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Biden wants to raise the corporate tax rate from 21 percent to 28 percent
Warren Buffett not worried about corporate tax hikes
Buffett: The fact that tax increases harm consumers is “corporate tale”
“It’s time for America’s companies and the richest percent of the population to start paying their fair share,” said US President Joe Biden in his first major speech to Congress – and he wants to translate these words into action. Among other things, he wants to raise the corporate tax rate from 21 percent to 28 percent in order to finance his billion dollar infrastructure program. According to Yahoo Finance, MPs – especially from the Republican Party – and business executives fear that these plans could damage the competitiveness of US companies and ultimately harm US consumers. All nonsense, however, thinks Warren Buffett, who showed himself completely unconcerned about higher taxes at the annual shareholders’ meeting of Berkshire Hathaway on May 1st.
Warren Buffett: Customers won’t notice higher corporate taxes
“When I’m at an annual Berkshire Hathaway meeting and it’s assumed I’m speaking on Berkshire’s behalf, I generally don’t want to deal with political issues, and I think I shouldn’t,” Buffett said, loudly on Benzinga “At the shareholders’ meeting at the beginning of May, however, there were still a few comments about Biden’s tax plans for US companies.
He himself is not at all concerned about higher taxes – and in his view US consumers should not be afraid either. “It’s a corporate tale for them to declare that it would be terrible for all of you to pay more taxes,” said the Omaha Oracle, according to Yahoo Finance. There is a lot of talk about how these higher corporate taxes are passed on to customers, but in most industries this is not the case at all. According to Buffett, this only applies to utilities that are a special case. Otherwise, some companies would only try to stir up fears with such claims.
Berkshire Vice Charlie Munger also said, according to Reuters, that it would not be the end of the world for Berkshire if corporate taxes in the US were increased to 25 percent or 28 percent. In fact, a few years ago the tax rate was 35 percent. First Donald Trump lowered it to 21 percent at the beginning of his tenure. As “CNBC” reports, Warren Buffett pointed out in this context that the corporate tax rate at the beginning of his career would have been more than 50 percent and was therefore much higher. Apparently, this has not harmed the success of Berkshire Hathaway.
Buffett and Munger pointed out, however, according to “CNBC”, that a rise in corporate tax should not be seen as negative for consumers, but certainly for Berkshire shareholders. Because the tax increase gives the state a larger share of the investment holding’s profits. However, Berkshire Hathaway will adjust over time, which is why they are not particularly concerned.
Buffett has already called for higher taxes in the past
Buffett, who also revealed at the shareholders’ meeting that he was at the US election Joe Biden gave his vote, has already spoken publicly on the subject of taxes. Among other things, he criticized the fact that – in percentage terms – he pays less taxes than his employees, and therefore called for a change in US tax policy so that the rich are asked to pay more. US President Biden now seems – at least in part – to be taking this path. However, he is willing to compromise and has already given in to raising the corporate tax to a value of “between 25 and 28 percent”. Experts therefore expect, according to “Reuters”, that the new tax rate for companies will ultimately be 25 percent – no problem for Warren Buffett, Charlie Munger and Berkshire Hathaway, who also accepted the originally planned increase to 28 percent.
According to investment strategist Brian Belski of BMO Capital Markets, there is nothing to worry about. “In the past, tax increases were anything but detrimental to the performance of the US stock market,” he said, according to Yahoo Finance. This is because negative effects such as a reduction in earnings per share are often offset by other factors such as higher spending on infrastructure or stimulus programs. For Berkshire Hathaway, whose success as an investment company depends heavily on developments on the stock exchange, the outlook remains good even with higher taxes.
Finanzen.net editorial team