With good intention, I proposed one way to help level the playing field through a Wealth Identification Program run by our all-powerful government. By identifying wealthy people who got wealthy through 100% luck (born into wealth), we could empower decision makers to make more informed choices when deciding between equally qualified candidates. Whether a decision maker chooses to help the less lucky is entirely up to their discretion.
The Wealth Identification Program could also put pressure on life's lucky winners to use their finances to give back to those who need help the most, while pushing themselves to see what they can achieve on their own. Imagine being born with the gift of Mozart, but never realizing your full potential because you didn't have to. Having money from the start can limit motivation!
With a public wealth ID program, the fortunate will tend to give more and try harder to maximize their potential. After all, when the the boss is not around, why do anything at all?
WHEN BEING RICH IS SO EVIL
Despite my tenant self-identifying he had a trust fund, and that it would take an extra day to access his trust fund in order to pay rent, almost all the feedback from my post on creating a Wealth ID program took a default assumption that getting identified as rich is bad.
Is there nobody out there who believes being identified as rich is good anymore? There are massive displays of consumption today that show off one's wealth through fancy cars, clothes, watches, and so forth. Perhaps this whole consumerism criticism / debt-addicted culture is untrue? I thought most people aspired to be rich. Let's dig deeper.
The Program doesn't directly take money away from you like the progressive tax system. The Program doesn't sear a painful mark on your forehead. All The Program does is create a government-run data base that identifies who are life's lucky financial winners.
Not only is getting identified as rich bad, plenty of commenters went so far as to equate The Wealth ID program to a Nazi run program during the Holocaust! Whoa. How did we go from making a suggestion on how to help the less fortunate get ahead, to one of the most evil times the world has ever seen?
Have a read of some of the comments below.
Ajibola says,
“I’m pretty sure the Nazis began the Holocaust by “identifying” the Jews and allotting a certain kind of ID to them. Think: Star of David.
The only difference here, is discrimination against the rich by class. Considering that taxes are heavily funded by the rich, why is there so much animosity? Are we losing focus as to why we chose Capitalism?
I’m curious here, Sam. Do you hate being privileged? Do you feel guilty for the wealth you have amassed? Or Maybe ashamed of it? I don’t know what you think, but it comes across like so.”
Jason writes,
“Having lived the life of “Fred” (the poorer candidate) you are describing in this article, I have a huge problem with this idea. There are ways to address inequality, but encouraging classism and institutionalizing the bypass of corporate meritocracy has got to be one of the worst ideas I’ve heard in a long time.
It’s not a far step from this logic to the racist logic that affected my family 50 years ago. As a son of Jewish immigrants who lived in the south, it was openly discussed when I was growing up about how my father must have had all the advantages due to his connections, and therefore it was ok to pass him up or treat us differently. And god forbid you tell this idea to my father about your color coded classes – he’d think you were putting a gold star back on his chest.”
Nirav writes,
“How long before some politician decides to blame the economic ill of the country on those evil trust fund babies and put them in concentration camps and confiscate their ill gotten wealth?
Besides, by the third generation most inherited wealth is gone. Without work ethic and properly instilled values, family dynasties cannot last.”
Rich writes,
“Horrible idea. What you are also doing by accident is letting the world know who does not have a wealthy family. Whatever happened to privacy? What’s next? Make them wear pins on their jackets with the letters “W” for wealthy and “P” for poor? Do we give poorer people an automatic advantage for jobs?
The Nazis did something similar when they thought a certain class of people had a leg up on the rest. “
And if billionaire Venture Capitalist Tom Perkins read my Wealth Identification Program post, he might have commented in a similar way to the letter he wrote to the WSJ in response to attacks on the wealthy and his ex-wife, Danielle Steele (anybody bagging on an ex-love will get an earful from me as well!).
“Writing from the epicenter of progressive thought, San Francisco, I would call attention to the parallels of fascist Nazi Germany to its war on its “one percent,” namely its Jews, to the progressive war on the American one percent, namely the “rich.”
