Thursday, August 28, 2008

Millionaires, Tax Rolls and Tax Cuts

"Some 10 million households have a net worth above $1 million, excluding home equity, almost double the number in 2002."

So if in 6 years we can double the amount of seemingly wealthy households, how is it that ONLY the rich get richer, as many people seem to want to believe? Is it possible that people can actually find a way into this club, from a more moderate income bracket?

"Don Crane, a small-business owner in Santa Rosa, Calif., certainly sees the value of everyday saving. "We can afford just about anything," he says, adding that his net worth is over $1 million. But he and his wife both grew up on farms in the Midwest — where nothing was wasted — and his wife clips coupons to this day. In fact, most millionaires come from middle-class households, and roughly 70 percent have been wealthy for less than 15 years, according to the AmEx/Harrison survey"

"So how do you join the millionaires' club? You could buy stocks or real estate, play the slots in Vegas — or take the most common path: running your own business. That's how half of all millionaires made their money, according to the AmEx/Harrison survey. About a third had a professional practice or worked in the corporate world; only 3 percent inherited their wealth." most rich people went out and created their own wealth, and not having it all handed to them...interesting. Any particular trait that might be found amongst these people??

Millionaires are also seemingly undaunted by failure. Crane, for example, now runs a successful company that screens tenants for landlords. But his first business venture, a real estate partnership, went bankrupt, costing him $20,000 — more than his house was worth at the time. "It was the most depressing time in my life, but it was the best lesson I ever learned," he says.

When asked to list the keys to their success, millionaires rank hard work first, followed by education, determination and "treating others with respect." They also say that what they absorbed in class was less important than learning how to study and stay disciplined, says Jim Taylor, vice chairman of the Harrison Group.

Perserverance....a good quality to have if you want to be successful in this world. I suppose learning a lesson from your failures and moving on instead of complaining about how bad things are can be a big way to overcome the money trap many people fall into. Now a lot of business people may not be the nicest guys when it comes to putting their businesses together. Bill Gates, was ruthless in creating the largest software firm in Microsoft. John D Rockefeller, of Standard Oil, threatened his competition with bankruptcy, in order to buy them out and absorb them under his umbrella. These are a couple examples of how business practice isn't for the weak-hearted. However:

Most millionaires share the values of their moderate-income parents, says Lewis Schiff, a private wealth consultant and Prince's coauthor: "Spending time with family really matters to them." Just 12 percent say that what they want most to be remembered for is their legacy in business, according to the AmEx/Harrison study.

They are not all bastards in this bracket of wealth. And for those who say the rich don't pay their taxes, well most millionaires do pay taxes. In fact, the top 1 percent of earners paid nearly 40 percent of federal income taxes in 2005 — a whopping $368 billion — according to the Internal Revenue Service. On top of that, well, last year, individual Americans gave $306,390,000,000 to charity. No other country comes anywhere near us. Not as a percentage of income, GDP or actual dollars. Think about that for awhile....between PERSONAL charitable contributions and the top 1% of taxpayers, you're looking at over $700 Billion dollars that contribute to the services of our government, and to all the causes of those who have little and need help, sometimes these things overlap.

Meanwhile, during 2006, Tax Foundation economists estimate that roughly 43.4 million tax returns, representing 91 million individuals, will face a zero or negative tax liability. That's out of a total of 136 million federal tax returns that will be filed. Adding to this figure the 15 million households and individuals who file no tax return at all, roughly 121 million Americans—or 41 percent of the U.S. population—will be completely outside the federal income tax system in 2006. As President Bush pushed through his two major tax bills in 2001 and 2003, opponents focused on the dollar amounts saved by high-income individuals. What many critics have ignored is the number of people who were removed from the tax rolls as a result of the expansion of the child tax credit, which was a key provision of the President's Economic Growth and Tax Relief Reconciliation Act of 2001. the number of tax returns with zero or negative tax liability has risen steadily over the past decade. However, it accelerated sharply between 2000 and 2004 due to the effects of tax changes during President Bush's first term of office. Despite the charges of critics that the tax cuts enacted in 2001, 2003 and 2004 favored the “rich,” these cuts actually reduced the tax burden of low- and middle-income taxpayers and shifted the tax burden onto wealthier taxpayers.

So increasingly now, we find that while the lionshare of tax rolls are held by the one singular set of Top 1 Percenters, the tax cuts, are now enabling exactly what many of the lower class people and democrats are calling for...that the rich pay their fair share...which we see, as they take on more and more of the total tax rolls. And not just the same people who have been paying for decades on their family wealth, but more and more new households add themselves to this "elite" status, from the not-so-elite ranks they came from...
They work hard to get where they are, and yet millions who have very little, if any at all, tax liability continue to complain how these producers aren't doing there part?
I find it all interesting....

1 comment:

Anonymous said...

There is always a lot of complaining that the rich don't pay their fair share - I actually, for the most part, think they do.

The use of resources within the country are not based on income. If there are less "rich" people, why would they pay for more "other people" getting sick? Rich people don't get sick more often than other people (thereby taxing the system greater). As far as I know, they don't tear up the roads more, etc, etc.

The other thing is that the wealthy class creates jobs. They own companies where people are employed. Even if they only employee 20 people there are those families to consider as well - the impact on the wealthy class is still great.

Furthermore, I think the wealthy class is a lot less impulsive. Classic Millionaire Next Door. These are people that save for a rainy day. They don't need to buy a new car every year when the old one still runs. When you don't have huge credit card debt (and the interest that goes with them) you really can save to eventually be well off.