You would think too much of anything is not a problem except when it comes to taxes.
At the moment, most of the wealthy have either fled to Florida and pretend they live there permanently in order to pay less in taxes for their NYC estate(s) or are panicking about Bidenâs new tax law calling up their lawyers to hide their money in off-shore accounts in islands that charge 0 in corporate and income tax.
Tax helps the country as a whole and a system the rich need to fight. Thatâs why they are annoyed.
Yet to be fair, they knew what they were getting themselves into. Sure, it might be great to be earning a juicy salary, having a match for match 401 (k) plan set up by your employer, have weekends off, casual Fridays and live the high life and all but the golden rule most people forget is that the more you make, the more you pay in taxes and the less you keep!
Only if junior bankers and graduates fresh out of school knew that earlier there would less debt circulating in markets, evictions, equity inside homes and more suitable down-payments (roughly 20%+) put on homes.
They would be much more prepared with setting up several passive income sources, having a cash cushion and pay attention to what location can bring them the most bang for their buck instead of the salary amount, something that isnât their choice.
When it comes to exercise to food, everything in moderation is key but especially with wealth. Take it from me, someone who grew up in a fortunate neighborhood where everyone looks the same, wears the same thing, works in the same industry and all know each other. Money messes with your mind when you think it can solve your most basic problems.
You can read here what I mean.
Lately after Biden announced his tax hike on business and the rich, the ultra-rich cough cough Bezos, Gates and Musk have been awfully quiet.
Tax Hikes. Yikessss
At its core, Bidenâs tax plan centers on raising taxes for Americans earning more than $400,000 (itâs still unclear whether thatâs for families or per individual). The plan would boost the top income tax rate and tax more of their income for Social Security, for example.
And Biden would increase levies more for millionaires and billionaires.
For example, he wants to tax long-term capital gains at the same rate as wages for households making more than $1 million a year.
Wealthy Americans currently pay a 37% rate on wages and a lower 20% rate on investment earnings (plus a 3.8% surtax).
The Biden tax plan would up the capital gains tax for millionaires to 39.6%âââthe same rate at which the president would tax job income for high earners.
Treasury Secretary Janet Yellen told the Senate in January that this change to capital gains taxes was a long-term goal of the Biden administration which would lead roughly 100,000 Americans subject to a wealth tax in 2023, according to Emmanuel Saez and Gabriel Zucman, economists at the University of California, Berkeley.
The policy would raise at least $3 trillion over a decade, they found in infrastructure, boost in GDP, exports, reduce the wealth inequality and boost the economy.
Although it is understandable that the rich donât like to pay their fair share in taxes such as our former president who only paid $775, paying taxes wonât only benefit the lower class it will help spur economic growth, the stock market and more employment leading to faster recovery and more all-time highs past the massive gains weâve seen throughout the past year within the major indexes.
Since majority of investors in the stock market are institutional retailers, pension funds, sovereign banks and institutional funds such as college endowments and now foreign investment corporations since US real estate is cheap and Americaâs businesses are booming, taxes will help trickle-down or shall we say trickle-up and help the rich right after a few years of consistently paying their truthful amount in taxes.
Of course, it has to take a few years. No big change happens overnight.
The package which follows on the heels of Mr. Bidenâs $1.9 trillion economic aid bill is central to the presidentâs long-term plan to revitalize American workers and industry by funding bridges and roads, universal pre-K, emerging industries like advanced batteries and efforts to invigorate the fight against climate change which will all be funded by corporate taxes, the other suspects (corporations) of not paying taxes.
It was reported that the largest C-suit Fortune 500 companies from Amazon to Apple did not pay anything in corporate tax last year.
No wonder America is struggling.
Although we are supposed to be a âunitedâ country, we are all on our own at the same time. While the rich have been cruising on their yachts and chilling in their 4th beach homes during this pandemic, they need to believe 70%+ Americans really need help and their contribution will directly benefit everyone including themselves of course later on.
Taxes 101
The more you make the more you pay in taxes yet the rich are more likely to pay less than someone earning less because they have outlets: tax shelters/havens, money laundering tactics and precious lawyers helping them through money loopholes.
If you are deciding to retire anytime soon, the best time to work ISNâT during a democratic president because republicans oppose taxes due to selfishness and are in favor of big business instead which in turn isnât great for the economy and only widens the wealth gap leading the rich to become richer and the poorer to get poorer.
(You can read about retirement here in more depth)
The Richâs Responses
Hereâs where it gets interesting. Of course anyone who is asked to pay more for something they paid less in before will naturally get angry and oppose the new changes yet some of the most sincere wealthiest 1% folks in America are totally fine with it and in fact beg for it!
No kidding, most of the rich arenât happy especially since New York is now officially the highest taxed state in the country. No wonder Wall Street is in talks of moving the NYSE to Miami. Not sure how the name will work out but theyâre up to change anything if taxes bite too deep into profits.
With the state budget set to increase the personal income tax on the wealthiest New Yorkers as well as hiking corporate taxes, some executives who fled the city temporarily for Florida (a no income tax state) due to the pandemic to relax are now highly considering permanent relocation, according to business leaders briefed on the matter.
âClearly, the toxic climate in New York has led businesses to look to Miami as an attractive place for long-term expansion and relocation,â Suarez, Miami mayor said.
He noted that heâs received a âvery receptiveâ response to his pitch to New York executives and pointed to moves by Blackstone and Starwood Capital into Miami.