From the Occupy movement to the demonization of the rich embedded in virtually every word of our local newspaper, the San Francisco Chronicle, I perceive a rising tide of hatred of the successful one percent. There is outraged public reaction to the Google buses carrying technology workers from the city to the peninsula high-tech companies which employ them. We have outrage over the rising real-estate prices which these “techno geeks” can pay. We have, for example, libelous and cruel attacks in the Chronicle on our number-one celebrity, the author Danielle Steel, alleging that she is a “snob” despite the millions she has spent on our city's homeless and mentally ill over the past decades.
This is a very dangerous drift in our American thinking. Kristallnacht was unthinkable in 1930; is its descendant “progressive” radicalism unthinkable now?”
After massive backlash from the public against Tom Perkins, he went on TV to apologize for his remarks in the video below and in writing.
UNDERSTANDING WHY RICH IS EVIL
The anthropology behind the responses is very interesting since I've never equated identifying wealthy people in order to help people without similar advantages with Mr. Evil himself, Adolf Hitler.
In the case of trying to level the playing field, something I've talked about time and time again about the importance of helping others, there must be some deep-rooted concerns by life's lucky winners. Based on my retirement wealth poll with ~1,200 votes, over 20% of you are very lucky, with over $1 million in retirement savings, excluding the value of your house.
Loading ...Why Being Rich Is Considered Bad
* Earning wealth is admired. Inheriting wealth is not. The American dream is about starting with nothing, working hard, and making a better life for ourselves and our families. The American dream is not about inheriting big bucks so we can just sit back. But, given that over the past century, so many of our parents have fulfilled their American dreams, many children today are benefiting from their wealth accumulation through trust funds and inheritances.
* Guilt affliction is nature's way of making sure people give back. I've spoken to many people who were born rich, and they do seem to exhibit feelings of guilt when they constantly ask themselves, “why me?” As a result, you'll see plenty of lucky winners spend their lifetimes trying to give back. Even those who've become tremendously wealthy without the benefit of family money experience the same sort of guilt. One of the simple solutions is to simply commit to giving back while alive, and donating the vast majority of wealth to charities.
* We will never forget the atrocities of the world. From the Nanjing Massacre to the Second Sudanese War where 2.5 million people were killed, we will never forget the horrors we've committed against each other for the sake of wealth and power. It's unbelievable that the root cause for all conflict is man-made. Some families have profited enormously from past wars. For example, did you know that the Quandt family, who founded BMW had heavy Nazi ties? They employed 50,000 slave laborers during wartime, and the heir is a multi-billionaire. How about using some of the billions he inherited to help out the families his grandparents abused during the war?
* Projecting our feelings is inevitable. Conflict used to bum me out because I had few outlets to express my feelings. Nowadays, conflict is an inspiration for writing new articles on Financial Samurai because conflict creates emotion. The best ideas come from emotion. “No tears in the writer, no tears in the reader,” as one saying goes. My posts are equivalent to your comments, just in a longer, more structured format. Writing is a healthier way to heal and I welcome anybody reading to vent their feelings in the comment section. Use me as a punching bag before you do something really bad to yourself or to others.
ARGUING THE OTHER SIDE
After reading all the comments about how wealth is evil, a commenter, “SelfAware” provides a counter point,
Great blog post and great read through the comments. I agree Sam, that it’s fascinating to see the clear reaction to the identification process. I didn’t read nor feel the implication that the identification process was to be a penalty so much as simply allowing folks to have more information prior to making decisions.
Why would folks that already have more than enough monetarily, vehemently oppose if someone that didn’t have that position get a shot? A lot of these comments are pointing to things such as race or gender based discrimination and I don’t believe that wealth falls into that bracket. One can not choose their race or gender and for those that wish to say you don’t choose to receive a trust, well you can always simply refuse or donate the money from said trust if you feel that you don’t wish to be identified.
