Wealth Doesn’t Create Itself.

Only a few rich people are irresponsible greedy jerks but virtually all politicians especially liberal ones are corrupt immoral degenerates.

My Grandpa always told me he never got a job from a poor guy.

 

 

Do the Rich Really Deserve Such a Bad Rap?


Smart Money  | http://www.smartmoney.com/Investing/Economy/Do-the-Rich-Really-Deserve-Such-a-Bad-Rap/?hpadref=1

March 19, 2008 | James B. Stewart


Is there anything to be said for “the rich"?

By that I mean anyone earning more than $200,000 a year (if single) or $250,000 (if married filing jointly), the new threshold established by the Obama administration for its tax increase proposals.

With Bernie Madoff handcuffed and led off to prison last week (to the accompaniment of applause and tears of some of his victims), the rich seem to have reached a new low in popularity. Tabloid news sources are staking out resorts, luxury condos, airports for private jets, looking for any hints of indulgence or excess, especially if they involve taxpayer dollars. No wonder, given the stories emerging from the wreckage of the credit bubble.

Yet, as hard as it may be to believe, the overwhelming majority of people earning six-figure incomes aren’t criminals or spendthrifts. The Federal Reserve released statistics last week that showed Americans collectively lost $5.1 trillion of their net worth during the last three months of 2008 and $11.2 trillion for the full year. The numbers don’t break that down by income level, but I think it's fair to say that much of the drop came from the steep decline in stock prices, and stocks are owned disproportionately by high-income people. Indeed, stock ownership is so skewed to upper-income households that the percentage declines are probably much steeper for them, more likely in the 30% to 40% range.

That means anyone who was a millionaire at the beginning of 2008, and had a million dollars invested in stocks, has lost about $300,000 to $400,000, which is in line with what I’ve been hearing anecdotally. And the losses have only multiplied this year as the market continues its descent.

This group also pays a disproportionate share of income taxes, even before Obama's proposed tax increases. The top 1% of earners are expected to pay 25% of all personal income taxes this year, and the top 5% to pay 40%, according to Tax Policy Center's latest figures. It's no wonder that the people I know who earn $200,000 to $300,000 are incredulous to be branded as “rich.” They certainly don’t feel that way.

In New York City, for example, $200,000 in income yields roughly $100,000 after all taxes (including the unincorporated business tax, which applies to anyone who’s self-employed). If you're following the prudent rule of thumb that you should spend no more than one-third of your after-tax income on housing, that means $33,000, or less than $3,000 a month, can go toward housing — barely enough for rent on a one-bedroom apartment in Manhattan. As for buying, the collapse in stock prices has wiped out much of what many people invested toward a down payment. New York may be atypically expensive, but many people who earn $200,000 and up have little choice but to live in a high-tax, high-cost location.

There’s no doubt that in recent years income disparity has increased in this country. But no one seems to mention that periods like the present, and 2000-02, with steep stock market slides, have a tremendous leveling effect.

By contrast, let’s take a look at the top 400 earners, who in 2006 (the most recent year for which data are available) earned an average of $263.3 million. Now that’s what I call rich. These 400 people paid on average $45.2 million each, and collectively paid a remarkable 1.77% of all personal income taxes that year, the highest percentage since the IRS has been keeping records. They also paid an average rate of just 17%, the lowest ever, largely because of their massive capital gains, which are taxed at a low rate. Presumably those gains will seem a distant memory by the time the 2008 data are compiled. But imagine if they were paying at the top rate of 35%. That would roughly double their taxes paid in 2006, to $90 million each, or a total of roughly $36 billion. And that’s only 400 people.

I suppose anyone who makes more than we do may seem rich by comparison. But before we get too caught up in the current populist fury, it’s worth considering who, really, is “rich” -- and who pays most of the taxes in this country.

