How the fortunate 400 got so rich

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Beaver
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How the fortunate 400 got so rich

Postby Beaver » Thu Jul 12, 2012 9:15 pm

How the Richest 400 People in America Got So Rich
http://finance.yahoo.com/news/richest-4 ... 19751.html

"n 1992, the 400th richest person in America made $24 million. In 2007, the 400th richest person in America made $138 million (or $87 million, inflation-adjusted)...According to the IRS, which recently released 2009 data from the 400 richest individual income tax returns, the real runaway growth in wealth has come from capital gains. In the last years of the bubble, the "Fortunate 400" made nearly half their income from capital gains (a.k.a.: profit from the rising value of an investment, such as stocks or property) and less than 10% of their income from old-fashioned wages...
Who are these people? As Tim Noah explained on our business page, a 2010 study studied the top 0.1 percent, who currently make at least $1.7 million. That's 14-times less than our Fortunate 400 group, but it's the closest we've got. Four in ten in this group were executives, managers, and supervisors at nonfinancial firms. Eighteen percent were financiers. Next came law (7 percent), medicine (6 percent), and real estate (4 percent)."

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Re: How the fortunate 400 got so rich

Postby johnfajardohenry » Fri Jul 13, 2012 6:26 am

Sounds like some confusion here between wealth and income.

One can be fairly wealthy while having a relatively low income. Warren Buffet used to be a good example. Up to about 10 years ago his main source of income was his salary as Berkshire Hathaway CEO and was in the $125-150 thousand (not million) range. This while his wealth was in the tens of Billion$.

Or one can be high income without being particularly wealthy.

So which do you want to talk about, wealth or income? They are two very different, though often related, things.

John Henry

rabble
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Re: How the fortunate 400 got so rich

Postby rabble » Fri Jul 13, 2012 8:21 am

That's a nice obfuscation, but wealth and income are inextricably tied and can't be separated.

Wealth creates its own income and that income is easily hidden.

HawkHead
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Re: How the fortunate 400 got so rich

Postby HawkHead » Fri Jul 13, 2012 8:44 am

rabble wrote:That's a nice obfuscation, but wealth and income are inextricably tied and can't be separated.

Wealth creates its own income and that income is easily hidden.


The real kicker is how the tax code is written.

Investment income, like long-term capital gains and qualified dividends from corporations, is taxed at 15% not the earned income rates of up to 35%.

If I have $700,000 on a W-2 from running my own company my federal tax liability is roughly $205,000.

If I have $10,000,000 invested in the stock market and it kicks off $700,000 in dividends I am paying $95,000.

So while wealth creates income because of its treatment it doesn't generate the same tax liability.

Meade
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Re: How the fortunate 400 got so rich

Postby Meade » Fri Jul 13, 2012 8:58 am

HawkHead wrote:If I have $10,000,000 invested in the stock market and it kicks off $700,000 in dividends I am paying $95,000.

What if you have your $10,000,000 invested in municipal bonds? How much would you pay then?

Also, didn't you pay income tax on that $10,000,000 when you first earned it? How many times should we allow rabble to tax your same $10,000,000?

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Re: How the fortunate 400 got so rich

Postby fisticuffs » Fri Jul 13, 2012 9:09 am

Also, didn't you pay income tax on that $10,000,000 when you first earned it? How many times should we allow rabble to tax your same $10,000,000?


Yes.
Once.
No one is asking to tax the principle as income. We are asking to tax the income like any other income. There's no reason we should tax income earned by sweating roofing a building at half the rate we tax income earned sitting in an investment.

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Re: How the fortunate 400 got so rich

Postby jman111 » Fri Jul 13, 2012 9:13 am

Also, didn't you pay income tax on that $10,000,000 when you first earned it? How many times should we allow rabble to tax your same $10,000,000?

Talk about "I am sick of..."
I am SO sick of hearing this idiocy.

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Re: How the fortunate 400 got so rich

Postby Meade » Fri Jul 13, 2012 9:27 am

Cry and whine, if it makes you feel better.

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Re: How the fortunate 400 got so rich

Postby Comrade » Fri Jul 13, 2012 9:40 am

rabble wrote:That's a nice obfuscation, but wealth and income are inextricably tied and can't be separated.

Wealth creates its own income and that income is easily hidden.


That is only partially true. It is not always the case. A farmer who owns lots of land is wealthy on paper, but he may or may not be generating income from that. In fact, he could be losing money in a given year. This year is a good example. The farmer spent thousands and many hours of labor on a corn crop that will not materialize. He has crop insurance to cover his loss, BUT he won't make anything this year. The value of his land had no bearing on what he did or did not make. In fact, if he did not have an outside job, he probably won't have any income to live off of at all.

