Warren Buffett on Marriage

Mohnish Pabrai, a New York money manager, thinks it's very important to have heroes. "It just so happens," Pabrai said in a recent interview with Marketplace, "that my hero is alive when I'm alive. And my hero is actually willing to accept a bribe to sit down for a meal. So we paid the bribe and we got the meal."

Who did Pabrai have a meal with? Warren Buffett. How much did Pabrai pay for that meal? $650,100 (although he did only pay two-thirds of that ... another friend paid the other third).

In the interview, Pabrai talked about the lunch and what advice Buffett had to share. Pabrai determined that they had about 54 different threads to the conversation (the lunch lasted three hours), but a few stuck out -- including Buffett's advice to Pabrai's daughters:

"For example, Warren told my daughters that the single most important decision they would make in their lives was who they decided to marry. And I think that's something that sticks with them. They actually think about that."

In fact, Pabrai talked about how one of his daughters, who attended the lunch with him, threw Buffett off-guard with a question about his marriage:

"...she suddenly brought up, she said, "Yes, was it hard when your wife left you?" So his first wife, Susan Buffett, in the 70s left Omaha and moved to San Francisco. I think the question caught Warren off-guard, I could see his eyes well up. But I think it took him just a few moments, then he was in control. Then I think he spent the next 40 minutes on Susan."

Interestingly, to me at least, the Marketplace reporter didn't seem very concerned about Buffett's marriage talk, despite the fact that it was such an obviously important topic in the lunch and to Buffett. Instead, she followed up with questions about philanthropy and his temper.

But, I just wondered if anybody else listening to the interview caught the phrase that I did ... that Buffett thinks that who you decide to marry is the "single most important decision" a person makes in his or her life.

For me, I'd disagree with Buffett. The single most important decision that each of us makes doesn't have to do with our spouse. But I would agree that who we choose for a spouse is important. What's essential, I think, is to pray, to know exactly what are the "non-negotiables," to remember what's not essential, and to embrace the responsibility of the decision without letting it paralyze you.

(FYI: Pabrai was the winner of the 2007 charity auction to have lunch with Buffett. Last year's winner won with a bid of $2.1 million. Bidding is now underway on eBay for this year's lunch. Last bid I saw was for $82,100. Pre-qualified bidders only. Hmmm ... I'm not going to bid for this, but who would I bid to have lunch with? Deep thoughts.)

Comments

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1. obewan said the following at 1:28 PM on Jun 23:

The most suprising thing about Warren Buffet is that he is a strong Democrat.

I think it is rare to find a person with his amount of wealth outside the Republican party. But, the Dems do have all those wealthy movie stars.

I once heard Warren Buffet when asked about taxes say that he has no worries since he has been blessed with so much. In his view, taxes are just one more way to give back to the society that has blessed him with wealth.

If I only had his billions, maybe I would share his views, except maybe for the Democrat part. LOL

2. Mark W said the following at 3:12 PM on Jun 23:

obewan,

It's actually not that surprising when you consider that the super-rich pay little to no taxes, and are often the ones who benefit most from gov't wealth redistribution (as seen in the recent round of bailouts). Given that Buffet is the largest shareholder of Wells Fargo, do you think he's going to criticize Obama's economic policies?

3. Mike said the following at 4:25 PM on Jun 23:

Those who are truly "wealthy" - the multimillionaires and multibillionaires - have armies of accountants to navigate the tax code and exploit every loophole. It's the successful small businessman (who provides the vast majority of jobs) and the middle class who get slammed by the tax policies of the Democrats, not the mean, evil, nasty "rich".

Never believe the "tax the rich" mantra of the Democrats.

8 out of 10 of the wealthiest Senators are Democrats.

Does anyone seriously believe they'd hurt themselves?

4. Bernie said the following at 4:36 PM on Jun 23:

Warren really isn't that far off... I believe that who you marry isn't just one of the most important decisions a person will ever make, but that it's truly the 2nd most important decision a person will ever make in their life.

You're right though, Heather. The biggest decision a person will ever make in their life is what they're going to do about Jesus Christ. I just wish more people would realize that, and not mix the two up.

5. T.Smith said the following at 6:15 PM on Jun 23:

Warren Buffet would make an interesting conversation, but I think that John D. Rockefeller would be far more intriguing (plus, $383 billion dollars is more than Exxon Mobile's market cap). Unfortunately, he is dead.

