Benzinga - by Shanthi Rexaline, Benzinga Editor.
While explaining why Berkshire Hathaway trimmed its Apple position at the annual shareholder meeting on Saturday, Warren Buffett made a comment that drew huge applause from the audience.
The investment guru noted that Berkshire pays taxes at a 21% federal tax rate on the capital gains it earns on its Apple investment. The tax rate was at 35% not long ago and a steeper 52% in the past, he said.
“The federal government owns a part of the earnings of the business we make. They don’t own the assets, but they own a percentage of the earnings and they can change that percentage any year,” he said.
“I would say with the present fiscal policies, I think that something has to give,” he said.
The U.S. government is operating with a huge fiscal deficit and is burdened by a heavy debt load.
With this in mind, Buffett said higher taxes are quite likely.
“They may decide that someday they don’t want the fiscal deficit to be this large because that has some important consequences and they may not want to decrease spending a lot,” he said.
Buffett stated that Berkshire pays substantial federal income taxes, emphasizing that it is appropriate for a company in a country as generous to business owners as the United States to fulfill its tax obligations.
He noted that Berkshire sent over $5 billion to the U.S. federal government in taxes last year.
“If 800 other companies had done the same thing no other person in the United States would have had to pay a dime of federal taxes, whether income taxes, no social security taxes, no estate taxes.”
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