FREE NEWSLETTER
Go to main Forum page »
There was a time when I probably did- that was many years ago when sailing around the Mediterranean in my luxury yacht was a fantasy. Once, decades ago, I actually explored the cost of renting such a yacht. Back then it was $200,000 a week, plus tips for the crew and the cost of the food you selected. I was afraid I couldn’t afford the tips- but I could bring eight friends to impress.
These days I don’t envy of the billionaires, I don’t worry about them paying their fair share, or how they use every provision in the tax code. We all do the same after-all. I admire many of them.
I resent distorted claims about their taxes, like an article claiming they pay lower tax rates than low income Americans- 8% the example was, but when you read the analysis they were using the unrealized appreciation on investments, not income. Like taxing the growth in your 401k before you withdrew a penny.
I can’t imagine a billion dollars would make me happier. I see more problems then benefits. No doubt I couldn’t use TurboTax to do my taxes, or the AARP tax service for that matter. Instead of a mid level Mercedes, I’d be expected to drive a Maybac or more likely be driven in it. What fun is that?
For the most part, I say they earned it. They did what I could never do, actually what very few people could do. They took risks, they persevered, they were inventive, they created things and took thousands of other people along for the ride and made them wealthy too. They created hundreds of thousands of job directly and through businesses that resulted from their actions or leveraged them.
Look at one of the newest billionaires, Peter Cancro. From a tiny Jersey Shore sub shop to an international business hiring Danny Devito as a spokesman. All built with cold cuts, oil and vinegar. Who among us can’t make a sandwich?
And how did they get their wealth? Just like we all strive to do, invest and let the stock market do the hard work. Of course, it would have been nice to have been in on the IPO for Apple or Microsoft or even an early investor, but there was nothing stopping me. Opportunity was there.
On balance, I say we have all gained from the efforts of many billionaires, some we probably never heard of. Without Phil Knight and John Mars it wouldn’t be worth jogging to a candy store.
Yeah, I know, some of these folks inherited their wealth. To that I say, so what? Somebody still earned it and I hope to leave what I accumulated to my children too.
No envy here.
”so what?”
so true. mom left a house and estate to me.
paid cash for a colo home that has appreciated.
retiring out and taking the proceeds to buy land
in WV to, ”finish out”. i thank her and bless her
EVERY day.
No envy here, either. I’ve known a number of very rich, and a couple of super-rich. They didn’t seem any happier than anyone else I know. But I do tend to classify them subjectively into categories. There are those who worked very hard for it and earned what they got. There are those who were creative or discovered something unique, and found ways to profit from their minds or insights. There are those who were, quite frankly, lucky – being in the right place at the right time. And then there were a couple whom I never trusted. They struck me as self-interested, greedy, predatory and without morality. IMHO, they took advantage of others, and it would not have surprised me if they would have cheated their parents or friends if they gained from it. But as far as I can tell, they were the rare exception and not the rule.
I never have envied the super rich, especially billionaires. Many(at least the ones we hear about) are miserable in many ways. How much money does one need? Many have earned their wealth on the backs of those they underpay, even though they do create jobs. Unfortunately, they also buy favor with politicians, so they do shape a lot of policies that impact us. Also, not all those who inherited wealth got it from someone who ‘earned it’ as you say. A great example is none other than Trump. His father made the wealth and passed it on, but I wouldn’t say what he did benefitted many others. Many want more money at the expense of others, and we are seeing this play out right now.
“Many have earned their wealth on the backs of those they underpay, even though they do create jobs.”
A point no Republican will ever acknowledge.
It’s always oh look at the jobs! Never the exploitation.
i was a college educated, landscaping, house cleaner
for the majority of my working days. ties, office politics,
and florescent lights were not for me. i was never underpayed
because i negotiated my wages. by the job or the hour. i was
was [and am] a ”free man in america”. i was never ”exploited”.
Sounds like you were a sole proprietor, which would make your experience completely irrelevant to this conversation.
Define underpay please. Who pays more than necessary to attract and retain the talent needed to get the job done?
Taylor Swift.
Costco for one.
of course they don’t. You couldn’t stay in business if you did. No doubt they are better able to choose from the market and attract people they want. They pay about $5.50 hr above average and get good morale and low turnover both of which have bottom line value. And their reputation is enhanced. They also tend to promote from within. It all goes together.
Definition of underpay: founder/owner/ceo-type takes every last red cent they are legally allowed to compensate themselves with whether or not they created the corresponding value.
The remaining is the underpay allocated to the workers.
No one pays more to attract and retain talent because the “founder takes most system” has been established and the rich and powerful, well, they ain’t gonna change that.
There is no legal limit on compensation. Saying they take every red cent is a bit silly.
Straw Man, also boring.