Josie06 Josie06
56-60, F
9 Responses Mar 18, 2009

Britain doesn't actually have a written constiution like the US but legal instruments over the years more or less acheive the same thing, so 1948 law brought health service into being. It provides free healtcare to all and further amendments and so on state that it sould be provided equally at the primary point of contact no matter where. Great idea but no one can pay for it. The 20% of idiots take up 80% of the time of the local healthcare providers. <br />
I was talking with someone today who has a premature child with brain damage. They made themselves known to the doctors and managed to get the MRI scans and viewed by the docs, but it really is a system of who shouts loudest receives. In an ideal world every healthcare professional would be dedicated to their job and the system would work, but that's dreamland, healthcare workers are the same as the rest of us, good and bad.

i tend to agree on getting our troops home ... however helter skelter running away at this point would not be the proper action either.<br />
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i didn't know that healthcare was in the British Constitution, that is interesting. It is not in the US Constitution.<br />
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Although i am not for protectionist policies i believe that somewhat of a stance in that area is needed. Every country should take care of theirown before taking care of others.<br />
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The UN encroachment is also something that should cease. Any dollars going to them should be only to sustaining the meeting of the member nations not all of the other agencies, etc that they have spawned. If one is spawned it should have limited life.

Well healthcare is part of the UK constitution so funding for it must be found. I think the feeding of the world's poor is noble but the provision of aid is also fraught with difficulties in making a sustainable difference, overcoming the corruption that siphons off much of the aid and providing enough to make a difference. Whilst, I see the rationale for retreating to an isolationist position I think that every nation looking after it's own will revert to the protectionist policies of the past. They didn't work then and won't work now. We are in a global economy and success depends upon being able to compete, something that the US has done successfully for many years. The US needs to get the hell out of IRAQ and Afghan and use that money for it's own economy.

stevester, i agree. Cut to the constitutional duties, no extras or want-to-haves.<br />
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Healthcare is not a constitutional mandate. It is necessary but not constitutionally necessary.<br />
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Priorities have to be set. Do we pay for the poor of the world ... or do we take care of our own first.

cutting government spending is possible but it requires some more enlightened thinking than simply cutting the budgets across the board. Defence is usually a certain target but in the middle of a couple of wars and a neeed to increase spending on maritime defence it's not likely. So reforming spending on healthcare? Good luk with that one. It is so complex and emotive that the reforms take ages to formulate and usually have dysfunctional side effects. The market will readjust itself. In Europe the reduction in interest rates are supported by additional funds being introduced to the markets to stimulate credit. It might work to revitalise the housing market, whcih over here is the engine room of the economy. I don't think all government intervention is negative. Increased spending on housing stock has a double benefit in providing low cost rentals and stimulating the construction industry. This recession has a ways to run

The question is: 'What is the stimulus stimulating?'<br />
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At this point it is not turning around this crisis, recession or depression (as some prefer to call it).<br />
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Government can not spend their way out of it. Roosevelt followed the same approach. The top tax rate was increased to 79 percent and government intervention became pervasive. Government spending skyrocketed. This big-government approach didn’t work for Roosevelt any better than it did for Hoover. <br />
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i pray i am wrong, but history has always shown us. We just never listen.

The problem at the moment is that the private sector is in downturn and tax revenues will fall no matter what. The classic economists advocate public works spending as a stabiliser when tax revenues fall to stimulate teh economy without fueling inflation .Borrowing is the only way to fund this. We should just borrow all the money and then welsh on the loans, whaddya gonna do?

The million a year and more ... are not based on income as salary.<br />
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These folks have investments and income other than salary that is their wealth.<br />
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Like Warren Buffett in the US. He pays little or no income tax ... why cause he doesn't get a salary. He pays capital gains and other taxes. His secretary pays more thax than him cause she has a salary.<br />
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i dislike how the government spends my money too. A forced diet of less money for them would be best. Tax reform is the only way.

I don't see these guys as rich. They're what we call the middle classes in the UK. And yes we pay the most tax because tax free allownaces are regressive and benefit the lower earners proportionately more. The really rich, million a year pay a lot of tax but can also afford to avoid it. I don't think tax is the biggest enemy, although I pay plenty, I think the misuse of my tax is more reprehensible. At this point you'll jump in and scream about the profligacies of the liberal left wing. In the UK there is virtually nothing to distinguish the main parties manifestos on spending tax. In the US there is a more polarised debate but I'll wager that the majority of the spending will be the same under either adminstration