The "wealthy" actually earn their money contrary to the belief of many

6SpeedTA95 · 08-21-2007, 11:39 PM

The Old Saying is true: The rich are different. But not only do their values and habits set them apart from the hoi polloi, they're different from their wealthy predecessors of a generation ago. For those interested in joining their ranks, it helps to understand why.

To enter the nation's top 1%, you need more than $5 million. And if you get there, you'll have plenty of newly-arrived company: The number of U.S. "pentamillionaires" has quadrupled in the past 10 years, to more than 930,000. Indeed, 70% of the nation's big family fortunes are less than 13 years old, according to research and marketing firm The Harrison Group. And the people who amassed them are, first and foremost, entrepreneurs — risk takers for whom wealth is a byproduct of pursuing their passion.

What got them to the highest level? It isn't necessarily stock-market savvy: On average, folks who recently hit the $5 million mark report that only 10% of their money came through passive investments. And only 10% of pentamillionaires inherited their wealth. One might think that good fortune would play a role, but even luck is largely a matter of one's own making. Psychologist Richard Wiseman has found that people who describe themselves as lucky share common habits that account for their success: They're friendly and fond of new experiences, traits that put them on a collision course with new opportunities. In addition, "lucky" folks simply have higher expectations of success — they're too pigheadedly optimistic to heed the long odds and call it quits.

Not to say that getting rich is simply a matter of having a swell attitude. The path to riches usually involves the kind of risk that would make most people feel a little queasy. Harrison Group head Jim Taylor recently persuaded more than 3,000 pentamillionaires to discuss their path to success. Perhaps not surprisingly, none of them had a cushy union job down at the DMV. The vast majority — 80% — either started their own business or worked for a small company that saw explosive growth. And almost all of them made their fortune in a big lump sum after many years of effort.

Surprisingly, today's very rich say that money itself wasn't much of a motivator. Once you've got food in your belly and a big-screen TV, the mere prospect of more Benjamins isn't enough to get you leaping out of bed at 5 a.m. Rather, rich folks often make their fortunes after they make up their minds to solve a problem or do something better than it's been done before. When Frank Darras graduated from law school, all he wanted in terms of material wealth was a middle-class life for his wife and kids. But while working as a doctor's assistant to put himself through school, he developed a burning desire to help the folks he saw struggling with unpaid insurance claims. "It was the David and Goliath aspect that attracted me more than anything," says the Ontario, Calif., attorney. Once he had his degree, Darras was like a cruise missile aimed at the insurance industry. By 1990 Darras had his first million-dollar year, and today he oversees one of the nation's largest disability and long-term-care practices. "I never thought I'd make $5 million in two lifetimes," he says. "I just loved the work."

Getting rich also requires a certain amount of stubbornness and clarity of purpose. Consultant Joel Kurtzman, who evaluated 350 startups for his book Startups That Work, found that successful outlets usually have a team of two or three founders who share a common vision; the success rate for this model was a remarkable 50%. The odds for solo founders were more like the oft-quoted one in 10, in part because they often found themselves working at cross-purposes with hired guns who see things differently. That's what 34-year-old Justin Jarvinen learned the hard way. The entrepreneur saw two promising business ventures go down the tubes after he took on partners who tweaked his ideas beyond recognition. But three years ago he started VerveLife, a service that helps companies promote online marketing efforts with free music downloads. Knowing that his success depended on his enthusiasm for bringing the idea to market, he carefully chose partners who supported his vision.

Jarvinen is now the majority shareholder in two dot-coms, and he claims an eight-figure net worth. But what really excites him is his freedom to explore and support new ideas; his current passion is mentoring younger entrepreneurs. "I'm interested in doing whatever I want, whenever I want," he says. And chances are you feel similarly. When people dream of getting rich, it's about more than nice clothes and fancy vacations. Being rich means freedom: to spend your time as you please, to pursue your real interests and to take a chance without courting utter ruin. Paradoxically, the road to riches often means acting as if you already have that freedom.

http://finance.yahoo.com/banking-bud...s-an-Open-Mind

This is a great article. It clearly states that only 10% of the nations top 1% got their wealth from someone else. That means that 90% of those in teh 5 million plus club earned it on their own. Which begs the question why do we want higher taxes? Specifically on the estate tax/death tax? There's also plenty of statistics that show that those who inherit their wealth squander it within a single generation.

