| ProPublica and Buffett basically agree on taxing the rich In its widely-reported article this week headlined "The Secret IRS Files: Trove of Never-Before-Seen Records Reveal How the Wealthiest Avoid Income Tax," ProPublica, an "independent, nonprofit newsroom that produces investigative journalism with moral force," writes that it "obtained a vast trove" of IRS data on the nation's wealthiest people that shows they "can — perfectly legally — pay income taxes that are only a tiny fraction of the hundreds of millions, if not billions, their fortunes grow each year."
The key reason, as the article points out, is that in the U.S. tax system, an increase in the market value of a stock is not taxed as income until it is sold and "paper gains" are turned into actual dollars.
Almost all of Warren Buffett's estimated net worth of just over $107 billion comes from his holdings of Berkshire Hathaway stock.  So, ProPublica reports, while his wealth grew by $24.3 billion between 2014 and 2018, his reported income, presumably mostly from interest and dividends on other investments, was just $125 million, and he paid $23.7 million in Federal taxes.
For ProPublica, that puts his "true tax rate" at 0.10%, smaller than 0.98% for Jeff Bezos, 1.30% for Michael Blumberg, and 3.27% for Elon Musk. It's also, obviously, much smaller than the rate paid by the many Americans who primarily rely on wages.
Based on those numbers, ProPublica says, "No one among the 25 wealthiest avoided as much tax as Buffett, the grandfatherly centibillionaire. That's perhaps surprising, given his public stance as an advocate of higher taxes for the rich."
ProPublica also suggests that when CEOs get relatively small annual salaries (Buffett's has been $100,000 for years), it's "not the self-effacing gesture it appears to be" since "wages are taxed at a high rate.")
And it says Buffett also "relies" on a "strategy" to reduce his income: Berkshire does not pay a dividend. "If Berkshire had offered anywhere close to the average dividend in recent years, Buffett would have received over $1 billion in dividend income and owed hundreds of millions in taxes each year."
ProPublica cites, (and provides), a detailed written response from Buffett.
In it, he says Berkshire shareholders have made it clear they don't want a dividend, preferring that profits be reinvested to fuel a "long-term buildup in value, knowing that it is destined for philanthropy, not consumption or dynastic aspirations."
"I can't think of any large public company with shareholders so united in their reinvestment beliefs: a 50 to 1 vote against dividends is simply unheard of."
He adds that "the U.S. government has benefited from our reinvestment policy," with Berkshire paying about 1.5% percent of all the corporate taxes received in 2019 and 2020. As for charitable deductions, (which were not a significant focus of the ProPublica piece), Buffett says the tax benefit he has received from donating billions of dollars of Berkshire stock since 2006 is less than 50 cents for every $1000 he's given away.
Those contributions will continue even after his death. "I believe the money will be of more use to society if it is disbursed philanthropically that if it is used to slightly reduce an ever-increasing U.S. debt. But that will be for Congress to determine."
ProPublica gives Buffett credit for breaking ranks "with his billionaire cohort to call for higher taxes on the rich," as in his 2011 New York Times op-ed headlined "Stop Coddling the Super-Rich."
In his statement for the article, Buffett writes, "I continue to believe the tax code should be changed substantially."
And on that key point, he and ProPublica are in firm agreement, although they probably don't agree on whether unrealized gains should be counted as taxable income.
Berkshire buys into Brazilian digital bank Berkshire is investing $500 million in the parent company of a privately held Brazilian digital bank with around 40 million customers.
In a news release (in Portuguese), Nubank said Tuesday the money will help it expand its product line, grow internationally, and attract global talent for its executive ranks.
The company's value, based on Berkshire's investment and another $250 million deal with "various domestic and foreign investors," is $30 billion.  Nubank was founded in 2013. Its goal is to use technology and design to improve banking in Brazil, where, it says, "people pay the highest fees and interest rates in the world for the worst banking services."
This year, it entered the CNBC Disruptor 50 list at #40.
Based on the relatively small size of the investment, it was probably the work of one of Berkshire's portfolio managers, not Buffett himself.
BUFFETT AROUND THE INTERNET Some links may require a subscription
BERKSHIRE STOCK WATCH
  BERKSHIRE'S TOP U.S. STOCK HOLDINGS - June 11, 2021
 Berkshire's top holdings of disclosed publicly-traded U.S. stocks by market value, based on today's closing prices.
Holdings are as of March 31, 2021 as reported in Berkshire Hathaway's 13F filing on May 17, 2021, except for Apple, Bank of America, and U.S. Bancorp, which also include shares held as of March 31, 2021 as disclosed in New England Asset Management's 13F filing on May 17, 2021.
In addition to U.S. stocks, shares held as of December 31, 2020 of China's BYD, as listed in Buffett's 2020 letter to shareholders, are included. The price of those shares in U.S. trading is used to approximate the current market value of the position. The value of the stake as a percentage of the company's market value is fixed at what was listed as of December 31, 2020 in the letter.
The full list of holdings and current market values is available from CNBC.com's Berkshire Hathaway Portfolio Tracker.
QUESTIONS OR COMMENTS
Please send any questions or comments about the newsletter to me at alex.crippen@nbcuni.com. (Sorry, but we don't forward questions or comments to Buffett himself.)
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-- Alex Crippen, Editor, Warren Buffett Watch
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