“The deal that Buffett made with [son] Howie concerning the rent for Howie’s farm was … linked with weight; the amount rose and fell with Howie’s poundage. Warren thought his son should weigh 182.5 pounds. When Howie was over the limit, he had to pay twenty-six percent of the farm’s gross receipts to his father. When he was under, he paid twenty-two percent. … Buffett couldn’t lose on this deal either. He got either more money or a thinner son.”
Sharecrop your way to health and wealth.
Wow, talk about derivatives!
Years ago I met the sage from Omaha when he was opening a furniture store in Houston. I met him, and chatted, and afterwards my wife asked it I got his autograph. I told her I did not want to look like a groupie, but she told me I would likely never meet him again. He recognized me in the line, and said “Hello, again.”
I asked him for a personalized autograph, and he laughed and complied.
It says “Thanks for the Advice, Warren Buffett”
How cool is that, for a Billionaire to engage in self-deprecating humor? As I am a finance guy, this is one of my treasured possessions.
Back on topic, he has not left his billions to his kids for having been members of the “lucky sperm club.”
Ya gotta love that he does not believe in entitlements based on blood.
We should all be so wise…
Although he didn’t leave it all to them, he didn’t leave them high and dry either.
Good friend of mine worked in a machine shop once. One day a guy came in to get something on his tractor fixed. Turns out it was Buffet’s son. My friend incredulously asked “If Warren Buffet’s your dad, what are you doing on a tractor?” Buffet Jr. said “My father told me he’d give me enough money to do something but not enough to do nothing.”
(Woops. Buffett.)
Re. #2- Just to clarify, Buffet is still alive. Your post almost makes it sound as if he’s dead.
I believe the exact quote is this: “A very rich person would leave his kids enough to do anything, but not enough to do nothing.”
Amen to that.
I also subscribe to his philosophy of taxing rich people at a higher rate. The society and economic system that they grew up in allowed them to become as rich as they are. Therefore, they rightfully should pay a little extra into the system that made them so rich. In no other country in the world is it as easy to get so rich so quickly as in the USA.
Or in his words: “I see nothing wrong with those who have been blessed by this society to give a larger portion of their income to the society than somebody that’s working very, very hard to make ends meet.”
I’m not saying tax ’em all at 50 percent — that’s excessive and unnecessary — but a truly progressive effective tax rate [i.e., after all the loopholes, shelters, deductions, and credits] is not unfair in the least — even the richest man on the planet agrees with that. Perhaps a progressive flat tax, maxing out at 30 percent? Just a thought.
Buffett also said, “There wasn’t anyone in the office, from the receptionist up, who paid as low a tax rate, and I have no tax planning; I don’t have an accountant or use tax shelters. I just follow what the U.S. Congress tells me to do,” he said. For the record, he paid 17.7 percent in 2007, and the average among his office workers was 32.9 percent.
He also is in favor of the estate tax, which raises $30 billion from the richest 12,000 families (i.e., not you). “You could take that $30 billion and give $1,000 to 30 million poor families,” he said. “Or should you favor the 12,000 estates and make 30 million families pay an extra $1,000?†Again, it’s the system they were born into that allowed those 12,000 families to rise so high. It’s only fair that they should give something back when they’re done with their lives (which brings us back to the original topic).
We would all do well to listen a little more closely to the wisdom of the richest man in the world.
Jon
Oops, that should be “A very rich person *should* leave his kids enough to do anything, but not enough to do nothing.â€
Jon
Here’s another bit of Buffett wisdom, on philanthropy:
“The way I see it is that my money represents an enormous number of claim checks on society. It’s like I have these little pieces of paper that I can turn into consumption. If I wanted to, I could hire 10,000 people to do nothing but paint my picture every day for the rest of my life. And the GNP would go up. But the utility of the product would be zilch, and I would be keeping those 10,000 people from doing AIDS research, or teaching, or nursing. I don’t do that though. I don’t use very many of those claim checks. There’s nothing material I want very much. And I’m going to give virtually all of those claim checks to charity when my wife and I die.”
Jon
I can see where Buffet knows business. He does like no other. However, isn’t a little weird that he pegged the son’s income to his weight? Where did that come from?
Jonovitch you might be interested in the following average federal tax rates, based on a sample of income tax returns:
those from the 20th to 40th percentile of the income tax distribution pay the following percentages of their income
— income tax -3%
— total federal tax 9.4%
those from the 40th to 60th percentile of the income distribution
— income tax 3%
— total federal tax 16%
those from the 60th to 80th percentile of the income distribution
— income tax 7%
— total federal tax 20%
80-90 percentile total federal tax 23%
90-95 25%
95-99 27%
99-99.5 31%
99.5-99.9 33%
99.9- 34%
Brigham,
yeah, it’s weird.
Frank (10), thanks for the averages. And yet when Warren Buffett’s effective tax rate is almost half what his employees’ rate is (without even trying), something is wrong. I also don’t believe his office workers’ incomes would place them in the 99.5 to 99.9 percentile, which would trigger the average 32.9 percent tax rate. Again, something is wrong, and I think a flat(ter) effective tax rate would go a long way to straightening things out.
FWIW, I think nobody should have to pay more than 33 percent, but everyone should pay something, even if only 1 percent. I also believe that the federal budget is out of control, and way too many things have been added on over the years. Federal spending needs to get back to the fundamental basics. It’ll hurt a little when beloved projects are cut, but it won’t be as painful as when China owns all our debt. Ouch.
Jon
Jon, Whatever Buffett’s anecdotes, this is what the actual U.S. tax distribution looks like. And it appears that your desire for no one to pay more than a third is being met, but just barely. Obviously, if you add in state and local taxes, the top groups likely go above one third.
I tend to agree, by the way, that it would be nice if everyone paid some federal income tax. Currently this is not even close to true. The median of the population only pays about 3%, after all.
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