- 2Gkashmiri 1y agoLet me explain: Direct taxes and indirect taxes. Indirect taxes. These are paid by customers on purchase of goods or services. Vat and gst or hst are examples. For a service provider, or a seller, there is no way to avoid this tax. If you sell something, you HAVE TO COLLECT THIS TAX AND REMIT TO GOVERNMENT. Direct taxes. This is whats "income tax". You sell something, you buy goods to sell, you earn a markup, you subtract expenses and your PBT (profit before tax) is subject to 15-25-30% income tax and you are left with Pat (profit after tax). Now, usually this Pat is exempt from subsequent tax because the owner gets this money but many jurisdictions now charge taxes on this "income" as well for individuals or other owners There are creative accounting ways to reduce this PBT but you cant just show $X on your financials and then say I dont owe any income tax.. Income tax is usually calculated on PBT