Blackstone recently signed an office lease in Miami while Starwood moved its headquarters to the city as well.
This leads to a possible Housing Bubble with low inventory and pent up demand especially in Miami where the market is crunched, contractors are busier than ever and lumber is having a massive shortage leading to delayed construction.
Yet I firmly believe with low financing rates for a mortgage, incredible demand for at least the new few months/years, tighter lending restrictions, real estate as the best inflation hedge and more GenZers and Millenails looking to purchase homes with their disposable income, real estate couldnât be hotter, especially in Miami and will only accelerate.
No bubble in sight.
Do I think NYC will come back?
Absolutely, itâll just take time but what is for sure is that no other city in the world can replace it.
Broadway to NYCâs pizza to confused tourists cannot be duplicated in Paris or LA.
The Faithful Rich
Although most of the rich donât want to leave their beloved city due to pesky taxes, some millionaires want to give it all away and are advocating to raise their taxes!
Some think they are too rich such as Abigail Disney, the granddaughter of Roy Disney who with his brother founded Walt Disney.
She has parted with $72 million to donate to the IRS and thinks the rich need to pay far more in tax. Itâs strange how only women seem to be reasonable and only advocating for this rule. MacKenzie Scott, Jeff Bezos ex-wife has given away a few billion to non-profits while Bezos doesnât even pay taxes on his own income let alone Amazonâs billion dollar profits.
As Covid widens the inequality gap, women (Disney and Scott) and frankly a small, but mighty international league of the super-rich are urging governments to take their money as well.
According to the Guardian magazine,
Abigail Disney has always been very, very rich, or, as she describes it, âtoo richâ. The money came with her name.
âYes money is a problem especially when a fortune can make you miserable and sheâs decided to give it away. Sheâs been donating to good causes ever sinceâââ$72m (ÂŁ52m) and counting, mostly to groups helping women in prison, women living with HIV, and victims of domestic violence. But giving it away is no longer enough. She wants the tax collector to take more money, not only from her, but from âall of the absurdly rich people across the worldâ.
This is mostly due to the staggering wealth gap as the top 1% have amassed over $17 trillion during the pandemic while millions have fallen into poverty. With rising tuition to an unstable job market, the least Disney wants to do is give at least some away to those who really need it.
Up to a certain point, money plunges your happiness and you start to feel bad for having so much especially if you inherited it!
If you are a true wealthy civilian you would feel almost guilty you arenât sharing it!
âAs well as killing more than 2.5 million people, the pandemic and global lockdown response has plunged some 150 million more into âextreme povertyâ, according to the World Bank. The Washington-based institution described Covid-19 as âa heat-seeking missile speeding toward the most vulnerable in societyâ.
In all honesty, I truly commend Disney and this group of billionaires for wanting to change but the big question is will they really practice what they preach?
Anyone can say anything to publications but when it comes down to tax time, will they really?
âThroughout the pandemic, the poorest have been forced to continue going to work, risking their lives, while the rich stay at home,â Disney says. âAnd those going to work in life-saving essential jobs, are paying more [proportionally] in tax than the wealthy who are safe at home.â
We are humans and looking after each other is a basic part of being American. Plus what are you going to do with that wealth anyway?
This Patriotic Millionaires movement is a small but super group of the ultra-wealthy with only a few members including the musician Moby and Ben & Jerryâs ice-cream co-founder Ben Cohen, Chuck Collins, heir to the Oscar Mayer hotdog fortune, Morris Pearl a former MD at BlackRock and the founder of New Zealandâs largest retailer, the Warehouse Group.
Now this is a group you can never be selfish about promoting.
It only gets annoying when you promote and brag about being on the Fortune 500 list.
Tax Uses
According to the Guardian,
âThese members argue that, instead of leaving the super-rich to splash their billions on philanthropic vanity projects such as opera houses and museums, higher taxes should be used to fund public services, welfare and tackle growing inequality. Disney wants taxes on the super-rich to fund universal medical treatment and education in the US and throughout the world.â
Similarly to Warrenâs plan to call for a 3% âUltra-Millionaire Tax Actâ targeting people with more than $1bn to help pay for the economic pain caused by the pandemic is key. It is saddening to see that the ultra-rich and powerful have rigged the game and pay a lower effective tax rate than the bottom 99% while billionairesâ wealth is 40% higher than the Covid crisis began.
For those who still donât believe money can mess with you, Iâll leave you with Abigail Disneyâs situation:
âInheriting a fortune can fuck you up, it really can,â she says. âI spent my 20s and 30s trying to dig out from under the anxiety and guilt that came with it. People donât like it when wealthy people talk about this, because wealth is meant to feel like the magic answer to every question, right? âIf only I had XYZ money, everything would be all rightââââand that is true for poor people.
âBut after a certain point it starts not being true.â She falters slightly, searching for the right words. âMoney becomes its own preoccupation. I think of it as like a really fancy dog that you have to constantly be brushing. And so you get sucked into it. From the time I was 21 years old, I spent far too much time with accountants, lawyers and estate attorneys, talking about, and thinking about, my money: where it was, why it was there, did it need to change, and what the tax implications would be.â
We can only hope more ultra-rich Americans will opt to pay their fair share in taxes and care for this country they donât seem to support.
Weâll see what happens but for now, happy Miaming or wherever you are avoiding paying taxes.