Warren Buffett Won’t Get Big Tax Savings From His Philanthropy

Warren Buffett’s decision to give away the bulk of his fortune was not designed to maximize his tax savings, writes Allan Sloan, a Newsweek columnist.

Mr. Buffett, who has pledged to give 12.05 million shares in his company, Berkshire Hathaway, to the Bill & Melinda Gates Foundation and to four Buffett family foundations, is well known for his skills in minimizing his company’s tax bill, Mr. Sloan notes.

But Mr. Buffett said his estate will have to pay an estimated $80-million to $90-million after he has given away all of his stock.

This year, Mr. Buffett will save nothing on taxes, Mr. Sloan writes. In 2008, he will save an estimated $500,000 to $1-million.

His savings are so small, Mr. Sloan notes, because individuals cannot write off more than 20 percent of their income on their taxes when they donate stock. (They can write off up to 50 percent annually for donations of cash.)

Mr. Buffett told the magazine that “I can get the same benefit by donating $4-million” as by giving almost $2-billion.