Super-Rich People Have $300 Billion Less
Forbes says that the collective worth of the 400 richest people fell by $300 billion or 19% to $1.27 trillion. The top reasons for the decline were market turmoil, plummeting real estate prices, fraud and divorce.
Bill Gates, the richest American, lost $7 billion. One guy who got kicked off the list completely was R. Allen Stanford — who was accused by the SEC of running a Ponzi scheme.
Oddly, a Madoff investor was actually added to the list:
Among the newbies is Jeffry Picower, who the magazine describes as "a longtime investor with Bernard Madoff who is alleged to have extracted billions of dollars from Madoff's fund before it collapsed."
Bet he's really popular these days.
Super rich are $300 billion lighter [CNNMoney]
(Photo:paxtonholley)
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Comments:
And if they actually paid taxes the way they should, we'd pretty much have a balanced federal budget and could easily provide universal health care.
Its called class warfare, and their side is winning.
Didn't Consumerist report that most people in Madoff's scheme didn't lose their initial investment?
In my eyes, if you make more than 125,000 a year, you a rich. Depending on where you live of course.
But think about how much they lost. Gates lost 7 billion! 7 Billion! He is SO RICH, a loss is a loss of 7 billion! I get pissed if I lose 5 bucks!
Wow, I wish I could lose 7 billion dollars.
What's funny is your average american that has savings/investments lost probably 25-50% or of their "worth", and these guys manage to make out at 19%.
Geez, with my pockets being $300 billion lighter, guess I'll just have to hold off on my purchase of my next island :(
oh no, a whole 7Billion$? whatever shall he do...
well no more bathing in evian and russian caviar.. oh damn.
gee, if i had that problem, whatever would i do!
@JGKojak: Excuse me? "if they actually paid taxes the way they should..." Have you checked the tax burden information over the last few years? Or for the coming year? It was just released that about 47% of Americans will pay no income tax for 2009. [money.cnn.com]
Take a look at that chart. 68 million people earning $100k or less will pay no taxes. None. Now, granted, there are 23,000 that earn over $500k that won't pay taxes. But there's one key distinction between these groups.
Maybe in that lowest bracket not only PAY no income tax, they get money back in the form of tax credits. They actually GET money. How about we stop that... maybe that money can go to your vaunted health care. You can only soak the rich so long before incentives start getting totally skewed. You want health care? You ought to be willing to pay for it yourself. Whether that is insurance or taxes. Don't expect others to pay for you.
@Saboth: if they have billions of dollars, they really don't need to invest their money for retirement.
@bloggerX: It's talk like that that will let the terrorists win. You go out there and buy an island, and buy an EXTRA island just in case, buddy.
Meanwhile, the collective worth of the poorest people also fell $300 billion ...
/tear
@JGKojak: "And if they actually paid taxes the way they should,"
So the 1% paying about 70% of ALL taxes paid is not paying what they should? Sounds like you need a reality check.
@Saboth: They didn't lose as much because they understand management of wealth. Something about 90% of the population doesn't.
@Suttin: They aren't investing for retirement, they are investing to increase their net worth so they may pass it on to their heirs and give it out to charity.
@rjhancock: And how much of the income do those same 1% make? While I'm sure it's not 70%, it's probably something around 50% (yes, I am making the number up... my point is the stat is pointless without comparing to percentage of income those same 1% earn)
@Oranges w/ Cheese ontopofBrocolli:
There is a big difference between income tax on joe middle class and captial gains tax rates paid by the richest of the rich. Warren Bugget keeps telling people that it isn't fair that his tax rate is lower than his secretary's tax rate. [www.washingtonpost.com]
Without those Billions we won't have any money to invest in new companies which means no jobs for you.
@SadSam: Warren Buffet's claim that he pays lower taxes isn't true. His "combined" tax burden percentage is lower, only because of certain tax phase outs (Social Security being the biggest one) and the fact he doesn't spend all his money (sales tax).
The claim that the "richest of the rich" only pay capital gains is not quite true. The situation he was talking about were hedge fund managers and their ilk who earn what is called "carried interest." Is it a loophole? Yep, they should be paying income taxes.