I feel you’ve touched a real nerve here Sam and I think the underlying issue here is that if you were to identify those that are rich, people would need to face their privilege. A lot of people don’t like the concept of acknowledging that they have an advantage when accomplishing something. The reality though is that this happens in so many things Dwight Howard has an advantage in basketball because he’s 7′ tall. Is it unfair that he’s so tall and athletic? Sure to the folks that aren’t and yes he had to work very hard to get to where he is but let’s not overlook the fact that he’s 7′ tall! It’s the same thing with trust funds, sure you could be the most hard working accountable and responsible person there is BUT if you have a huge amount of wealth sitting there waiting for you that is an advantage pure and simple.
As a matter of opinion I feel it’s so evident that’s true just by looking at these comments, if everyone here thought it wasn’t a big deal, this SUGGESTION that Sam has would have went over without so much as a whimper. But all of this backlash has me thinking yes people don’t want their advantage to receive scrutiny and they definitely don’t want that advantage to be counter balanced in anyway.
If you notice Sam didn’t say for that person to lose their money for it to be transferred, he merely suggested identifying folks that have money and folks here lost it. We want so many other folks identified for anything, Passports, Drivers License, Residential Status (citizen or foreign), etc… But when it’s suggested to identify wealthy folks oh heavens no we couldn’t bear to stand it!
With all that being said taking the idea on the merits your difficulty in implementing this would reside with the fact that generally folks in power are wealthy. They wouldn’t want a system that would adversely affect them or their progeny which would mean that this idea would die on the vine in Capital Hill and if they didn’t squash it the Corporations that sponsor all of the politicians would lobby it into it’s death bed. Let’s be clear in understanding that nothing stands in the way of wealth and power having their desires foisted onto the powerless. At least that’s this man’s opinion…
WEALTH PERCEPTIONS ARE CHANGING
I never met someone who openly told me they had a trust fund until I met my tenant. 15 years ago, nobody ever admitted they still lived at home with their parents after college, but now it's no big deal. It's actually quite smart in order to pay off student loans and save money.
For those of us who never had a trust fund or a massive inheritance, we should be careful to judge others who do. By judging, we're really just being jealous. It's not their fault they were born rich! At the same time, it's good to ask ourselves whether we'd be who we are today if we knew a pot of gold was already waiting at the end of the rainbow.
For those who were born rich, I think it's your duty to use your good fortune to help other people. If you're arrogant and do nothing to display your gratitude, people will logically hate you. And for those who weren't born rich, but were able to somehow get rich, then all the more reason to help others given you know how brutally hard it is to get ahead.
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I would be very interested to see a mathematical formula which calculates win money will run out when workers support non-workers i.e. welfare, disability, the dislocated etc, etc.
I’d like the idea, but why not creating some sort of a goodness idea for people and corporations, using the ID as a multiplier against there wealth!? A public wealth ID might get people to be more socialy responsible with there money but a goodness idea takes it to a next level!
150+ years ago. Cf. H.D. Thoreau’s Walden.
The reasons people dislike the rich come from a few places IMHO.
First, historically the rich through history often gain privilege beyond what most people have, aside from the “royal” idea where they literally could lord it over people, they get advantages like better schools, better opportunities, better networking connections, better life experiences, etc. that make their paths easier. Let’s be real, when Daddy drops big bucks on a politicians campaign, and then asks if Sonny can get a staffer job to earn some experience, it’s more likely to happen than some kid coming in with a recommendation from a professor.
Secondly, when you aren’t one of the rich, you are usually working for one. Decisions they make directly affect you with limited input on your side. You or someone you know are likely to have been fired because you “made” too much and likely had to train your replacement before they dumped you. You likely know someone who had their “pension” reformed or altered, possibly to class B or C shares of company stock or an unwieldy 401K in some buy back that the company off the hook, but means the fees are trashing any value and there is zero likelihood they would equate to a pension, yet somehow the top management got converted to A shares or a different fund, which aren’t subject to the same fees. You’ve likely seen them place their children/cousins/relatives in positions of authority or leapfrog someone who was counting on getting that job and was much better suited for it. So it’s easy to see how someone can get jaded with respect to the rich.