Yet we want to punish people for hteir success by taking in excess of 50% of their income?

David Octavius · 08-22-2007, 12:32 AM

Originally Posted by 6SpeedTA95

http://finance.yahoo.com/banking-bud...s-an-Open-Mind

This is a great article. It clearly states that only 10% of the nations top 1% got their wealth from someone else. That means that 90% of those in teh 5 million plus club earned it on their own. Which begs the question why do we want higher taxes? Specifically on the estate tax/death tax? There's also plenty of statistics that show that those who inherit their wealth squander it within a single generation.

Yet we want to punish people for hteir success by taking in excess of 50% of their income?

Ok Mr Melodramatic, no one who has that much is paying that much in taxes. The nominal tax rate does not necessarily equal the actual tax rate when tax deductions or whatever else their accountants find is put in the mix.

People who make more ought to pay a slightly higher tax rate - they are able to take advantage of their entrepreneurial spirit because it is supported by government regulations that ensures they are legally protected in certain instances and can safely start new business or invest. In other countries there are no such things and thus very few people are able to escape poverty because their government does not promote entrepreneurial or investment spirit by "setting the table"

And why ought there be an estate tax? You said yourself, those who inherit, waste it away in a single generation anyway so why not tax it?

Its funny that those who make money - and their apologists - seem to forget, or just don't know, that its because government - like a referee - set the rules of the game to make the climent right to do things they are able to do. As such, they should pay something back to the system that enabled them to make more than they would otherwise did

WickedLou9 · 08-22-2007, 06:41 AM

The rich pay more because they can. Society as a whole feels that it's worth while for those who are fortunate enough to have millions of dollars to pay a little more for the good of the country. It's thier duty to do so.
And let's not kid ourselves. Yes they are in a higher tax bracket but the rich are not paying what they are supposed to be paying. They abuse tax shelters, send money over seas, etc. anything to avoid paying what they owe. Joe average can't take advantage of these tax shelters.

kinggovernor · 08-22-2007, 07:21 AM

Originally Posted by WickedLou9

The rich pay more because they can. Society as a whole feels that it's worth while for those who are fortunate enough to have millions of dollars to pay a little more for the good of the country. It's thier duty to do so.
And let's not kid ourselves. Yes they are in a higher tax bracket but the rich are not paying what they are supposed to be paying. They abuse tax shelters, send money over seas, etc. anything to avoid paying what they owe. Joe average can't take advantage of these tax shelters.

so would buying a house be considered a "tax shelter"

David Octavius · 08-22-2007, 08:15 AM

Originally Posted by kinggovernor

so would buying a house be considered a "tax shelter"

Can I get BBQ sauce with that red herring?

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I think there is a fine line between fair progressive taxation and thievery, the rich should not be penalized for being so. But, they got rich because of the structure of society and the regulation of government (which is also a fine line, don't want too much of that either). They ought to give something more back because in many other countries where the government is either incompetent or corrupt, they wouldn't be making shit.

hsmith · 08-22-2007, 08:28 AM

Originally Posted by David Octavius

Can I get BBQ sauce with that red herring?

--

I think there is a fine line between fair progressive taxation and thievery, the rich should not be penalized for being so. But, they got rich because of the structure of society and the regulation of government (which is also a fine line, don't want too much of that either). They ought to give something more back because in many other countries where the government is either incompetent or corrupt, they wouldn't be making shit.

Oh, what about the fact their businesses provide services the gov't doesn't? Shouldn't the gov't be paying THEM for providing these "extra services"?