The founder s the one who goes without pay when payroll is due and you’re short f funds. Risk deserves rewards, despite what socialists claim.
Always immediately to the you are a socialist comment when the ills of capitalism are mentioned. So boring.
Hey guy, maybe capitalism just needs to be improved, not swapped for socialism. That ever cross your 1980s Reagan brain?
Risk deserves reward commensurate with the level of risk actually taken.
And let’s be honest, the VC firm is paying that founders salary even in the toughest of times.
No. How much is enough? I am retired, travel, play golf, go to the gym, volunteer, etc. I may not stay in the fanciest hotels, or fly 1st class, but I wouldn’t trade my life and adventures to be uber wealthy. Also, the other problems of being in the mega-group.
People don’t like capitalism because they think it’s unfair that there are winners and losers. Makes sense, given the embrace of everyone gets a trophy thinking.
You never hear people say, I don’t need my dishwasher, lets stop creating labor saving devices that improve the lives of billions, lets do it 16th C. style.
I’m with you, but I also think the US needs a serious tax code overhaul. SS first (it scares me thinking about the potential depression caused by removing all of that cash flow from the economy) then the tax code. Its repugnant that the carried interest issue has lingered this long, it was a creative dodge that the smartest lawyers in the country figured out. Congress ought to have closed that door quickly.
I Think the easy solution is just have very rich friends who like to treat you to great vacations or a couple weeks on their yacht. Then you don’t have to worry about tipping the help. I’ve been thinking about becoming a politician or a Supreme Court justice for the perks!😄
I recommend Sarah Wynn-Williams’ book Careless People about peri-IPO Facebook, now Meta, as a ripping yarn about the work and values of our current #2 billionaire. Particularly sickening are the huge sums the company made in China by crafting their products to be information-gathering tools of the Chinese government. Not all lucrative work is honorable.
Envy is a quest for happiness. Genuine happiness is contentment with what is in hand while pursuing what is in the bush. Not because others have it, but because it stirs your blood.
Ever spent time with the retarded or a down’s syndrome person or a small child? These people are my reference.
Elon is arguably the richest person on the planet, yet he lives like a child; full of joy and wonder. He could lose it all tomorrow by the risks he takes. We can live at that same level if we choose to – it’s just a matter of scale, not of reward.
You can choose to believe “I knew you to be a hard man.. And I was afraid.. So I hid what I had in the ground” or you can go for it.
I guess these days one can use the word retarded to describe certain persons and not face any backlash.
My mother is one of the founders of PARC (Pinellas Association of Retarded Children). They still use the acronym and still achieve excellence with its original purpose, but have dropped the use of retarded to appease people like yourself. I spent many hours there as a kid and enjoyed my time working with them beyond measure. I recently gave a keynote to an awards event for these beautiful people and for my mother. You should volunteer, I think you’ll find as I did that they possess a secret many “normal” people miss.
Elon seems like a petulant child. Not content with his $billions, he seems determined to make life miserable for millions of people, with very little thought given to the impact his actions have. U.S.A.I.D being the most egregious example.
It’s all about decisions and choices. One guy sits in his apartment and plays Overwatch for 12 hours. A different guy is bartending at night as a second job and has a “stop and chat” with a dude ordering a gin and tonic who gives him some ideas to explore. While eating a Trader Joe’s pre-packaged salad at his desk duing lunchtime, he starts Googling about the ideas the bar guy sparked in him. His co-workers are at Chipotle talking about cat videos on Tik Tok.
I’ve seen it time and time again, and I’ve lived it. Go Google “Francisco’s Money Speech” to learn about money, wealth, and envy.
I envy Elon Musk because he is a billionaire and he has that big chain saw and can do what he wants with it.
Elon Musk wields a big chain saw because he has a close personal relationship with Donald Trump.
Undoubtedly, there are billionaires who have no such relationship and, thereby, wield no chain saw.
What you likely envy is Musk’s relationship with the POTUS.
I’m afraid I was not serious in my comment.
Person starts a company. Takes the risk of using his money or someone else’s.
Most give it a year maybe two. The max downside is probably personal bankruptcy. Woopie, thousands go bankrupt every month.
Company is working so the person hires someone else and then many more.
The company is built by the many. The many work the long hours and have the stress of building just like the founder, employee or not. Nothing is guaranteed at the early stages.
This is where the issue lies. The founder gets incredibly rich and powerful if it is a success. The many workers? If they were lucky they have stock options and they get rich but not nearly the same level as the founder. Didn’t they take the same level of risk?
Corporate structure is the issue. Keep it private and the founder can and should do whatever with the stock. If a company goes public, how can you bring fairness to the many workers?
Workers are hired to perform jobs that need to be done. They don’t make the management decisions that can make or break a company. In this sense, the workers don’t build the company. It is the owner’s decisions, guidance and vision that build the company.
