Berkshire buyback seen clashing with estate tax push

Warren Buffett

Warren Buffett's $1.2 billion share buyback from a single unnamed investor likely helped that person's estate save substantially on taxes, just one day after the Berkshire Hathaway CEO said the rich should actually be paying more, not less, when they die.

With the "fiscal cliff" looming and estate taxes set to rise dramatically in less than three weeks, the timing was seen as advantageous - and, according to Berkshire watchers, also out of place in the context of Buffett's recent tax activism.

"I would say 'Warren, would you please just keep your nose out of this.' He's not in a position to criticize what's good for America and for everyone else's estate," said Anthony Sabino, a professor of business at St. John's University. "He's no doubt utilized the present tax code to maximum effect."

Berkshire said it bought 9,200 Class A shares from "the estate of a long-time shareholder," whom it did not name, at $131,000 per share, a price in line with where Berkshire has traded in recent weeks.

Buffett's assistant didn't respond to a request for comment on the shareholder's identity. The shares represent 1 percent of Berkshire's Class A stock.

The repurchase came less than a month ahead of the looming "fiscal cliff," automatic tax hikes and spending cuts set for Jan. 1 that the White House and members of Congress have been negotiating to avoid.

Among other levies, the estate tax is expected to rise in the new year package by as much as 20 percentage points, which may have spurred the anonymous shareholder to sell now.

Buffett was a signatory of an open letter released Tuesday that called for a lower starting point for the tax and a higher taxation rate, beginning at 45 percent.

"We believe it is right to have a significant tax on large estates when they are passed on to the next generation. We believe it is right morally and economically, and that an estate tax promotes democracy by slowing the concentration of wealth and power," the 33 signers wrote in the letter released by the campaign, United for a Fair Economy.

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