What is rich? To some people, being rich means having more than your neighbor. By world standards, pretty much every one living in the developed world is rich. About 80% of the people in the world live on less than $10 a day.
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HEar George & Mary-Lynn discuss today's topic on The BIGG Success Show podcast! Click the player to listen: Play Now | Play in Popup | Download
HEar George & Mary-Lynn discuss today's topic on The BIGG Success Show podcast! Click the player to listen: Play Now | Play in Popup | Download___
Based on income
Washington has been trying to define rich, too. By one standard, a single person in the United States is rich if he or she makes more than $200,000 a year. By that same standard, a married couple is rich if their average income is more than $125,000 a year.
So that’s $250,000 for the couple. Isn’t it interesting that our tax laws define rich at different levels, depending on whether you’re single or married?
Historical perspective
We wanted some historical perspective so we looked back at the very first income tax schedule that Congress passed back in 1913. Back then, you had to make over $10 million a year, in today’s dollars, to be rich.
Based on net worth
So far, we’ve defined rich by income. But there’s another definition of rich coming out of the discussion in Washington. It’s based on net worth.
This one has to do with estate taxes or what some people like to call death taxes. Estates of $5 million or more are considered rich by some. Others draw the line at $3.5 million.
Why tax the rich more?
There are a number of reasons cited for increasing taxes on the upper-class:
1. They have seen real income increases while most people haven’t
2. It’s only fair that they should pay more
3. They can afford it
4. They won’t spend it
We want to focus on the last reason – they won’t spend it. To which we say:
Great! Let the rich suck in money like a vacuum cleaner. If we’re lucky, they won’t spend it. If they do, that’s fine too, but it’s better if they don’t.
Why? Think about their alternatives if they don’t spend it:
They could burn it
If this is what they do with it, we should raise their taxes. We should also do an intervention. They obviously need counseling because no reasonably rational human being would act this way.
They could invest it
Aha! Now we’re on to something.
They may invest it in stocks or bonds. More demand creates more wealth for all investors, including all of those people who hold these assets in their 401(k) or other retirement account.
They may invest in CDs at the bank. Then the bank has more money to loan out to small businesses. More supply given the same demand means lower capital costs for small business owners.
If they’re rich enough, they may put it into “alternative investments”. They may place it in the trust of a venture capitalist. The venture capitalist, then, has more money to invest in entrepreneurial ventures.
Where do jobs come from? Study after study has shown it comes from entrepreneurially minded people. But, in many cases, they can’t get their good idea off the ground without capital.
The rich aren’t the pariahs of our society. By investing their money, they help entrepreneurs prosper. We hope more people get rich, including you if that’s part of your definition of BIGG success.
How do you define rich?
Direct link to The Bigg Success Show audio file | podcast:
http://traffic.libsyn.com/biggsuccess/00654-121410.mp3
(Image in today's post by srbichara)
I never thought of it like this. Even though I don’t have much money, I define myself as being rich – rich in love, happiness, family. Money is important, but I disagree that they bring happiness.
Being rich is much like having BIGG Success…it’s how YOU define it! Sounds like you are rich indeed, Anne. Thanks for sharing your comment.
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