Warren Buffett defends himself after ProPublica says he avoids taxes

Warren Buffett defends himself after ProPublica says he avoids taxes
Warren BuffettAlex Wong / Getty Images
  • ProPublica reported this week that Warren Buffett pays relatively little income tax, despite huge gains in his wealth.
  • The investor pays minimal tax by holding Berkshire Hathaway stock and not paying a dividend.
  • Buffett pointed out that shareholders don't want a dividend and he's giving his fortune away.

Warren Buffett minimizes his personal tax bill by keeping his fortune in Berkshire Hathaway stock and not paying a dividend, ProPublica said in an investigative report published on Tuesday.

The billionaire investor and Berkshire CEO defended himself in a detailed statement to the news outlet, explaining that his shareholders don't want a dividend, and saying he's on track to give virtually all of his money to good causes.

ProPublica analyzed Buffett's income-tax returns between 2014 and 2018 and determined that even though his wealth grew by $24 billion in that period, he only reported $125 million of income and paid just $24 million in taxes.

"No one among the 25 wealthiest avoided as much tax as Buffett, the grandfatherly centibillionaire," ProPublica declared. It added that Buffett's annual income of $12 million to $25 million between 2015 and 2018 was tiny; more than 14,000 US taxpayers reported a higher income than he did in 2015.

Buffett responded to ProPublica's main assertions - that he squirrels away his money in Berkshire stock and eschews a dividend to keep his tax bill low - with 23 pages of documents. They included a written statement, as well as excerpts from several of Berkshire's annual reports, news releases, and photocopies of newspaper and magazine stories.


The investor pointed out that Berkshire shareholders overwhelmingly prefer the company to reinvest its profits instead of paying a dividend, as they know a big chunk of the funds will ultimately go towards good causes.

"Many large shareholders, including me, enjoy the long-term buildup in value, knowing that it is destined for philanthropy, not consumption or dynastic aspirations," Buffett said.

The investor highlighted that holders of Berkshire's "A" shares voted 87-1 against a dividend in 2014, and "B" shareholders voted 47-1. He likely wanted to show that Berkshire doesn't pay a dividend because the vast majority of its shareholders don't want one, not because he wants to lower his personal tax bill.

Buffett defended his decision to keep virtually all of his fortune in Berkshire stock. The 90-year-old billionaire has pledged to give over 99% of his net worth to philanthropic causes, and has already donated about half of his nearly 475,000 "A" shares since 2006, he said.

Moreover, Buffett calculated the tax benefits from his donations to date at less than 50 cents for every $1,000 he's given away. He also prefers to hand his cash to charities, instead of giving it to the federal government to pay off the national debt.


"I believe the money will be of more use to society if disbursed philanthropically than if it is used to slightly reduce an ever-increasing US debt," he said.

Buffett reiterated his support for changes to the tax code that would reduce wealth inequality.

"I hope that the earned-income tax credit is greatly expanded and additionally believe that huge dynastic wealth is not desirable for our society," he said.

Buffett attached photocopies of a Fortune cover story from 1986 to his statement. It was titled, "Should you leave it all to the children?" and included his advice on how much to pass down: "Enough money so that they would feel they could do anything, but not so much that they could do nothing."