But there is a vast difference between "rate" of taxation and "amount" of taxation. Which would you rather pay? $1m in taxes or 10% of your income in taxes? Any rational person would take 10% of your income until you made $10,000,01, right?
Look back at that chart - "joe middle class" are those who average under 100k in income. And 60m of them aren't going to pay taxes this year. Hmmm... maybe we do need to revise the tax system. Every voter should have SOME skin in the game.
Take a look at that chart. 68 million people earning $100k or less will pay no taxes.
@TuxthePenguin: Am I the only one that wants to know how they're doing that?
They should have shown a figure adjusted for the amount lost to divorce. I would have liked to have seen how much of that money is just gone versus how much just went to someone else.
@JGKojak: If you accept the premise that the wealthy should pay more, you should find the reason why they are able to. The main one is that the tax code it too complex. There are too many loopholes.
How do you fix that? Flat tax, no breaks. The needy will get their money back through welfare programs anyway, and the wealthy won't be be able to hide behind an obscure tax code.
@woolygator: You are correct. The majority of the rich do not sit on their money like Scrooge McDuck. The money is invested, which affects the little people in terms of 401k's, mutual funds, etc. So unless you are a mattress stuffer, this is bad for everyone.
@TuxthePenguin: Incentives???
Sorry... I have never bought the idea that rich people 1) are as valuable to society as they think they are; 2) will stop producing if they only get 1 billion instead of 5 billion.
3) Last time I looked, Paul McCartney and Bruce Springsteen still do new music, not to make money, but because they love what they do. The "taxman" doesn't impact their decision what they do in life.
@Rectilinear Propagation: From my experience (as a CPA here in Texas), usually its someone with two (or more) children and a mortgage. Since Mortgage interest is deductible as well as PMI and property taxes, that can wipe out a lot of liability. Throw in personal exemptions, child tax credits, 401k and IRA contributions, its not really difficult to do, especially if one or both jobs require a lot of un-reimbursed business travel (mileage, airfare, etc)
There are some simple solutions:
1) Make rich people pay FICA. Right now you don't pay FICA after your first 90K-- make FICA go up to your 1st million. You know what? We'd save Soc Security AND Medicare in one fell swoop by doing that.
2) Eliminate most tax shelters that don't involve charity. Make it impossible to create phony off-shore corporations and money-laundering schemes.
3) Tax risky investments. Make Capital Gains a 50% tax on Capital Gains cashed in the first year of holding, 25% after 5 years, and have no capital gains on stocks held for more than 10 years. That would stop a lot of the speculating/madoff ponzi bullshit.
I have NEVER understood why CEOs (or coaches) are worth hundreds of millions in salary. And I have really never understood what one does with that second hundred million. Whatever they do with it, there probably DO need to be disincentives to be super rich. No one needs that much money and the imblance is killing the world economy.
@woolygator: I call bullshit.
Jobs are created by working people making a decent wage and being able to afford manufactures goods and luxury items. Its Henry Ford (who was no liberal that's for sure) idea that if he paid his workers a decent wage, they'd be able to afford a car.
Right now, places like Wal Mart are pricing everyone else out of business because wages have dropped so low its the only place many people can afford to shop.
So... I'll trade your investments for living wages any day.
@psm321: The top 1% earn $250k and above. As a percentage, they pay less of their income to taxes. However, they still pay more overall through other taxes that joe the plumber typically doesn't have to deal with.
Hate to tell you, but if it wasn't for the wealthy and all the investing they do in real estate and businesses, most wouldn't have a job.
@JGKojak: Incentives do not always affect earnings. Usually the rich do not slow down their direct income, but they can, and do, change their passive incomes. The most textbook case is the decision to invest in corporate bonds or municipal bonds. Corporate bond returns are valued at return*(1-tax rate) while municipal bonds are just return. Now, as the tax rate increases, more and more municipal bonds because preferable. After all, you would assume people would want to keep as much money as possible... after all, we don't see Paul McCartney and Bruce Springsteen writing checks for millions to the US Treasury, do we?
If you don't believe in incentives, then no economic theory will be able to have any sense to you. Incentives are everything... down to what a consumer buys. Taxes are the exact same, incentivizing certain actions (buying a home) to deincentivizing others (smoking, drinking, etc).