Finally is the idea of “earned” money. It just isn’t fair, is it, if someone just gets their money handed to them. Just like someone who wins a lottery makes people act like they didn’t earn the money, often inherited wealth can generate the same attitude. Most folks will respect Sam Walton and what he did to build Wal-mart, but they likely don’t respect his kids or the current corporate heads and what they do. I think there is a real reason for this though. Often people who built a company reach a point of saturation. After all, how many more “homes” or “cars” or whatever do they need. They also have a sense of pride in their business and are proud to have created jobs and hence are often generous with their employees and the community. Unfortunately they either die or sell, and then the “efficiency” folks come in and they often have zero ties to the community or the employees. They are looking to squeeze and increase market share and profit often repealing many of the generous policies and benefits the original owner put into the company. At that point the company may sink or swim, but the guys at the top are breaking promises made, gutting people, etc. to make the buck and earn their bonuses. So now you have plenty of folks feeling betrayed and crapped on by the “rich”.
So while I feel many folks strive to become well off or rich, there is an underlying resentment against folks who are sitting there while the bulk of the populace is feeling the pinch and they are getting richer and richer because new inventions and efficiency are eliminating jobs while increased business efficiency with fewer employees mean those who’ve invested (typically the better off) gain more value.
Stealth wealth is a secret advantage of the wealthy. Why do you want to take their element of surprise away from them? It’s like the guy in flip flops and ratty shorts is the one who can buy a CA property in cash but doesn’t get the upfront respect. The element of surprise is the best. I’m sure there will be ways to get around the system even if gov’t manages to pull this together, and those who create loopholes will be rewarded financially.
-Mike
I think the comparison to Adolf Hitler is silly, as you said.
I think a comparison to Vladimir Lenin and the Bolsheviks would be more appropriate. They did identify people with certain “privileges” and either subjugated them or murdered them. Having lists of forbidden individuals was certainly useful to them.
Yikes! That sounds terrible.
If people with privilege are vilified, why are there so many people who like to show off their privilege? Do they just not know better?
Don’t really like the public wealth identification program idea.
Lets say there are two peers both senior VP at a large company.
Senior VP 1 has a positive networth
Senior VP 2 has a negative networth
The public wealth identification program makes both VPs networth publically available. What do you think would happen to Senior VP 2?
I’m okay with a wealth identification program as long as it’s private with an option by the individual or family to make it public. Their would need to be some sort of incentive to making it public because most would just keep it private.
Additionally, knowing someone else’s networth probably has very little correlation to how much they are willing to give back via philanthropy.
I’m honestly not sure what would happen to Senior VP 2 as the decision is a holistic one, and one’s net worth based on luck is only one factor.
If you still have a negative net worth and you’re a Senior VP, then you’ve probably been mismanaging your money. That would be a net negative, but it’s only one of many variables to consider.
The Wealth ID program is LESS relevant for those in senior positions making big bucks.
