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Buffett: Congress likely to tackle tax-dodging mergers

Warren Buffett said "you are getting more mergers that are tax driven" and Congress is "likely to address" the issue.

In response to a question about Pfizer's bid to buy the foreign drug firm AstraZeneca, partially to reduce its U.S. tax bill by moving overseas, Buffett said the trend "will gather momentum and my guess is that when you get to companies of this size, of this prominence, and with the speedup of momentum, my guess is that Congress, one way or another, addresses this. But that could go either direction in how they address it."

Buffett appeared live on CNBC from Omaha with Becky Quick on CNBC's "Squawk Box" following this weekend's Berkshire Hathaway shareholders meeting.

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Congress might, he said, just focus on the narrow section of the tax code that allows a company that merges to move its tax domicile, or "that forces them to rethink all corporate taxes, we'll find out. But I do think it will get attention."

"This whole thing on the foreign situation, I think, will cause one hell of a fight in Corporate America."

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Buffett said he'd like to see all companies pay the same tax rate, but those that would see their taxes go up would "squeal" more than the companies that would get a tax reduction.

Even so, "I think there may be enough action going on now that despite what I said you will get some new resolution on corporate taxes generally beyond the question of just foreign tax rates, but it will take a lot" because opponents will have "lobbyists lined up from Washington to Baltimore."

Buffett said he has no intention of moving Berkshire overseas to cit its tax bill. "We do not feel that we are unduly burdened by federal income taxes. But it does get a little annoying to us when we see other people paying far lower tax rates while engaging in the same sorts of businesses that we engage in."

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But, he went on, Berkshire did fine when it paid 52 percent and 48 percent tax rates and "we make a lot of money under U.S. tax rates" now.

Buffett said he wouldn't favor reform that lowered overall corporate tax revenues in order to make U.S. companies more competitive globally. "If you look at corporate taxes as a percentage of GDP since World War II, they've come down from 4 percent to ... under 2 percent... Corporations are doing fine in the United States... and not having any trouble competing."

BUFFETT ON COKE ABSTENTION

Buffett said he abstained in Coca-Cola's shareholder vote on a controversial pay plan because he had "no desire to go to war" with the company, even though he disliked the plan.

Buffett, however, said the plan may be changed before it is implemented, so that it is no longer "excessive." Coke's management, he said, will do "what's right."

Buffett expressed his concerns to CEO Muhtar Kent before the vote and went public on CNBC with his criticism just after Coke announced the plan had won approval of 83 percent of shares voted.

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He said it should be "no surprise" to people that corporate boards are "clubby" and partially "social organizations." "There's a great tendency to act in a socially acceptable way instead of a business maximizing way."

Buffett pointed out that many board members are very well paid and are hoping to be invited onto other boards as well. Raising objections makes them less attractive to other companies. "That's the real world."

Buffett added that you can get things done without getting into a fight, and that's true outside the board room as well.

Buffett's reluctance to vote against the plan has been criticized by some advocates of corporate governance reform, including activist investor Carl Icahn.

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Berkshire Hathaway holds 400 million Coke shares, about 9 percent of the company's shares outstanding. It's worth about $16.4 billion.

Buffett's comments echoed what he told roughly 38,000 shareholders at this weekend's annual meeting.

DEFENDING GM AND BOFA

Berkshire also has a $1.4 billion stake in General Motors. Buffett endorsed CEO Mary Barra's handling of the automaker's recall controversy. She's in a "hotseat," he said, "but not a hotseat of her own making."

He said Bank of America's accounting error when calculating losses from its acquisition of Merrill Lynch in 2009 didn't worry him very much. CEO Brian Moynihan is "doing a terrific job." The bank "has a wonderful deposit franchise and it will do well over time."

Berkshire has a multi-billion dollar investment in B of A.

PRAISE FOR 3G AND AMAZON

Buffett repeated his desire to do another big deal with Brazil's 3G. Berkshire Hathaway's partner in last year's $23 billion purchase of Heinz. He said that deal is going well.

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Asked if he's "cooking" up anything with 3G, Buffett said 3G's Jorge Paulo "does the cooking. I do the tasting." One thing the two companies won't do, he said, is launch a hostile takeover.

Buffett also had praise for Amazon.com and its CEO, Jeff Bezos. "It's one of the most powerful models I've seen in a lifetime and it's being run by a fellow who has a very clear view of what he wants to do... and is not hampered by external factors like people telling him what he should earn quarterly or something of the sort." In addition, "He's got satisfied customers. That's hugely important."

By CNBC's Alex Crippen. Follow him on Twitter: @alexcrippen