6. NoImNotRich said the following at 7:31 PM on Jun 23:

Actually, the rich pay more taxes. Once you make so much money they tax you more. Look it up. You're wrong if you think the rich pay less.

Everyone should pay the same tax, but that's not how the system works.

7. Mark W said the following at 10:00 PM on Jun 23:

@NoImNotRich

Yes, you are correct about the way the U.S. income tax system is supposed to work. And for the most part, that is how it works up to a point. But Mike has it right. The uber-rich figure out all kinds of loopholes to avoid paying taxes, so they have little to fear no matter how much the gov't huffs and puffs. Mike's right - they'd never hurt themselves, or their friends.

8. Jethro said the following at 2:09 AM on Jun 24:

Oliver Wendell Holmes said "taxes are the price we pay for civilization".

I like that.

9. obewan said the following at 6:09 AM on Jun 24:

#6. NoImNotRich said the following at 7:31 PM on Jun 23

Actually, the rich pay more taxes. Once you make so much money they tax you more. Look it up. You're wrong if you think the rich pay less.
-------------------------------------
It is true that income from employment is taxed at 35% around $300K or so, but for someone like Buffet who could claim dividend income, things could be different.

Bush set the cap on "qualified dividends" to only 15%. Buffet rarely sells his stocks. If he has $30 billion dollars in holdings that are never sold, his tax rate would be a low 15%. I pay at least 20% on my meager salary!

10. Tigger said the following at 7:21 AM on Jun 24:

Yes, Warren Buffett does this charity lunch every year, and always has something interesting to say. Last year I used a transcript of the lunch in an ESL class (advanced students) and they also had interesting responses.

The reporter, who worked for Marketplace which I assume is a finance paper/mag of some sort, probably figured his audience wasn't interested in reading WB's advice about marriage. Quite a loss, as Wall Street Journal proves all people are interested in most things, but I guess that's how it's done at some places. Regardless, much of what Warren Buffet has to say is worthwhile.

I don't know much about taxes, except that I pay 4% income tax over here in South Korea due to some deal SK made with the US. No complaints there. It's pretty nice for the savings account. :)

11. Tami said the following at 8:56 AM on Jun 24:

Trevor (11) -- I think it's just because the man had his daughters with him. :)

I would guess that -- given the unfortunate course of his own marriage -- Buffett would likewise encourage his sons (if he had them) to choose a wife very wisely.

12. John the Aggie said the following at 9:31 PM on Jun 24:

I agree that the very rich can sometimes find loopholes to avoid paying the rate they would pay if they were lazy about it. Two points, however:

1 - Capital gains and dividends are taxed differently (and less severely) than income. this makes sense, because you have already faced taxation on money you have invested. We are all free to invest money just like Warren Buffet and not be taxed on those investments (and a look at the national savings rate says we could all use a lesson in this...). Should the government be allowed to double dip into your hard work and prevent wealth accumulation?

2 - A complex tax code, as is necessary for a country as multifaceted as the United States, will naturally have some variances that shrewd people will be able to exploit. If a rich man wants to hire an "army of accountants" to do so, why not? It is in their best interest, and "best interest" is what our good old capitalistic system is founded on. They will still pay the AMT on their income in any case.

If you look up some statistics, you will find that the rich pay the vast majority of all taxes. When I ran the numbers a couple of years ago, a "rich man" paid $600 in tax for every dollar contributed by someone from the bottom 50% of the income distribution.

13. Mike said the following at 4:13 PM on Jun 25:

John the Aggie (#14) -

Yes, you're right. Last stats I saw, the top 50% of wage earners pay 95% of the taxes. A significant problem; it means we're reaching the dangerous tipping point where 49% of the people pay 100% of the taxes. That's a real danger, one that leads to taxation without representation. (Now, where have I heard that before...?)

My comment was relative only to the constant drumbeat of "tax the rich" coming from the Democrats. There are a select few - and Democrat lawmakers are generally among them - who avoid the taxes they happily foist on the rest of us. A good example is John Edwards, two-time candidate for President. Since he doesn't draw a salary, but instead takes his pay in the form of dividends from his corporation, through some accounting maneuverings, he avoids taxation altogether. (I can't remember the exact details, but that's the general idea.) All perfectly legal. And he's a VERY wealthy man.

As I said before: The tax burden falls on the small businessman and the middle class. You know that $250,000 cap Mr. Obama referred to during the campaign - that nobody making less than that would have his taxes raised? (Ignore for a moment the fact that promise was promptly broken in the form of a new cigarette tax, and may soon be broken again in the form of new energy and health care taxes.) Well, a good chunk of the people who make that kind of money are small business owners - in other words, employers. You know, the folks who provide about 95% of the jobs in America.