FAFSA is a good example of this. If you come from a well to do family you’re screwed and pay full tuition. If you’re poor they give you a break. I come from an upper middle class household who were by no means rich. They felt I needed to do everything on my own and as such gave me nothing for school, never gave me a car but rather wanted me to work hard as they did. FAFSA disqualified me from a scholarship that would have helped cover my expenses but because the government felt my parents “could” and “should” contribute they took back the scholarship after I had won. My parents didn’t care and said I would have to figure it out myself all the same. So this system just hurts people who are trying to make it on their own. I know many parents help their children but I don’t get a thing from my family and have been disadvantaged by their income levels. So I am against this system as I have seen the discrimination first hand. My parents gave me a place to live, and food while I was 0-18 (you know what is required by law) and that’s about it. So despite you thinking I come from a wealthy family and have huge advantages I don’t. I think our family took 1 vacation in my entire life, and besides that I’ve had to work 10x harder being in a position of no help and in fact people saying I’m advantaged. I’m tired of it, it’s because of this mentallity it makes me want to flaunt every penny I own. Flaunt the patek’s, the AP, cars, house etc. it’s my way of showing society that no matter what they do to hurt me and disadvantage me I will succeed and push back. This is what happens when you create a society is not “fair” you upset a lot of people. If you want a fair society you need flat taxes, with emergency safety nets for the bottom but something where no one can be upset the others aren’t contributing their fair share. Not getting admittance to a school or job because of your wealth (high or low). But yet, people like you continue to push for this “fair” system. Life isn’t fair, and no matter what you do it will never be. Can you afford a few lobbyist for congress? Most can’t.
That being said I enjoy the majority of your writing but you continue to drive me to flaunt even more of what I have than I normally would. Maybe someone can see what I have and become as motivated as I was, that’s my hope. But it sickens me that ANYONE other than the BEST candidate should get a job or admittance into a university. If you worked for me, I don’t care how rich or poor you are, your color, your gender etc. just that you have a work ethic like me and are the best candidate for the job. That’s the principles you should promote, not hindering somes livelihoods to help out the poor. My parents were born into poverty with parents working 3 jobs, not caring if they came home, did drugs etc. they realized they didn’t want that and their position in life convinced them to go to school to become engineers and make a difference for themselves in the world. It’s hard for me to see your point of view when all you say is how we should make it easy for some and hard for others… You know like choosing the winners?
Another thing… China has stolen all of the us data on medical records shall we give them a directory to everyones wealth as well? Give the hackers and identity theft community a list of who to target? Stealth wealth is about safety, being able to have peace of mind yet you’re talking about everything against what you stand for.
Finally, 90% of millionaires each generation are self made. So i think our system is pretty good at allowing everyone the american dream still. Me, despite no advantages (though I was born into a middle class family) have been able to succeed. The true key to success is spend less than you make, and invest it. It’s not rocket science. But people want the new cars (buying on loans or overextending their paycheck), the big house etc. I have never purchased anything I couldn’t afford cash except for investing in real estate to leverage real estate cash flow. That’s what I attribute to my success. And it irritates me when people try to say I had a golden spoon because of my parents. The parents who intentially made it hard on me, followed by a school system that won’t give me scholarships due to my parents. The only time I found the system was ever truly fair was the workforce. I had to apply, show my hard work (resume, transcripts, recommendations etc), interview, connect with the group through skills I developed and then ultimately apply what I knew and work hard. The thought of someone damaging that system that allows all my hard work to go to waste is sickening for the person who just wants to overspend, doesn’t work as hard as me or as hard as someone should. Do not kill the American work ethic with such a tier system too. We are the land of opportunity where all can flourish.
You are still entitled to rent to the non trust funder all you want, it is a free world after all. But I don’t resent those who have more than me, it just motivates me to catch up with them. Learn from them (or their parents if that’s who gave them the money). You see a broken a system and all I see are learning opportunities to continue to grow in this great nation.
Well said. Sam most of the ideas on this site are great this one is not. At least you have readers who push back instead of following every word in cult like fashion. Coming from nothing and building what I have is an advantage of sorts because I know that I could do it again if I had to.
Howdy Jon!
I like you strangely annoyed but positive attitude about the system!
If you make less than $125,000 or $150,000, most private schools will pay all your tuition. I think that’s pretty damn good, and if I was a parent on that income cusp, it would be logical to try and earn less given tuition is $50,000+ a year AFTER TAX!
I had a similar issue. My parents were middle class, but made a little too much for me to gain any financial assistance. Solution? I went to William & Mary, and instate school that cost under $3,000 a year in tuition instead of going to a private school that cost $24,000 at the time. And you know what? I’m happy for that decision to reduce our family’s financial burden, and attend a fantastic college.