If it costs you $1 more to produce another widget and you have a 50/50 shot at selling it for $3, you earn on average $1 dollar (4*.5 - 1 = 1). Add in taxes and that equation starts to change. Add in graduated rates and you can see where it starts to make economic sense to slow production. There are accountants and CPAs (like me) who are paid good money to help make sure people and companies earn as much as possible. Just like there are CPAs for McCartney and Springsteen who do everything they can to minimize their taxes.
I can't say I'm sad for anyone who has plenty to have slightly less plenty in a time when so many who work hard (or would if they could) have little to nothing, but I do hope that the good work the Bill and Melinda Gates Foundation isn't impacted by his personal losses, because a lot of what that foundation does needs to be sustained during hard times as much as ever.
Sounds good to me. I have two kids and a mortgage, and am the only one bringing in income. I see to get back around $4k this year.
@JGKojak: You're suffering from income-envy. Why does anyone make hundreds of millions? Well , the fact is that he or she works for the highest bidder in the headhunter game. They wouldn't get that much if others didnt have similar offers. It's capitalism -- and I love it so
"The top reasons for the decline were market turmoil, plummeting real estate prices, fraud and divorce."
Wow, the rich really are just like the rest of us!
@JGKojak: I like some of your solutions (and they'd make my job easier), but...
1. FICA is soley Social Security. But removing the cap (or raising it, its actually 104k or so this year) only means that you're making it less a retirement scheme (which it is billed as) and more of a welfare scheme. Also, remember that this would also increase the EMPLOYER portion of the tax as well, which means companies earn less, which means fewer people on the payroll, less income to the stockholders...
2. I love this idea. I've been championing it for years. But I want to go further... a bit later.
3. I like this idea as well, but does this also include interest? Remember, many low-income people use CD's which are taxed at capital rates. And you're making the system more complicated. You'd see rates of bonds and such fluctuate to account for the new taxes. In the long run, you'd not really see much more income, just a distribution.
4. "Super-Rich" - you need to remember that they aren't putting this under the mattress. Bill Gates is so rich because of his Microsoft stock, not cash in the bank. Those investments spur on the economy. Which is what we need more of right now.
@TuxthePenguin: Dang.. I'm so screwed. Unless they start allowing deductions for my cats.. and rent payments.
@JGKojak: Or, you know, we could cut spending to balance the budget. Like the majority of our foreign policy.
Don't worry, the Madoff profiteers have some heavy lawsuits ahead of them to clawback all that cash. They're only rich as long as they can avoid the law.
@Hoss: You are suffering from income fantasy. It sustains the middle-class's need to live vicariously like the lottery does for the poor slobs.
@JGKojak: Introducing a Capital Gains tax like you're proposing would cause many people to stop investing in things other than established business ventures. As in, a lot less investing in startups, and a lot less investment in newer things. And in this economy, we need to increase investment in smaller business, not limit it.
When I first heard this story yesterday, I was thinking that Gates' fortune might have also gone down because of all the hundreds of millions $ he is giving away for their charitable causes (AIDS prevention in Third World countries, worldwide disease vaccinations, etc.).
I read an article years ago where he said they intend on giving away nearly all their fortune for charity...
We should all donate to a TIP jar to prop up their retirement funds.
@SadSam:
What wasn't written was that Buffet offered anyone at that meeting $1,000,000 if they could show that they paid a higher percentage tax than his receptionist.
Nobody got the money.
The rich are the canary in the coal mine and America's source of morale. If they get poorer, it's bad for the nation's soul. Hence, I propose we bail them out before this starts depressing everyone.
/s
@Hoss: Or they are just lucky. Which is great, they took a chance and won. Most people lose, you have to let the ones who win do well. You take it all away and they won't want to take such a long shot risk.
@Blueskylaw: Yes, I remember that. The problem was, he wanted whoever challenged him to count a bunch of "taxes" had nothing to do with income tax: gas taxes, sales tax, etc. Income tax burden =/= tax burden.
Not that you really could, anyway. If either of them had investments, you'd need to count the taxation paid on the corporate level that reduced their dividends, etc. It gets complicated, FAST.
Awww... brings a tear to my eye....
NOT!