Warren Buffett was a big supporter of Hitlery Clinton in the 2016 presidential election.
Today, Buffett is singing a different tune that sounds a lot like “I love Trump!” praising the Trump tax cut, calling it “a huge tailwind” for American businesses.
If Buffett is so smart and possesses such a brilliant business mind, why couldn’t he see the obvious benefits of the Trump tax cut up front? All he had to do was connect the dots. He’s supposed to be the best there is at that.
The GOP tax law, which lowered the federal corporate rate from 35 percent to 21 percent, is a “huge tailwind” for American businesses, Buffett said.
“It certainly means corporations will pay quite a bit less in tax than they otherwise would,” he said. “When we make money in 2018 domestically, and subject to a lot of little things here and there, basically we’ll be paying at 21 percent instead of 35 percent. That’s a lot of money.”
The 87-year-old Berkshire chairman and CEO released his annual report to shareholders on Saturday. It revealed that the company’s net worth increased to $65.3 billion for the 2017 tax year, including $29 billion because of tax reform.
In a “Squawk Box” interview, Buffett explained the reasons for most of the gain.
“[First,] we had about $100 billion of unrealized gain in equities. When they’re sold you pay tax on that. And previously when the tax was 35 percent we would have had a $35 billion reserve for taxes against that as a liability. That would drop to about 21 billion,” he said. “So $14 billion, roughly, was a reduction in the amount of tax that when we sell those securities we will pay. It wasn’t cash now. But it reduced a liability. When you reduce a liability net worth goes up.”
“The other important point related to the same thing, deferred income taxes, [is] when we buy some kind of fixed asset,” he said. “It’s particularly a tailwind if you’ve got … lots of deprecation and taken bonus deprecation upfront. So it’s a big item there.”