Berkshire Hathaway chairman and CEO Warren Buffett on Saturday released his annual letter, which touted the company’s record-setting tax payments last year and urged the federal government to spend the money wisely.
Buffett recalled how, when he first bought Berkshire Hathaway 60 years ago, his longtime business partner Charlie Munger warned him that what was then a large textile business was “headed for extinction,” as indicated by its inability to generate profits and pay taxes at the time.
“The U.S. Treasury, of all places, had already received silent warnings of Berkshire’s destiny,” he wrote. “In 1965, the company did not pay a dime of income tax, an embarrassment that had generally prevailed at the company for a decade. That sort of economic behavior may be understandable for glamorous startups, but it’s a blinking yellow light when it happens at a venerable pillar of American industry. Berkshire was headed for the ash can.”
“Fast forward 60 years and imagine the surprise at the Treasury when that same company – still operating under the name of Berkshire Hathaway – paid far more in corporate income tax than the U.S. government had ever received from any company – even the American tech titans that commanded market values in the trillions,” Buffett wrote.
WARREN BUFFETT’S ANNUAL LETTER TO BERKSHIRE HATHAWAY SHAREHOLDERS: READ HERE
“To be precise, Berkshire last year made four payments to the IRS that totaled $26.8 billion. That’s about 5% of what all of corporate America paid. (In addition, we paid sizable amounts for income taxes to foreign governments and to 44 states.)”
Buffett added that the company’s aggregate income tax payments to the U.S. Treasury over time have reached an aggregate $101 billion, and noted that the company only paying out one dividend in the past 60 years allowed the conglomerate to build its base of taxable income over time.
BUFFETT’S SURPRISE NOVEMBER LETTER TAKES PERSONAL TONE
The value investor, known for holding stocks over the long term, also touted his top investments.
“We own a small percentage of a dozen or so very large and highly profitable businesses with household names such as Apple, American Express, Coca-Cola and Moody’s. Many of these companies earn very high returns on the net tangible equity required for their operations”, he said.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| AAPL | APPLE INC. | 245.55 | -0.28 | -0.11% |
| AXP | AMERICAN EXPRESS CO. | 295.37 | -8.40 | -2.77% |
| KO | THE COCA-COLA CO. | 71.39 | +1.34 | +1.91% |
| MCO | MOODY’S CORP. | 500.03 | -11.54 | -2.26% |
Buffett went on to discuss the value of capitalism, which he said has faults and abuses that “in certain respects are more egregious now than ever” but “also can work wonders unmatched by other economic systems.”
“True, our country in its infancy sometimes borrowed abroad to supplement our own savings. But, concurrently, we needed many Americans to consistently save and then needed those savers or other Americans to wisely deploy the capital thus made available. If America had consumed all that it produced, the country would have been spinning its wheels.”
BUFFETT SLAMS REGULATORY BURDENS
“The American process has not always been pretty – our country has forever had many scoundrels and promoters who seek to take advantage of those who mistakenly trust them with their savings. But even with such malfeasance – which remains in full force today – and also much deployment of capital that eventually floundered because of brutal competition or disruptive innovation, the savings of Americans has delivered a quantity and quality of output beyond the dreams of any colonist.”
“From a base of only four million people – and despite a brutal internal war early on, pitting one American against another – America changed the world in the blink of a celestial eye,” Buffett wrote.
He explained that in a “very minor way” Berkshire’s shareholders have participated in the American miracle by forgoing dividends. What was originally a “tiny, almost meaningless” reinvestment “mushroomed” over time.
“Berkshire’s activities now impact all corners of our country. And we are not finished. Companies die for many reasons but, unlike the fate of humans, old age itself is not lethal. Berkshire today is far more youthful than it was in 1965,” he wrote.
“However, as Charlie and I have always acknowledged, Berkshire would not have achieved its results in any locale except America whereas America would have been every bit the success it has been if Berkshire never existed.”
“So thank you, Uncle Sam. Someday your nieces and nephews at Berkshire hope to send you even larger payments than we did in 2024. Spend it wisely. Take care of the many who, for no fault of their own, get the short straws in life. They deserve better. And never forget that we need you to maintain a stable currency and that result requires both wisdom and vigilance on your part,” Buffett wrote.