Consider also that, even if you were to take 100% of the income of everyone making $200,000 a year or more, it would generate less than $600 billion. Nowhere near enough to pay for all the goodies Washington is currently throwing out.

In general, I agree with you. Wealthy people are clearly doing more than their "fair share". My only point is the whole "tax the rich" mantra is a smokescreen - thinly disguised class envy that has little or nothing to do with reality. And the people spouting that line are blatant hypocrites, because it doesn't affect them.

"Tax the rich", my rear end. "The rich" are us, my friends. Count on it.

14. Peter said the following at 5:06 AM on Jun 27:

At first I was going to disagree with Heathers statement of disagreement with Buffets statement (lol) until I read another comment saying that Christ is #1 decision, marriage is 2nd. I can agree with that, especially as a believer in Christ. At first I thought "What??! becoming 'one' with someone is no light decision or process! If you mix water and oil, you get something that doesn't mix. Dirty water and clean water? You get dirty water. Clean spring and clean tap... you get a mix of the two... and the growth process is for life, and everyday that person will change your life.. " but anyway... That quote about marriage saving love is very insightful! ---------- On another note, this whole super rich vs rich vs top middle class small business vs middle class Tax debate has confused me. If more people comment, can you CITE REFERENCES to more information if you have some time? Someone has said one of those classes is taxed the most... someones wrong and someones right... let it not be a Republican vs Democrat thing.... let it be a pure economics explanation. Por Favor?

15. Mike said the following at 6:19 AM on Jun 28:

Peter (#16) -

According to the IRS, here are the figures for 2006 (the latest year available:

Based on sampling, there were 43,351,108 tax returns filed, generating a total of $228,952,219,000 in taxes. Of those, 1,482,149 were for households making between $100,000 and $200,000, 373,927 returns were for households making between $200,000 and $500,000 per year (the IRS does not break down at the $250,000 level), 69,682 returns were for households making between $500,000 and $1,000,000, and 45,111 were for households making $1,000,000 or more, for a total of 1,970,870 tax returns. Those returns generated $33,226,344,000, $22,612,808,000, $10,782,095,000, and $33,401,746,000 in revenue, for a total of $66,796,600,000.

That's a little confusing, so I'll lay it out in table form:

$100K - $200K: 1,482,149 returns, $33,226,344,000
$200K - $500K: 373,927 returns, $22,612,808,000
$500K - $1M: 69,682 returns, $10,782,095,000
Over $1M: 45,111 returns, $33,401,746,000
Total: 1,970,869 returns, $100,022,993,000

Now, comparing that with the remaining income brackets, you have a total of 41,380,238 returns, bringing in a total of $128,929,225,000 in revenue. Wow. In real numbers, that means people making $100,000 or more - 4.55% of the reporting tax returns - are paying 43.69% of the taxes.

If we drop the numbers down to the next two income brackets to include the households making $50,000 or more, it means those people - 21.47% of the population - are paying 72.3% of the taxes.

These numbers have been on the IRS web site for years. They're not hard to verify. So John is absolutely correct: "The rich" are paying way more than their "fair share". However, I'm also correct in saying that there are way too many loopholes in the system, and this is where John and I disagree. I don't think the system "has to" be complex. Only things that come from God "have to" be the way they are. Everything else was made by man, and is subject to change.

Frankly, I think the whole idea of taxing incomes is flawed, fundamentally. It punishes people for being productive. And the stairstep tax structure, where the more you make, the higher percentage you pay, is literally a communist idea - it's straight out of Marx's Communist Manifesto. I think I'll keep my allegiance to the Almighty, not the State, thank you very much.

Taxing incomes leads to the sorts of shenanigans we have now - hiding income through all these various kinds of income, like salaries, wages, tips, dividends, capital gains, etc., etc. Politicians can also use the tax code to punish or reward behaviors they like or don't like. Therefore, you wind up with a labyrinth of messy codes that it takes an army of accountants and lawyers to figure out.

Instead, if we had a tax on consumption - like a sales tax - it would be way simpler to administer. Buy something, pay the tax. It would also keep the tax from being hidden. You could keep from hurting poor people by just establishing vouchers that exempt spending up to the poverty level.

All that said, though, the most fundamental problem is that government spends way more money than it brings in. Until you fix that problem, what form the robbery takes is largely academic.