If a startup fails, the workers lose their jobs, but owners could take a bigger financial hit. They may have taken out a second mortgage on their home or used their personal investments as collateral for a loan.
Owners and workers don’t bear the same amount of risk. Besides, if you work for a startup company, you certainly aren’t there for job security or pension benefits. You hope to get wealthy if the company prospers.
If a startup succeeds, given the asymmetric risks borne by owners and workers, fairness wouldn’t dictate that owners and workers benefit to the same degree. It is the opportunity to become wealthy that fuels the entrepreneurial drive. The owners are the entrepreneurs, not the workers.
I work in academic research science.
Sometimes labs make big discoveries that are marketed.
Typically, the lab leaders and the universities get all the licensing fees. The people in the labs who did the lab work and who contributed ideas in lab meetings, the people who were essential as troubleshooters, often get nothing. This is incredibly unfair.
I suspect that is part of the employment agreement same as scientists working for a drug company. Who provides all the resources to make the research feasible?
Explain WeWork to me then.
I think you have it backwards. It is estimated that when it went public Microsoft created 12,000 millionaires among its employees. .
Do you have it backwards? You use Microsoft as an example… I’ll use WeWork. Adam Neumann is a billionaire. The many people who built the company? You know how that went.
when I worked at WMT in the 90s, I was shocked to find out most of the original employees were millionaires, at least the ones that held on to their stock Mr Sam made sure everyone could buy! And was in their profit sharing plan. If I had stayed there, I would be a millionaire many times over based on the stock options I received and stock I bought while there, sadly I was stupid and left for a “better” job.
Thanks for sharing the non-envy.
The billionaires you admire may very well have worked hard and therefore are entitled to spend it on yachts, Rolls-Royces, and Lake Como vacation houses, but don’t people have better things to do then glorify them?
Or demonize them.
The Four Seasons company will now sell you a yacht vacation for a fairly reasonable sum, in many highly valued locations. The Ritz Carlton as well. Pack your bags!
During all but the first twenty years or so of my career, I worked at least 60 hours a week. Starting in 1982, I contributed to a 401K . In 2005 I started receiving stock awards as part of my compensation. Since I retired in 2010 my investments have grown in value and our networth has way more than doubled. That growth continues.
I did not work for any of that growth, I didn’t do anything. I suspect many HD readers can say something similar.
So, except for several zeros, why am I different than billionaires who see their wealth grow without doing anything? I worked once. They build something once and then let it work for them just I did and likely you did too.
I envy healthy people.
Good point. I’d rather be a healthy person of modest means, than a billionaire with a cancer diagnosis.
I know I don’t envy them much. The things that matter in my life have almost nothing to do with money. That said, I very strongly disagree with the idea that this wealth is mostly earned. It is definitionally unearned income because it’s just simple stock appreciation. The idea that these individuals worked hard enough to just even hundreds of millions of dollars, let alone billions, is plainly absurd. You think Jeff Bezos works harder than an ER doctor? I sure don’t. And it’s becoming clearer and clearer each day that these sorts of ultra wealthy people are incredibly dangerous for a democratic society. They got lucky. Sure they worked hard at times, but they got way way luckier than they worked hard.
Lucky? Try starting a new business, new industry in your garage and see how much work is involved. Before you can have stock appreciation you need something of value to sell to the people.
what about Sam Walton, or many others over the years.
I think you may be a tad envious.
But you have a point about a great wealth can be abused when helped along, but that is not a fair general condemnation.
Please don’t glorify the I built it all by myself in my garage so I deserve my billions mantra.
Companies that are successful are that because of the people, the many people, who build them.
The many people do not get compensated at the level they deserve based on the value they created. Its a founder take most system. That’s why people are envious / irritated with billionaires.
Well, the jobs didn’t exist before and the founders make money through investment and giving themselves shares of the company they found. I see no problem with that. And I don’t see anything taking from workers.
Then you see no problem in a founder take most system. Which is fine if you don’t mind very unequal pay for similar work / value creation.
The problem with some billionaires is when they think they know more about everything, and have all the answer’s just because they’re rich. I’m thinking about one in particular right now…
I’ve known people of modest means who thought they knew everything. Just ask any teenager.
True
Please, spare me the hero-worship. It’s natural to want to identify with these people, and the mythology around them taps into compelling ideals. It’s pure storytelling. They did some relatively trivial initial investment of effort, but the majority of their wealth had nothing to do with their own hard work. You’re defending something that needs more scrutiny than support. These American kings and queens are shaping our country, do you like what you see? I know I don’t. I think we’d all be better off without their power-grabbing and manipulation.
Entrepreneurship is not characterized by “trivial initial investment of effort.” Such efforts don’t build successful, innovative companies—they build lemonade stands.
