Corporate tax reform is a “huge tailwind” for American businesses, he said, referring to the new GOP tax law that lowers the federal corporate rate from 35 percent to 21 percent.
The 87-year-old Berkshire chairman and CEO released his annual to shareholders on Saturday, and revealed that the company’s net-worth increased last year to $65.3 billion, with $29 billion of that coming from the change in tax law.
Buffett explained the reason, in part, for the gain.
“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.”
In his letter, Buffett also said the Omaha-based conglomerate has amassed a $116 billion war chest to spend on a deal but feels prices were too high to act in a big way last year.
Buffett, also nicknamed the “Oracle of Omaha” for his successful track record of stocks picks and his market commentary that’s widely-followed by the investment community, joined CNBC from Omaha, Nebraska. He became the controlling shareholder of Berkshire in the 1960s.