It’s interesting you have a desire to flaunt your wealth more than ever to show and inspire. Could the situation be analogous to an unpopular kid in high school who pulls up in a Ferrari for the reunion with a hot partner?
Work ethic is strong in America as a whole imo. We’ve just got it so good nowadays with our infrastructure and tidal wave of inheritance coming, that some people rational think, “Why work so hard?”
Another idea to divide the country. How about a post on uniting our country for a change.
With understanding, comes more unity.
Any proposals on how to create a more unified country in a comment or in a guest post? I understand it’s much easier to just tell other people what to do, but I challenge you to share your perspectives as well!
It’s already on my own site (wish I would’ve sent for a guest post), but the only post I ever wrote about politics said two main things:
1. We’re all far more alike than we’d ever care to admit. Our views, even in opposing parties, are typically and generally similar. However, our belief that our two parties are diametrically opposed causes unnecessary rifts and confrontations. I give an example of a recent Senate race where the “on the issues” page of two opposing candidates in the same election said nearly the same things–you’ll find this all the time.
2. Understanding and openness is key to any debate. Understand that nobody is right more than half the time (including one’s self). Challenging your own, or your own party’s, thinking is vital to having objectivity. Look no further than the latest Pacific trade pact agreement. In general, this allows the executive branch to fast-track (send for up/down vote) trade deals with Asian partners through congress. This somewhat strengthens the executive branch, but holds checks in place. Any expansion of free trade is a positive for any economy–almost as an economic principle.
Hopefully this does not start a heated political discussion, as no political discussion should ever be heated. We’re all in this together! :)
Eric
I believe the whole “wealth = evil” message is an attempt to vilify a group of people (“the wealthy”) so as reduce any defense of this group when raising their taxes or creating new taxes that apply to this group. After all, who could possibly be against taking more money away from people who are evil (and giving it to the virtuous poor)? Usually accompanying this first message is a second message that it is OK to take this group’s money because they didn’t earn it anyway. The wealthy are painted as trust fund kids or people who spend their days lounging on their yachts without ever doing any work.
My issue is there are many wealthy people who earned their wealth through a life time of hard work, sacrifice, and living beneath their means (this includes me). These same people have paid and continue to pay the taxes that make up much of the funding of the federal and state governments that provide, among other things, the network of social programs that assist the poor and disadvantaged. I doubt many of us (“the wealthy”) are looking for any thanks for paying most of the cost but is it too much to ask that we not be painted as villains just because we have money?
It would be cool to get an occassional “thank you for paying more than your share of income in taxes” now wouldn’t it? Maybe a free carpool lane sticker as a reward.
Alas, you are evil. Better go hide :)
FS,
I’m thinking that you’re becoming a victim of your surroundings on this one. Within the progressive movement and all its offshoots, yes, being rich is being evil. This mantra is obviously getting a lot of play in politics from Hillary talking about her “dead broke White House days,” to Rubio literally being broke.
This mentality is perpetuated by the fact that most major publications are highly slanted in this progressive fashion–the appeal to readers is to reinforce thoughts they already have.
However, if pull yourself away from the San Fran ground zero of socialism (oops, I meant the progressive movement), you’ll find that most Americans truly admire (even if not publicly) those that created wealth, jobs, and innovation.
If I were to simply piggy-back on your point, then I’d expand on it saying how ludicrous it is that business tycoons and innovators who got rich by employing people and making lives better for customers are so derided, but sports figures who employ virtually nobody and are generally terrible role models are sanctified.
Thanks for posting.
Eric
Was Hilary really dead broke during the White House days? I saw some stuff… I mean, they made…. $400,000 a year as the first couple, or at least $250,000… and had their housing and all travel costs paid for.
It is SMART campaigning, and I believe she will win 2016. But can people really buy she was broke? People can’t be that stupid.
Being rich is only evil when that wealth is used to hurt the middle class for their own benefit.