David Octavius · 08-22-2007, 08:39 AM

Originally Posted by hsmith

Oh, what about the fact their businesses provide services the gov't doesn't? Shouldn't the gov't be paying THEM for providing these "extra services"?

Which came first, the chicken or the egg? Would these business exists as they are now if government did not set the right conditions in the first place? No they would not (at least not with the kind of vigor they have now), so I don't see why government should pay them anything.

I know this puts a damper on the whole government is always evil thing but we are lucky we have one that gives us the protection to start a business and invest - we just gotta make sure they don't over regulate and constrain, rather than help, our economic growth

WickedLou9 · 08-22-2007, 08:57 AM

Originally Posted by kinggovernor

so would buying a house be considered a "tax shelter"

Homes aren't really a tax shelter because in most places there are local property taxes that can be quite significant. I pay 5000 dollars a year in property taxes. That's not much of a shelter. It's more of a tax liability than anything else.

7th Ninjai · 08-22-2007, 12:04 PM

Originally Posted by David Octavius

Which came first, the chicken or the egg? Would these business exists as they are now if government did not set the right conditions in the first place? No they would not (at least not with the kind of vigor they have now), so I don't see why government should pay them anything.

I know this puts a damper on the whole government is always evil thing but we are lucky we have one that gives us the protection to start a business and invest - we just gotta make sure they don't over regulate and constrain, rather than help, our economic growth

Do you own your own business? Because, if you do, I don't believe you would be praising the government. I do own my own business and I see the government as nothing more than hinderance and deterent as I go about my business. Want to invest in something new? I have to always consider the tax consequences. Want to hire a new employee? I have to consider the tax consequences and make a decision whether or not it's worth it. Want to do just about anything related to finances with my business? I have to consider the tax consequences. The government is not something I, as a business owner, look upon favorably.

WickedLou9 · 08-22-2007, 12:16 PM

Originally Posted by 7th Ninjai

Do you own your own business? Because, if you do, I don't believe you would be praising the government. I do own my own business and I see the government as nothing more than hinderance and deterent as I go about my business. Want to invest in something new? I have to always consider the tax consequences. Want to hire a new employee? I have to consider the tax consequences and make a decision whether or not it's worth it. Want to do just about anything related to finances with my business? I have to consider the tax consequences. The government is not something I, as a business owner, look upon favorably.

I think you are missing the point. The US has the largest and strongest economy in the world. We have some of the wealthiest population and the biggest consumer market on the planet. This didn't happen on it's own and it wouldn't have happened without our government and it's programs and policies. Our government keeps us safe from invasion, from criminals and terrorists. Our government builds interstate highways to help commerce take place. It does all sorts of things that allow you to be in business. For that privilege, you pay a tax. Taxes here are lower than in most other 1st world countries.

7th Ninjai · 08-22-2007, 01:20 PM

Originally Posted by WickedLou9

I think you are missing the point. The US has the largest and strongest economy in the world. We have some of the wealthiest population and the biggest consumer market on the planet. This didn't happen on it's own and it wouldn't have happened without our government and it's programs and policies. Our government keeps us safe from invasion, from criminals and terrorists. Our government builds interstate highways to help commerce take place. It does all sorts of things that allow you to be in business. For that privilege, you pay a tax. Taxes here are lower than in most other 1st world countries.

I understand the point. I also understand that I deal with Korean clients weekly who come to this country to invest $100,000 or more to get an e2 visa and are shocked at the amount of tax they have to pay for their business and personal incomes. I've seen several actually go back to Korea because, amoung other things, the tax rate is too high.

A common compliant across many larger business is that they have to invest / hold their money overseas to avoid paying taxes in the US. Our current tax code is a detriment to our economy and causes both individuals and companies to invest outside of the country.

