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Stocks B / Berkshire Hathaway


Subject:  What was BRK’s effective tax rate? Date:  2/12/2018  2:41 PM
Author:  rclosch Number:  234443 of 247131

Note 16 on page 95 of last year’s 10k indicates Berkshire current Income tax expense for 2018 was $6,5. Billion. In 2015 it was $ 5.4 Billion, 2014 it was $3.3 Billion. This indicates an effective tax rate of 19.1%, in 2016, 8.6% in 2015, and 6.4% 2014. These figures if they are correct make BRK world class in its ability to use the tax code to the advantage of its shareholders.

For three years the average would be 11.3%. A 43% reduction would thus reduce Berkshire’s effective rate something in the area of 6.5

At the statutory rate of 35% Berkshire’s tax expense would have been $11.8 billion in 1016, $11.8 billion minus-$6.5 billion means there were $5.3 billion in deductions and credits. In 2015 it was $12.2 billion minus $5.4 billion or $6.8 billion in deductions and credits.
To make things even more obscure there is the table on page 85 that shows Cash paid for taxes in 2016 was $4.7 billion. I do not know how explain the differences between page 85 and 95 and hope there some one here who knows how to explain this. And of course, it is possible that Berkshire actual cash expense was more than either the figures on page 85, and 95. Am I being delusional in suspecting that Berkshire would like to make their real effective tax rat as obscure as possible?

Going forward the tax chance is certainly not raise Berkshire’s effective rate, and since Tax credits come off the top. The Drop in Berkshire’s Effective tax rate should be proportionally greater that the 57% drop implied by the drop from 35% to 20%. IF that average rate for the last three years was 11.37% then we can project the effective rate in future (or at lease till other party resumes control of the government) will be well below 4,9 %, but since Credits come off the top these credits could drop the company’ effective tax rate well below that more.
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