Warren Buffett Talks GOP Tax Cuts

Billionaire investor Warren Buffett thinks President Donald Trump's administration will succeed in passing a tax cut this year, and many business and investors are already positioning themselves to act accordingly.

If there are significant changes to the tax code that would reduce tax rates on capital gains or corporate taxes, then it would be beneficial to sell losing positions now and defer the gains until next year, Buffett explained to CNBC's Becky Quick in an interview Tuesday. In fact, there is "a lot of this going on" as expectations are high for a tax cut to be implemented.

"It would be foolish to have a gain now and pay 35 percent tax on it if by waiting a few months you are likely to pay 25 percent," Buffett said. "This is the year to take losses, not gains."

Meanwhile, Buffett isn't willing to assign a likelihood of a tax act being passed this year, saying it will be known "in a month or two." As such, he is sitting on the sidelines for the time being; it would be "silly" to sell anything today. Naturally, since Buffett isn't the only investor sitting on the sidelines, this likely implies that the market is being propped up by a lack of selling.

"It's an actual factor at Berkshire Hathaway and it's very, very, very seldom in my 87-years this has ever been a factor," he admitted.

Finally, Buffett thinks the bill should be considered not as a tax reform but as a tax cut, and any politician who isn't in favor of a tax cut is in the "wrong line of business."