Buffett on Dividends

David Foster has some thoughts on Kerry, Buffett, and dividends.

Warren Buffett has signed on as an economic advisor for Kerry. One of Buffett's arguments is that the dividend tax reduction is "class welfare–for my class." If Berkshire Hathaway were to pay $1 billion in dividends, he argues, he would personally receive a large amount of money at a low effective tax rate.

Leave aside for the moment the questionable equivalency of tax reduction with welfare. Even without the dividend tax reduction, Buffett could already take money out of Berkshire Hathaway at a relatively low tax rate, simply by selling shares at the capital gains rate. Berkshire does not pay any dividends, and, almost certainly, a major reason for this policy has been the historically-favored treatment of capital gains vs dividends.

I totally agree. Very nice post.