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Stocks B / Berkshire Hathaway

URL:  https://boards.fool.com/provisionpre-tax-income-all-gaap-of-course-is-32982786.aspx

Subject:  Re: What was BRK’s effective tax rate? Date:  2/12/2018  6:04 PM
Author:  rclosch Number:  234450 of 244697

Provision/pre-tax income (all GAAP of course) is the correct thing for effective tax rate because
the only difference between this and actual cash taxes paid is one of timing. Over a long (in
Berkshire's case very very long) period of time cash taxes paid will match up with the provision.


Thanks for your explanation this and your other comments very nicely explain the reason for the difference between note 13 and note 16.

Provision for taxes (for 2016) was: $9.2B (your $6.5B is simply the current provision; actual cash
taxes paid was actually just $4.7B). So, the effective tax rate was (on $33.6B of pre-tax income)
27%.


When I divide 33.6 by 4.78 I get an effective tax rate 14% not 27%
The figures for 2015 and 2014 14.6% and 13% this gives us a much average of 13.7%. Which makes more sense to me as I think I remember Buffett answering a question at an annual meeting to the effect that Berkshire effective rate was around 13%.

14% times a 57% tax cut (7.98%) still leaves us with an effective rate below 6% going forward.

Is there any way estimating how much of the difference between the statutory rate and the effective rate is deductions and how much is tax credits?
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