David Octavius · 08-22-2007, 01:26 PM

Originally Posted by 7th Ninjai

Do you own your own business? Because, if you do, I don't believe you would be praising the government. I do own my own business and I see the government as nothing more than hinderance and deterent as I go about my business. Want to invest in something new? I have to always consider the tax consequences. Want to hire a new employee? I have to consider the tax consequences and make a decision whether or not it's worth it. Want to do just about anything related to finances with my business? I have to consider the tax consequences. The government is not something I, as a business owner, look upon favorably.

Missing the point entirely. Yes I have owned my own business and yes taxes are a bitch. I don't advocate government being actively involved in the economy nor having such high taxes, but its disingenuous to think we would be as successful without some government regulations that (saying for the umteenth time) give us protections to start business or to invest with confidence.

Of course there is a fine line between just enough and too much government involvement but that is why we need to keep the accountable. But yea, you do owe our government something (just not so high), no free ride.

WickedLou9 · 08-22-2007, 01:30 PM

Originally Posted by 7th Ninjai

I understand the point. I also understand that I deal with Korean clients weekly who come to this country to invest $100,000 or more to get an e2 visa and are shocked at the amount of tax they have to pay for their business and personal incomes. I've seen several actually go back to Korea because, amoung other things, the tax rate is too high.

A common compliant across many larger business is that they have to invest / hold their money overseas to avoid paying taxes in the US. Our current tax code is a detriment to our economy and causes both individuals and companies to invest outside of the country.

Then move to Korea if it's so much better there.

I am sure that there are NUMEROUS other drawbacks that far outweigh the lower tax burden.. I don't know, like the nuclear capable, million man North Korean army sitting across your border, with the only thing stopping them being a strip of land a few hundred yards across and the threat from the US government that may or may not mean anything. Remember that part I mentioned about providing security?

7th Ninjai · 08-22-2007, 07:18 PM

Originally Posted by WickedLou9

Then move to Korea if it's so much better there. I am sure that there are NUMEROUS other drawbacks that far outweigh the lower tax burden.. I don't know, like the nuclear capable, million man North Korean army sitting across your border, with the only thing stopping them being a strip of land a few hundred yards across and the threat from the US government that may or may not mean anything. Remember that part I mentioned about providing security?

Come on Lou, I'm not saying everything is better in Korea and I certainly do not want to move there. I'm saying that our current tax law discourages the wealthy and businesses for investing in our economy as much as they could otherwise. That is a fact.

WickedLou9 · 08-23-2007, 09:11 AM

Originally Posted by 7th Ninjai

Come on Lou, I'm not saying everything is better in Korea and I certainly do not want to move there. I'm saying that our current tax law discourages the wealthy and businesses for investing in our economy as much as they could otherwise. That is a fact.

It doesn't discourage it out of any sort of malcontent for the wealthy. It taxes people so that they can have the benefits that I talked about earlier. Government can not operate without taxes. Withotu government we would have no police, no roads, no military, no public education system, no courts to settle disputes, etc. Without that infrastructure, business can not operate. So while taxes may hinder business to some extent, the alternative is much much worse.

David Octavius · 08-23-2007, 09:17 AM

Originally Posted by WickedLou9

It doesn't discourage it out of any sort of malcontent for the wealthy. It taxes people so that they can have the benefits that I talked about earlier. Government can not operate without taxes. Withotu government we would have no police, no roads, no military, no public education system, no courts to settle disputes, etc. Without that infrastructure, business can not operate. So while taxes may hinder business to some extent, the alternative is much much worse.

While i agree with some of what you say I cant agree with that open ended implication that taxes may suck but the alternative is worse - there comes a point when taxes are too burdensome, when government becomes too inefficient and when the corrupt use our money to give too many breaks.

I actually think taxes should be cut almost across the board at both the State and Federal levels toforce our government to be more efficient with less. Right now they are so comfortable spending our money, knowing they will get more next year that accountability in what they spend and how much is almost non-existent - like a new lottery winner, they spend money without thinking about its implications long term. By choking them off from funds, it will force them to have re-evaluate their spending while at the same time keeping more of our money in our pockets.