In his latest annual letter, Warren Buffett, the Chairman and CEO of Berkshire Hathaway, highlighted the company’s unprecedented tax payments and called for the federal government to use these funds wisely. The letter also reflected on the company's remarkable transformation from a struggling textile business into a corporate giant that paid $26.8 billion in taxes last year. Buffett emphasized the importance of capitalism while acknowledging its imperfections and urged policymakers to ensure a stable currency and support those less fortunate. This letter underscores the long-term value investing philosophy that has driven Berkshire Hathaway's success over six decades.
Buffett's reflections began with a candid look at Berkshire Hathaway's early days, when it was far from the powerhouse it is today. Sixty years ago, the company faced significant financial challenges, failing to generate profits or pay taxes. In fact, in 1965, Berkshire Hathaway did not contribute a single dollar to the U.S. Treasury, an issue that persisted for nearly a decade. At the time, this lack of profitability was a cause for concern, especially for a well-established American enterprise. However, under Buffett's leadership, the company transformed dramatically. By 2024, Berkshire Hathaway had become one of the largest contributors to U.S. tax revenue, paying $26.8 billion in corporate income taxes—approximately 5% of all corporate taxes collected by the IRS.
The letter also delved into the broader implications of Berkshire Hathaway's success. Buffett pointed out that the company's ability to reinvest rather than distribute dividends played a crucial role in its growth. Over the past six decades, Berkshire Hathaway has made only one dividend payment, allowing it to build a substantial base of taxable income. This strategy has enabled the company to accumulate an impressive record of tax contributions, totaling $101 billion over time. Additionally, Buffett praised the power of capitalism, noting that despite its flaws, it has been instrumental in driving America's economic prosperity. He acknowledged that the system can sometimes be exploited, but overall, it has produced unparalleled results.
Buffett also took the opportunity to discuss some of Berkshire Hathaway's top investments, which include major corporations like Apple, American Express, Coca-Cola, and Moody's. These companies, known for their strong profitability and brand recognition, have contributed significantly to Berkshire Hathaway's success. Buffett highlighted the importance of long-term investing, a principle that has guided his investment decisions and helped create immense value for shareholders. Moreover, he emphasized the interconnectedness of Berkshire Hathaway's operations across various sectors of the U.S. economy, underscoring the company's broad impact on American industry.
Looking ahead, Buffett expressed optimism about Berkshire Hathaway's future, stating that the company remains vibrant and dynamic, much more so than it was in 1965. He credited much of this success to the unique opportunities provided by the American economic system. While recognizing that Berkshire Hathaway's achievements are tied to the country's prosperity, Buffett also urged the government to spend taxpayer money wisely and maintain a stable currency. He concluded by thanking the U.S. government for its role in enabling Berkshire Hathaway's success and expressed hope that future contributions would be even larger. Ultimately, Buffett's message was one of gratitude and responsibility, emphasizing the mutual benefits that come from sound economic policies and responsible corporate citizenship.