Warren Buffett’s Berkshire Hathaway Now Pays 5% of All Corporate Income Taxes in America
Warren Buffett, chairman and CEO of Berkshire Hathaway (BRK.B) (BRK.A), highlighted a striking corporate evolution in his 2024 shareholder letter. The conglomerate’s journey — from paying no federal income tax in 1965 due to company woes, to delivering the largest corporate tax payment in U.S. history in 2024 — exemplifies its extraordinary financial turnaround under Buffett’s leadership. In fact, Berkshire’s $26.8 billion contribution represented approximately 5% of all corporate income taxes collected by the U.S. government last year.
Buffett’s authority on fiscal responsibility stems from his 60-year stewardship of Berkshire, during which he transformed a failing textile company into a trillion-dollar conglomerate. When Buffett took control in 1965, Berkshire was “headed for the ash can,” failing to generate profits or pay taxes for a decade — a situation Buffett described as “an embarrassment” for a once-venerable industrial firm. His late business partner, Charlie Munger, immediately recognized the acquisition as a strategic error, but Buffett pivoted Berkshire toward insurance, utilities, and value-driven investments. This shift enabled the company to build massive taxable income through relentless reinvestment rather than dividends. Since 1965, Berkshire has paid over $101 billion in cumulative federal taxes, with shareholders receiving only one nominal dividend in 1967.
The scale of Berkshire’s 2024 tax payment — surpassing even tech giants with trillion-dollar valuations — reflects Buffett’s long-term capital allocation philosophy. He attributes this capacity to shareholders’ “endorsement of continuous reinvestment” over six decades, which compounded returns and expanded the tax base. Buffett emphasized that this reinvestment strategy allowed Berkshire to “build its taxable income” organically, contrasting with companies prioritizing short-term shareholder payouts.
Buffett himself tried to put the sum of money into context. “Huge numbers can be hard to visualize. Let me recast the $26.8 billion that we paid last year. If Berkshire had sent the Treasury a $1 million check every 20 minutes throughout all of 2024 – visualize 366 days and nights because 2024 was a leap year – we still would have owed the federal government a significant sum at yearend,” Buffett said. He continued, “Indeed, it would be well into January before the Treasury would tell us that we could take a short breather, get some sleep, and prepare for our 2025 tax payments.”
Berkshire’s tax milestone underscores a broader principle in Buffett’s leadership: patient capital compounding, even through early setbacks, can yield transformative societal contributions. The company’s journey from tax irrelevance to becoming America’s largest corporate taxpayer exemplifies how disciplined reinvestment fuels both corporate resilience and national fiscal strength.
On the date of publication, Caleb Naysmith did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com