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The Real "1 Percent" (80% of millionaires EARNED their money through hard work)

Cato Institute ^ | 11/08/2011 | Michael Tanner

Posted on by SeekAndFind

So just who are those top 1 percent of Americans that we're all supposed to hate?

If you listen to President Obama, the protesters at Occupy Wall Street, and much of the media, it's obvious. They're either "trust-fund babies" who inherited their money, or greedy bankers and hedge-fund managers. Certainly, they haven't worked especially hard for their money. While the recession has thrown millions of Americans out of work, they've been getting even richer. Worse, they don't even pay their fair share in taxes: Millionaires and billionaires are paying a lower tax rate than their secretaries.

In reality, each of these stereotypes is wrong.

Roughly 80 percent of millionaires in America are the first generation of their family to be rich. They didn't inherit their wealth; they earned it. How? According to a recent survey of the top 1 percent of American earners, slightly less than 14 percent were involved in banking or finance.

Roughly a third were entrepreneurs or managers of nonfinancial businesses. Nearly 16 percent were doctors or other medical professionals.

Lawyers made up slightly more than 8 percent, and engineers, scientists and computer professionals another 6.6 percent.

Sports and entertainment figures  the folks flying in on their private jets to express solidarity with Occupy Wall Street  composed almost 2 percent.

By and large, the wealthy have worked hard for their money. NYU sociologist Dalton Conley says that "higher-income folks work more hours than lower-wage earners do."

Because so much of their income is tied up in investments, the recession has hit the rich especially hard. Much attention has been paid recently to a Congressional Budget Office study that showed incomes for the top 1 percent rose far faster from 1980 until 2007 than for the rest of us. But the nonpartisan Tax Foundation has found that since 2007, there has been a 39 percent decline in the number of American millionaires.

Among the "super-rich," the decline has been even sharper: The number of Americans earning more than $10 million a year has fallen by 55 percent. In fact, while in 2008 the top 1 percent earned 20 percent of all income here, that figure has declined to just 16 percent. Inequality in America is declining.

As for not paying their fair share, the top 1 percent pay 36.7 percent of all federal income taxes. Because, as noted above, they earn just 16 percent of all income, that certainly seems like more than a fair share.

Maybe Warren Buffett is paying a lower tax rate than his secretary, as he claims. But the comparison is misleading because Buffett's income comes mostly from capital gains, which were already taxed at their origin through the corporate-income tax.

Moreover, the Buffetts of the world are clearly an exception. Overall, the rich pay an effective tax rate (after all deductions and exemptions) of roughly 24 percent. For all taxpayers as a group, the average effective tax rate is about 11 percent.

Beyond taxes, the rich also pay in terms of private charity. Households with more than $1 million in income donated more than $150 billion to charity last year, roughly half of all US charitable donations. Greedy? It hardly seems so.

And let us not forget the fact that the rich provide the investment capital that funds ventures, creates jobs and spurs innovation. The money that the rich save and invest is the money that companies use to start or expand businesses, buy machinery and other physical capital and hire workers.

It has become fashionable to ridicule the idea of the rich as "job creators," but if the rich don't create jobs, who will? How many workers have been hired recently by the poor?

No doubt dishonest or unscrupulous businessmen have gotten rich by taking advantage of others. And few of us are likely to lose much sleep over the plight of the rich.

But shouldn't public policy be based on something more than class warfare, envy and stereotypes?



TOPICS:

Business/Economy

Constitution/Conservatism

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News/Current Events

KEYWORDS:

frontpage

millionaires

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To: SeekAndFind

Corollary: most inherited wealth is dissipated within one generation (see “Hilton, Paris”)



To: SeekAndFind

I used to work in a job which allowed me a lot of information on the finances of wealthy people. One thing I noticed is nearly all of them, more than 80% btw, were very hard workers. Unfortunately a very high percentage were also crooked. I had to admire them in a way but not in others. I would also describe them as risk takers and planners.



To: SeekAndFind

They are the Red, diaper, doper, trust-fund babies, of the 1% they protest against, who have been indoctrinated with Leftist ideology at Leftist summer camps and taught protesting techniques there, too.



by 4 posted onby Jack Hydrazine (It's the end of the world as we know it and I feel fine!)

To: SeekAndFind

Oh what a load of bull. We all know damn well that they stole it directly from the #OWS peeps.



To: E. Pluribus Unum

She’s still rich.



by 6 posted onby 1010RD (First, Do No Harm)

To: SeekAndFind

Bookmark.



by 7 posted onby Sergio (An object at rest cannot be stopped! - The Evil Midnight Bomber What Bombs at Midnight)

To: SeekAndFind

bm



To: 1010RD

She won’t die rich.



To: E. Pluribus Unum

Corollary: most inherited wealth is dissipated within one generation (see Hilton, Paris)

I suspect she is earning far more than she is spending, with all her endorsements and business ventures. Hate her or not, she’s not picking anyone’s pocket.

I suspect she is earning far more than she is spending, with all her endorsements and business ventures. Hate her or not, she’s not picking anyone’s pocket.







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by 11 posted onby TheOldLady (FReepmail me to get ON or OFF the ZOT LIGHTNING ping list)

To: SeekAndFind

Inheriting money can be hard work too. Just sayin.



To: E. Pluribus Unum

I thought her inheritance was sharply reduced



To: E. Pluribus Unum

That’s usually true. The problem is a matter of perception. Billionaires such as Bill Gates, the late Steve Jobs, Steven Spielberg, George Lucas, etc., did indeed earn their fortunes through offering innovative products and technologies, or by being very good storytellers (and in Mr. Lucas’ case, a canny businessman as well; the deal he struck with 20th Century Fox regarding merchandising made him VERY wealthy). Only a lunatic would attempt to argue these gentlemen (and others I may have forgotten) don’t deserve their fortunes. However, when many people think of the “1%”, how often does Paris Hilton or Kim Kardashian or Snookie come to mind? People who earned their wealth either through birth, or by relatively unproductive means. Unlike Messrs. Gates, Lucas, Spielberg, and Jobs, I personally don’t really see what Snookie has contributed to innovation, technology, or arts and culture. Therein lies the problem, in my opinion.



by 14 posted onby AnAmericanAbroad (It's all bread and circuses for the future prey of the Morlocks.)

To: AnAmericanAbroad

“I personally dont really see what Snookie has contributed to innovation, technology, or arts and culture.” I don’t either, but someone thinks she is good for business, so I guess pays her good money. Good for her. I’m sure many folks could take your example of Spielberg and Lucas and put them on the same level as Snookie. Heck, lots of folks probably think Bill Gates is evil incarnate what with P.C.’s destroying civilization as we know it. (The Unabomber and some elderly relatives come to mind!) As long as the money isn’t crooked - who am I to judge. Well, I guess I judge by not watching their T.V. shows or whatever.



by 15 posted onby 21twelve ("We can go from boom to bust, from dreams to a bowl of dust....and another lost generation.")

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