Your grasp of how wealth is created is tenuous at best.

Wealth does not necessarily generate income on its own.
Last edited by Comrade on Fri Jul 13, 2012 9:42 am, edited 1 time in total.

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Re: How the fortunate 400 got so rich

Postby jman111 » Fri Jul 13, 2012 9:40 am

Meade wrote:Cry and whine, if it makes you feel better.

Ya know what would make me feel better?
If you could construct a legitimate argument supporting the quoted statement.

As fisticuffs stated, the tax is on ADDITIONAL INCOME which was made possible by the 10 mil. It's the equivalent of me questioning why the gubmint wants to tax my income from using a piece of equipment, the purchase of which was taxed.
If I paid tax when I got the tractor, why do I have to pay taxes on the income generated using the tractor? How many times are they gonna tax my tractor? Does that make any sense to you?

rabble
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Re: How the fortunate 400 got so rich

Postby rabble » Fri Jul 13, 2012 9:50 am

The only wealth that does not generate income on its own is completely removed from the equation. And wealth is NEVER completely removed from the equation.

If it were, rich people wouldn't be smugly repeating "making my money work for me" except when they're whining and crying like little babies about paying their piddling little taxes.

And the money that wealth creates is easily hidden. The thing about it is, in our current tax environment, WE DON'T KNOW how much money that wealth is generating.

You can claim it only happens sometimes, but the bottom line is, income generated by wealth is so easily hidden that it can't be traced.

But of course, that's probably not happening much. Who on earth would want to generate large sums of hidden cash?

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Re: How the fortunate 400 got so rich

Postby HawkHead » Fri Jul 13, 2012 10:00 am

Meade wrote:
HawkHead wrote:If I have $10,000,000 invested in the stock market and it kicks off $700,000 in dividends I am paying $95,000.

What if you have your $10,000,000 invested in municipal bonds? How much would you pay then?

Also, didn't you pay income tax on that $10,000,000 when you first earned it? How many times should we allow rabble to tax your same $10,000,000?


Are you really this slow or do you answer all peoples informed posts this way? At least your first question is reasonable.

If I invested in muni's I would pay no federal tax. $700,000 in income $0 federal tax liability. Once again, I am not sure if that is fair or not but I am OK with it if it helps counties/cities/towns raise funds to run their government.

Now to the "silly" questions. You never pay tax on the principal you invest in the stock market. The $10,000,000 was taxed as earned. It is not taxed again. You only pay tax on the earnings of the investment.

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Re: How the fortunate 400 got so rich

Postby Comrade » Fri Jul 13, 2012 10:06 am

It does make sense to me that you don't quite understand.

That tractor is repeatedly taxed as personal property tax in many states in every year that you own it. Just like you pay property tax on your home, businesses and some individuals are also taxed on posessions.

Wisconsin is actually better in this regard than in other states, but it is somewhat compensated for here by taxing real estate at a higher rate. Regardless, some businesses are requested to itemize major assets here and pay a yearly tax on them.

Therefore, to be a little more accurate, the scenario is as follows;

Tax is paid on the sale of the tractor. Tax is paid on the fuel for the tractor. tax is paid on the labor and parts to maintain the tractor. Property tax is paid every year on the tractor. IF you are lucky enough to have your labor pay off and you get a crop to sell, THEN you get to pay taxes on the money made as well. and that gets compounded by FICA, and state and local income tax.

If you have a loss for the year, it may or may not be deductable from future income, but the property tax will be paid regardless.

Most of the complaints about taxes are due to aggregate paid in totality over a given period of time. Most of the people who support the level of taxation like to break it up into indivual issue taxes as that is easier to defend. Both sides tend to exagerate to make their point.

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Re: How the fortunate 400 got so rich

Postby Rich Schultz » Fri Jul 13, 2012 10:08 am

If the income produced by wealth is so easily hidden why do the top 10% pay 70% of the income tax?

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Re: How the fortunate 400 got so rich

Postby Comrade » Fri Jul 13, 2012 10:10 am

rabble wrote:The only wealth that does not generate income on its own is completely removed from the equation. And wealth is NEVER completely removed from the equation.

If it were, rich people wouldn't be smugly repeating "making my money work for me" except when they're whining and crying like little babies about paying their piddling little taxes.

And the money that wealth creates is easily hidden. The thing about it is, in our current tax environment, WE DON'T KNOW how much money that wealth is generating.

You can claim it only happens sometimes, but the bottom line is, income generated by wealth is so easily hidden that it can't be traced.

But of course, that's probably not happening much. Who on earth would want to generate large sums of hidden cash?


I just gave you a specific example that shows how your assumption is not always the case and you didn't resond to that at all.

So, under your premise, exactly HOW is the income a farmer receives from selling his crop easily hidden?


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