Are you affluent (wealthy/rich)?… Sad, but you are under attack… it’s time to fight back (02/10)

Yes, the USA is the greatest country on the planet Earth. Why? … Simply put: our free society and, in a word, “CAPITALISM” (which is defined in Webster’s Dictionary as “The economic system in which the means of production and distribution are privately owned and operated for profit.”) and “CAPITALIST” has two separate definitions: (1) “an owner of wealth used in business” and (2) “wealthy.”

Wow! The above is a perfect description of the typical successful business owner/ reader of this column.

For you entrepreneurs who have worked your tail off (success in business, in my experience, is never plain luck) and have become affluent, you have been shoved into your own separate new minority group, usually referred to as “the rich.” Make no mistake about the rich in America. They are under a relentless attack… In the media… In public… And in private conversations.

Certain politicians love to attack us and propose to take bigger portions of our wealth by various obscene taxing schemes (higher income tax and capital gains rates/killer estate tax rules and rates/a surtax/remove limits on taxing earnings subject to social security taxes). “They can afford it,” is the smug explanation. As a voting group we are a small minority. Our campaign contributions are valued more than our votes.

Sad!

My research has failed to discover an authoritative source as to whom is considered rich. Based on my 50-plus years of consulting with them, here are my three categories: (1) Rich, net worth of $4 million to $10 million (but to varying degrees are still concerned about maintaining

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their lifestyle to the day they die. (2) Ultra rich, net worth of $10 million to $25 million (no longer concerned about maintaining lifestyle). (3) Mega rich, worth more than $25 million (more concerned with not losing any of their net worth and conservatively growing it). Of course, some in this group are worth $50 million, $100 million or more.

Almost all the rich have a fetish about:

  1. Overpaying their taxes (yet begrudgingly are honest taxpayers).
  2. The value of their time.
  3. The efficiency and competency of their employees (particularly top management) and outside professionals (i.e. their CPA and lawyers). Appropriate and timely follow up is a must.
  4. Avoiding hassles and welcoming convenience.

Most of those still in business are on a constant search for relief from stress, time pressure and responsibility. Yet, they rarely become a   member of the “paralysis-by-analysis” club. Try to rip ‘em off and you are toast.

The rich are an essential ingredient of the fabric that makes America great. Let’s take a look at some undisputed facts that prove the rich are a necessary cog in the wheel of a prosperous American economy.

  1. 1. Taxes. How much of the income tax burden is borne by the rich?… The most recent IRS data available shows the top 1% of taxpayers (earned $410,000 or higher in 2007) paid a whopping 40.4% of all Federal income taxes. Amazing, because those taxpayers only made 22.8% of all the reported adjusted gross income. So much for the myth that the rich don’t pay income tax.

Now hear this and share it with everyone you know: In 1993 Burt Hauser, an economist, published new data about the income tax system. As a result, Hauser’s Law was created: “No matter what the tax rates have been in postwar America, tax revenues have remained at about

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19.5% of [gross domestic product] GDP.” The simple truth is that an increase in GDP increases tax revenues, while an increase in tax rates (which sock only the rich) reduce tax revenues.

Want further proof?… Three times in our country’s history, across-the-board income tax rate reductions – during the administrations of John F. Kennedy, Ronald Reagan and George W. Bush – all resulted in increased income tax revenues in the years immediately following the rate reduction.

Hey, you guys in Washington – want more tax revenues?… Increase the GDP, not tax rates.

  1. 2. Jobs. Who creates 2/3 of all the jobs in the United States?… Closely held business… translates into the rich (business owners).
  2. 3. Charity. The rich are the backbone of philanthropy in our country. Their contributions (often in the millions of dollars) fund medical research, universities, hospitals, education and the endless number of other charities in the U.S.

Maybe we can pound these facts into the heads of our politicians: The rich, by any definition, are the only Americans with excess wealth beyond what is needed to meet their basic living expenses. They don’t put this excess wealth in their mattresses. They invest it in Wall Street (support larger companies), put it at risk in their own businesses (create more jobs), fund various charities and yes, are guilty of spending a portion on high-end goods and services (create jobs).

Note: It may surprise you, but most of the rich do not flaunt their wealth. You can’t tell they are rich by the clothes they wear, the cars they drive or the homes they live in.

Redistribute the wealth of the rich and you have socialism, which has created misery wherever it’s been tried. We have seen the wonders of capitalism for over 200 years. It works. The USA is the most powerful and wealthy nation in the world. Anyone in our country, sometimes not even a citizen, has an open door to earn his/her own wealth and become rich.

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Simple logic tells you that destroying the rich by taxing away a large portion of their wealth will not help the poor. In the long run, excessive taxing of the rich will backfire, reducing the tax revenues to Washington.

It’s time for us to fight back… How? Keep your net worth confidential (except for your professional advisors who need to know). Although your tax burden may become more onerous, use every legal trick and strategy to cut your tax bill. There are two taxes we know how to legally avoid: the capital gains tax and the estate tax.

Unfortunately, taxes and politics have been, are and probably will continue to be inexorably intertwined. So most essential: Use a portion of your wealth, time that you can find and all the influence you have to support the candidates for the House and Senate (and when the time comes, president) that understand the economics and will pass the kind of laws that return our country to a level of normalcy where the marketplace, not the government, determines the amount of your wealth.

Now, a seeming shift (which you will see is really not a shift) in subject matter. The tragic earthquake in Haiti has created a need for us to open our hearts and pocketbooks to help the Haitian people. As usual the Red Cross is on the scene helping in every way possible.

Here’s a little plan to help you save a ton of taxes while helping the people of Haiti. My book, Tax Secrets of the Wealthy sells for $367. It really shows you step-by-step how to totally eliminate the estate tax, whether you are worth $3 million or $33 million (or more). Simply write a check to the Red Cross, for any amount, and the book is yours.

Send your check (payable to the Red Cross) to me: Irv Blackman, 3960 Deer Crossing Court, Unit 102, Naples, Florida 34114.

I’ll do two things in return: (1) Send you a copy of Tax Secrets of the Wealthy (as my gift to you) and (2) pay the shipping (via UPS). How much should be the amount of your check?… $50… $100… $1,000 – you decide. Please affix your check to your letterhead with your

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business card (just your name, address and phone number if you are not in business). I’ll forward your check to the Red Cross and ask them to acknowledge receipt directly to you.

As always, if you have a question, call me (Irv) at 847-674-5295.

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