For example: right to work laws, paying off politicians with political contributions in order to get tax $$$ that would otherwise be used for legitimate purposes to help out society (a.k.a. Lobbying, a.k.a. legalized corruption), etc.
I am truly amazed how massive and powerful lobbyist groups are. I wonder why there isn’t a bigger uproar about this practice? Can’t politicians think for themselves without promises of funding or threats of pulled funding?
Donald Trump is rich enough to not be influenced by lobbyist perhaps we need individuals like him? I’d prefer a system with 0 lobbyist but unless the folk are so rich they can’t be bought what can we do?
Agree about the lobbyist Sam! When will there be a change in the tax rates for “society’s lottery winners” as Obama calls them- the hedge fund managers, venture capitalist, etc. Why are they pay a lower capital gains tax when the average business owner is being taxed at 30-50% and trying to build a business with actual jobs!?!?!
It’s so frustrating to see them in our neighborhood driving around in their Masserati’s when we know they are getting a “bonus” by not paying the same taxes we are!!!
It’s always interesting when Warren Buffet says he pays less taxes than his secretary, yet isn’t willing to pay an equal tax rate. At least he plans to give all his money away!
Do as I say, not as I do!
So much for stealth wealth…?
This program would be the Government-run Stealth Wealth Interceptor Buster. At the end of the day, we must recognize that the government knows all and controls all. We can only hide for so long!
I think you have the wrong solution to your problem. The problem you’ve stated is that people who don’t inherit wealth are at a disadvantage and that those who do inherit are more likely to lose motivation, coast, and have things too easy.
Your wealth ID proposal works at the edge of this problem, but mostly just generates a lot of social friction and ill feelings between classes. Instead of whining like everyone else, I’ll propose a different approach. What if we outlaw all inheritance? In a given lifetime, you can accumulate as much cash as you can earn… but everybody starts from zero. This makes for a society in which there is a much tighter connection between performance and reward. Some people will still be advantaged because their parents will educate them, etc., but it tightens the inequality gap which is the whole point.
I’m not saying this is a good idea, but I think it is a more direct solution to the issue of an unfair gap in starting point in our capitalist system.
A 100% tax on any money left over once you die is something my friend at the Carnegie Foundation in NYC proposed to me when he was here visiting the other month.
It would be FASCINATING to see how spending and saving behaviors would change, if this were so. What do you think would happen?
I think the most likely changes include:
-Savings rates in the US will remain unchanged because people are already living full throttle :)
-People who have accumulated means will live like ballers as they get older
-People who have accumulated means will be much more active in putting smaller amounts of money towards causes… not just charities, but funding things (research, infrastructure) they think will benefit humanity or similar. People who don’t like charity will be forced to consider positive outlets for their money.
-The traditional upper classes will become more frugal but ambitious early in life, appreciating the value of a dollar earned
-Taxes will decrease and government spending will significantly increase with all the extra revenue
Actually, an interesting result of this system is that the government could defer all taxes until after you die.
I’d think it would be pretty popular with the general public to stop paying income, sales, and real estate taxes now and just let the government have it once you’re dead and can’t take it with you!
The general contemplation really is a fascinating view into concepts that are typically left unturned.
I personally think you’re incorrect that taxes would decrease. From my personal perspective, once the government finds a source of revenue they will never relinquish it and will simply spend more. As it stands now, we have significant unfunded liabilities. This is a creation of both major political parties. Our social security system is heading for entire insolvency and I assume that socialized healthcare will create similar liabilities in time.
I really liked your idea of deferring taxes until death. That idea would be a festival of sociological, economic and political fascination and study. But, it could never happen because government cash flow would dry up during an interim shift. And, of course, we do have the estate tax at present (double taxation?).
If we’re honest with ourselves, we know that there are all degrees of, and perceived levels of, inherited wealth. If someone receives $3,000/m from inheritance it doesn’t mean that they’re flying around in Gulfstreams and never working. Of course, $3,000/m can mean jubilance to others.
