As someone in the top 1% myself, I understand what you mean (when I think of “rich”, I think of Warren Buffett with $60 billion). The thing is, the average household in the United States makes $4,167 per month. The top income tax bracket doesn’t kick in until $31,083 per month.
To most people that is rich, *especially* when you consider that those of us in the top 1% know how to use private pensions, tax shelters, trusts, partnerships, and corporations to lower our income considerably. (By the time all of the tax breaks after factored in, an income of $31,083 is probably really an income of $50,000+ per month if it’s done right.)
Also, at that level of income, whether you are “wealthy” or not depends on if you on a business or you are collecting a paycheck.
What I mean is, if you are a high paid executive and you get $31,000+ per month, that’s it. If you stop working, the checks cease. Game over.
If, however, you get that same $31,083 per month from owning shares of a private business, such as a commercial plumbing firm you built from a start-up, at even a low capitalization rate of 11x EBIT, your “shares” are worth nearly $4,000,000.
You may have $0 in the bank but the reality is you are still worth a cool $4 million. Instead of owning stock in McDonald’s or Berkshire Hathaway, you own shares of *your* company. Most people can’t “see” it so they don’t believe it. They suddenly think they got rich after selling their business but they were always that rich, they just exchanged stock in a private firm for cash.
A much, much bigger problem is the middle class is being taxed out of existence. When Buffett was in his 20’s and 30’s, the payroll tax was only 3% if I remember correctly. Today, it can go as high as 15.3% for self-employed business owners. A family making less than $150,000 per year has to work their ass off just to pay the IRS and, proportionately speaking, they are paying more than ever before. That is the sick part of this mess.
The ONLY way I would support increasing my taxes would if they raised the bracket on on income over $1,000,000 per year and they drastically CUT the payroll tax back to the level of the 1950’s to give small business owners a shot at getting off the ground.
Someone who is self-employed has to be able to keep most of the money he earns in the early years and Congress is killing off these men and women with tax increases. It has to be fixed. I know it was my biggest obstacle when I started out and, frankly, I’m not sure how much longer the American dream can stay alive if they keep reaching their hands into the pockets of entrepreneurs.
Well, it's not like they aren't doing it on purpose. Self employed entrepreneurs give union laborers and other domesticated sheep dangerous ideas about self-determination.
Good post, but I must say...this administration is not interested in keeping the American Dream alive.
Their idea of a dream is socialism, where everyone is equally miserable.
Except, of course, The Party.