Warren Buffett has been saying for years that the government should tax large estates. He believes that letting families pass down huge fortunes without paying a dime creates dynasties that hurt the economy and make inequality worse.
So you would think Buffett would be first in line to pay that tax himself, right? Not exactly.
Buffett is transferring his entire Berkshire Hathaway stake, valued at $140 billion, to four family foundations during his lifetime. That means those donations never trigger the estate tax, which currently sits at 40% on anything above a $15 million exemption per person. By giving the money away before he dies, his estate pays exactly zero.
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Back in 1998, Buffett joked about this very idea. "I don't send along any voluntary payments to the I.R.S, I want you to understand," Buffett told a reporter.
Buffett has pointed out that roughly 2.6 million people die in the U.S. each year, but only about 5,000 estates actually pay the estate tax.
Despite his public advocacy for higher taxes on the wealthy, Buffett has structured his philanthropy to avoid any estate tax liability. His donations to the Bill & Melinda Gates Foundation and other family foundations are made while he is alive, subject only to income tax deductions. This strategy is perfectly legal and widely used by billionaires, but critics note it undermines the very tax Buffett claims to support. The $15 million exemption per person means a married couple can shield $30 million from estate taxes; Buffett's $140 billion fortune would face a 40% tax if passed on at death.
While Buffett talks about taxes, his company has been putting money to work in a different direction. Berkshire Hathaway closed its $6.8 billion deal to buy Taylor Morrison, a national homebuilder. The purchase was spearheaded by CEO Greg Abel. Buffett told CNBC's Becky Quick that Abel "did that faster than I could have done it, smoother than I could have done it, and I never talked to the CEO."
The modular home manufacturer Clayton Properties Group, a Berkshire subsidiary, is set to absorb Taylor Morrison. Abel said the move fits a vision for "a unified site-built homebuilding operation."
Analyst Margaret Whelan, who leads Whelan Advisory, was among those who said Berkshire's purchase of Taylor Morrison signaled that the housing market had bottomed out.
Berkshire's enormous cash pile of $397.4 billion has sparked debate, with some critics arguing it reflects a shortage of appealing opportunities. However, the recent purchases of Taylor Morrison and Alphabet shares suggest that Buffett and Abel are selectively deploying capital when they see value. The company also repurchased $234 million of its own shares in the first quarter, indicating confidence in its intrinsic worth.
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