I could be wrong here, but it’s my perception that the root of this deep thinking on Sam’s end is most likely the wealth gap which has widened over the last several decades. This is something which I think most thoughtful people would agree needs to change. In fact, I think it’s a top priority in the minds of a small group. In fact, it should likely be one of the larger topics of concern in the national political landscape. My personal feeling on the matter is that it will correct itself in time. If not, I am willing to be a socialist and say that the government may need to intervene. After all, tax rates are historically low.
The government would lose a boatload of tax revenue in this situation, as people would find away to spend everything and shirk on their duties.
One of the smartest thing the government has done is withhold taxes all throughout the year, and often times, charge more, hence the tax refunds. If they didn’t, the gov’t would go broke due to our irresponsibility!
Would this mean ending race based affirmative action and replacing it with wealth based? If so I would be open to the idea. This would ensure that the really disadvantaged have a shot rather than making broad assumptions using race as our current policies do.
There’s a lot of debate about race and college admissions currently. Harvard says they have a holistic approach to admitting students, while one independent study by a non-Asian organization and a coalition of Asian students say the score requirements are just too wide amongst races. Here’s an NPR article about the issue.
It does seem off to admit with different standards based on race, especially if that person came from a wealthy family already. Someone told me when I was young, “You’re just going to have to work twice as hard to get get half as much.” I just shrugged it off at the time, but I took his advice to heart when I became an adult.
Helping someone who is poor sounds much better than helping someone who is of a certain race. I wonder who would disagree with this belief, and the reasons why.
Related: Does Income Inequality Matter As Much If There Is Social Equality?
The NPR article was insightful. Thanks for the link.
I see some virtue in wealth identification. There is an idea that unrestricted individualism breeds competition which leads to strong societies (ie. Libertarianism). The problem with this thought is that it doesn’t address generational wealth which causes an imbalance. It’s like watching a football game where one team starts with 21 points. The winning team will be less hungry to win. In addition, the team that always loses wants to change the game. Hence the recent popularity for Socialist/Collectivist movements.
In our system there have been a series of political changes to level the playing field. One is the breakup of monopolies. Another is Civil Rights legislation. As I pointed out, affirmative action programs based on race are limited in their effectiveness because of broad assumptions.
If we want a fully competitive society than perhaps it makes sense to identify those who start with more and place social pressure on them to achieve more.
We are definitely going down a slippery slope, with the notion of inventing yet another way of identifying or classifying people. I know that we have always had different classes and group in cultures for as long as we have been people on this earth. The worst thing we can do is have the government getting involved which will inevitably lead to a new program of wealth distribution!
I for one am not one who inherited wealth and had to build my own. I think it is up to every individual to decide how they use their wealth, for either good or selfish reasons. The whole time I am reading your post I kept saying to myself….. “Stealth Wealth, Stealth Wealth, Stealth Wealth“!
I think our culture is not open enough today that people can accept people for who they are, regardless if they are wealthy due to inherited or self-made wealth. One day maybe…..
I agree that wealth perceptions are changing. Your tenant openly saying he has a trust fund and people openly talking about living with their parents after college are good examples. What’s also interesting is the growing, albeit slowly, movement of more transparency in compensation. More job listings are starting to publicize upfront what the salary ranges are and companies like Buffer are publicly stating exactly who in the company makes what.
I think money makes a lot of people very uncomfortable which is so many men and women are super sensitive about their own wealth, or lack thereof, and how others perceive them because of it. The housing crisis certainly caused many people to assume all people with money are evil. That was a tough time because so many people lost their jobs and felt hopeless for so long.
I’ve met a lot of very generous people over the years, ranging from poor all the way up to multi-millionaires. Money shouldn’t define who we are as people. But I do think it’s good to help others any way we can, regardless of how much or little money we have, through various ways such as donations, time, coaching, listening, etc.