Skip to comments.Warren Buffett Seeks Dividend Tax Hikes—Whose Money Is It?
Posted on 03/22/2012 6:13:36 AM PDT by SeekAndFind
Ever since Warren Buffett observed that his tax rate is unfairly low, President Obama keeps finding ways to get mileage out of his friend's lament. One of the president's recent proposals is to dramatically increase the tax rate on corporate dividends for upper-income shareholders.
It may seem that Buffett has no dog in this fight, since the company he runs, Berkshire Hathaway, pays no dividends anyway.
But that's not the whole story. Before 2003, when dividends were taxed at much higher rates, companies like Berkshire had a handy rationale for holding on to their shareholders' money indefinitely, claiming this was the most tax-efficient investment policy.
Lowering the dividend tax to 15% weakened that argument, and since then public companies started paying more dividends and investors have valued them more highly. Berkshire is one of a few megacorporations that still pay no dividends at all; since its chairman is a financial superstar, the company has become Exhibit A for the claim that dividends really don't matter.
But what if Berkshire shareholders actually would be better off if the company paid dividends? Since Buffett has placed himself squarely on the side of a tax policy that favors his own view of the matter, that question is of interest not only to Berkshire's shareholders but to Congress and the voters.
With that in mind, let's take a look at the Sage of Omaha's latest annual letter to his shareholders. As usual, it leads off with his favorite metric a chart showing Berkshire's annual increase in book value dating from the present company's beginning in 1965.
(Excerpt) Read more at news.investors.com ...
” - - - But what if Berkshire shareholders actually would be better off if the company paid dividends? “
Warren Buffet, elitist douche bag !