Thanks to President Donald Trump’s tax cut, Warren Buffett’s investment firm Berkshire Hathaway has reaped a windfall. The billionaire investor had strongly backed the defeated Democratic contender Hillary Clinton during the 2016 presidential campaign.
Berkshire’s gain in net worth during 2017 was $65.3 billion. While $36 billion came from Berkshire’s operations, the remaining $29 billion was delivered as a result of the new US Tax Codes that were signed into law by Trump last year. The $29 billion windfall helped push Berkshire’s net earnings to $44.94 billion in 2017 . The investment behemoth had reported $24.07 billion net earning in 2016. The increase in the company's net earnings is close to 87 per cent.
“A large portion of our gain did not come from anything we accomplished at Berkshire,” Buffett wrote in his annual letter.
Berkshire holds about $100 billion in unrealised gains on equity investments. Before Trump's tax cuts, Berkshire had calculated taxes at the corporate rate of 35 per cent. The new law reduced the rates to 21 per cent. Berkshire, therefore, could drastically cut its deferred provisioning for taxes items.
Interestingly, Buffett had opposed the tax cut plan.
Trump’s tax cut, which will expire in 2025, has given the vast majority of taxpayers in the US lower tax bills.
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