Within a year, what do you suppose will happen to that equal distribution of assets? Answer: those who are good at hustling and making money will, once again, become the 1%. That much is obvious, but why? Because making money is a skill that some people are good at, and no matter how much the government intends to "soak the rich", it only ends up hurting the lower and middle class, because the rich know how to work within ANY system and make money.
Think of the rich as having skills like Michael Jordan, Kareem Abdul Jabbar or Magic Johnson, only in financial instead of basketball terms. You might not like this fact, and you may agree with decisions that fly in the face of this reality, but reality it is. Below, we have some recent real world examples from Britain and France that illustrate this point rather vividly.
THE SCARY FISCAL CLIFF: During the current negotiations regarding the so-called "Fiscal Cliff", much is made of taxing the millionaires and billionaires, because they can "afford to give a little more". That much is true, though digging deeper into this issue is much more interesting. Shall we?
There is a neat little article on Britains Missing Millionaires. I'll pause while you read it. Here's a favorite quote from the article: "A funny thing often happens on the way to soaking the rich: They don't stick around for the bath." Okay, if you didn't read the article, here's my synopsis:
- Britain 2009: 16,000 taxpayers declared income of a million euros or more, at the current federal tax rate of 40% (higher than the rate in the US today).
- Britain 2009: These 16,000 millionaires pay 13.4 billion euros in taxes, or 9% of all federal taxes.
- Britain 2010: Top tax rates raised from 40% to 50% in order to "soak the rich" to pay for all the goodies.
- Britain 2010: Millionaires say "we're not gonna take it anymore" (regarding the higher 50% rate) and leave the country in droves.
- Britain 2010: Now there are only 6,000 millionaires (down from 16,000 the year before). These remaining millionaires pay only 6.5 billion euros, amounting to a mere 4.4% of federal tax receipts. Tax collections from those making a million dollars or more have been reduced by MORE THAN HALF! Instead of raising revenue, this clever rate increase dramatically REDUCED taxes collected - I'm shocked!
- Conclusion: Rich people aren't the stupid fellows that the Obama-ites that re-elected him think they are. They won't take a tax fleecing without a fight - what a surprise! Rich people get rich by knowing how to make money and how to keep it, because its a SKILL!
The story doesn't end there, however. Let's move on to France. The French failed to observe the behavior of their British brethren across the English Channel (see above), and recently topped them with a top tax rate of 75% - that will certainly soak those rich buggers! Now we get to read about France's Missing Millionaires. An interesting side affect of the rich French folks leaving is that they have decided to put up their fancy mansions on the market at fire sale prices, and the foreign SUPER rich have moved in to snap them up, knowing that they won't have to become a taxpaying resident of France and pay the 75% income tax. The result? The French (and the Brits, for that matter), end up LOSING tax revenue by raising rates to an intolerable level, and as a bonus, the French get to have foreigners (mostly Middle Eastern oil sheiks, it would seem) owning their historic French mansions - I'm not seeing this tax increase ending well for the French, either, no more than it has for the Brits before them.
Are you still feeling good about the current movement to "make the rich pay their fair share" in this country? I mean, after all, the 1 percenters in America only pay 40% of all federal income taxes - shouldn't that be higher? That's a trick question, so be careful how you answer it!
(Secret answer: see how the French and British higher earners reacted to tax increases, and then assume that the American rich are even smarter and more clever than their European counterparts, and you'll have your answer).
If you are still not convinced, look at what happens to regular old folks who win the lottery: usually, within a few years, they have lost it all due to bad decisions. The winners often wish that they had never won at all! Why, you ask? Well, because they don't understand money: both how to make it and how to manage it, and consequently, its like being given a Los Angeles Lakers jersey and getting to start for the team - despite your good fortune, you just don't stand a chance!
Here's is one of my favorite quotes (I'm NOT making this up) from the above article on Lottery Winners who ended up Losers:
"In 1998, William "Bud" Post III won $16.2 million in the Pennsylvania lottery, only to later wish it had never happened. That's because his brother hired a hit man to try to kill him and his sixth wife (and was arrested for doing so), other relatives made him invest in businesses that never paid off, a landlady made him give her a third of his winnings, and Post "spent time in jail for firing a gun over the head of a bill collector." He declared bankruptcy and, in 2006, at the age of, 66, "died of respiratory failure... at a Pittsburgh area hospital"
Are you still feeling good about the current movement to "make the rich pay their fair share" in this country? I mean, after all, the 1 percenters in America only pay 40% of all federal income taxes - shouldn't that be higher? That's a trick question, so be careful how you answer it!
(Secret answer: see how the French and British higher earners reacted to tax increases, and then assume that the American rich are even smarter and more clever than their European counterparts, and you'll have your answer).
If you are still not convinced, look at what happens to regular old folks who win the lottery: usually, within a few years, they have lost it all due to bad decisions. The winners often wish that they had never won at all! Why, you ask? Well, because they don't understand money: both how to make it and how to manage it, and consequently, its like being given a Los Angeles Lakers jersey and getting to start for the team - despite your good fortune, you just don't stand a chance!
Here's is one of my favorite quotes (I'm NOT making this up) from the above article on Lottery Winners who ended up Losers:
"In 1998, William "Bud" Post III won $16.2 million in the Pennsylvania lottery, only to later wish it had never happened. That's because his brother hired a hit man to try to kill him and his sixth wife (and was arrested for doing so), other relatives made him invest in businesses that never paid off, a landlady made him give her a third of his winnings, and Post "spent time in jail for firing a gun over the head of a bill collector." He declared bankruptcy and, in 2006, at the age of, 66, "died of respiratory failure... at a Pittsburgh area hospital"