Are we equating effort with physical labor? John Bogle built Vanguard using intellect and vision. He worked hard mentally, not physically.
John Bogle is not and never was a billionaire. And the effort is trivial in relation to the reward.
You make it sound like they rolled out of bed one day and poof they had a new business and were wealthy.
Some have dangerous influence and are allowed to exercise it. That’s wrong, but it’s entirely separate of what it took to accumulate their wealth. You have to create something of value for the market to reward you.
Absolutely correct.
Actually, some did just roll ‘out of bed and poof they had a new business and were wealthy’ And for some, their ability to accumulate more wealth is inextricably tied to their dangerous influence.
Obviously, it’s more than just “hard work.” Realistically, nobody can work more than, say, 18 hours a day, leaving six hours for sleeping, eating and (one hopes) some attention to personal hygiene. We’re talking here about folks who earn huge multiples of what the typical American earns, not twice as much, as the number of hours worked might justify. So what explains the extra? Obviously, there’s talent — the talent to identify a new market and figure out how to exploit it. But lots of folks are brilliant and come up with products that seem clever but don’t ultimately succeed, so I think we also need to figure in two other factors: willingness to take risk and luck.
Isn’t what they earn nearly all investment growth? The work came before to an IPO in many cases, is it luck thereafter?
When a person succeeds, we’re quick to ascribe it to skill or talent. But was it luck instead? If we’re talking musicians and sports stars, it’s easy to say, “No, it was talent.” In something like business, that’s a much harder conclusion to reach. An entrepreneur can come up with a brilliant idea, and then get unlucky — because a much larger, better financed company muscles into the business.
+1. It is hard to believe that such talent + hard work did not exist prior to 1990s in Silicon Valley. Those reaching their 20s and 30s since then have been incredibly lucky to have tailwind of plenty of venture capital with appetite to fund risk, an ecosystem of talent to join risky ventures, mentors and connectors to help these ventures, and so on. Put a 21st century silicon valley entrepreneur in 1929 and see what happens as a thought experiment to realize the impact of “timing”, which no one has control over.
I put zero weight in any successful entrepreneur’s opinion that a very significant % of their success is not due to luck.
As an example Google the inventor of Velcro.
From time to time, I do think about the decisions I have made over the years, and I am aware I could have been wealthier. One early decision thwarted by the banks was the purchase of a McDonalds on the near north side of Chicago. However, I’ve had a great life, lots of travel and adventures, some paid for because that was a part of running my business. I learned a lot, tried many things and succeeded at things some considered to be impossible. Give me more money and I probably would have made a mess of it.
I have no idea who the newest billionaire is, nor have I ever heard of a car called a Maybac. LOL! Chris
You need to get out more😃
Peter is the founder of Jersey Mikes Sub shops. He just sold a majority interest for $8 billion. A very interesting story. When he was 17 he worker in a small sub shop at the Jersey shore. When it was for sale his mother urged him to buy it which he did with the help of his high school football coach. Now he is a billionaire, but still runs the business.
Maybach is top of the line Mercedes which starts at around $200,000.
FYI it’s “Maybach.”
Yup
No envy here either Richard, I got everything I need. Those billionaires are job creators, who, without us worker bees, never would have become wealthy in the first place. I think of the employee/employer relationship as mutual exploitation. We part ways somewhat when it comes to taxes. To expand on one of my previous posts, I had clients whose incomes were delivered via W2s or 1099Rs whose marginal tax rate was 37%. Contrast that to the Warren Buffett types who live of their capital gains taxed at only 20%.
23.8% with the NIIT
Your and my capital gains are taxed at the same rate and my muni bonds are tax free, not to mention Roth earnings. I bet there are far more average investors/savings who benefit from the 20% than there are super wealthy albeit vastly different amounts involved.
I think the most important, usable, meaningful tax breaks go to average middle income Americans.
The one big difference is the ability of financial companies to structure their earnings as carried interest. They then pass through earnings which are taxed as CGs, not earned income. It’s an enormous break for hedge fund / private equity folks.
The tax code is definitely tilted towards the wealthy. Case in point back door Roth conversions. Not saying it’s illegal but Roths were originally out of reach for the very wealthy, then the laws were changed.
Originally in 1997 the Roth was limited to the following income: 95k for single filers, and 150k for married couples.
Then in 2010 the law was changed to the benefit of the wealthier to avoid paying taxes on their retirement investment gains.
The most egregious example is Peter Theil:
https://www.propublica.org/article/lord-of-the-roths-how-tech-mogul-peter-thiel-turned-a-retirement-account-for-the-middle-class-into-a-5-billion-dollar-tax-free-piggy-bank
This is one of the reasons that the federal deficit is so large.
I am thinking they may revoke the pass through in upcoming tax legislation.
you may be right – it has been discussed, but I’m not aware of any legislation to do it.