December 2010 | Bigg Success

money 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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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:
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(Image in today's post by srbichara)

bathroom stalls Eddie was on the phone when Eve walked into his office. She put a note in front of him which said: Dinner meeting. He hurriedly wrapped up the phone call. “Thanks, Eve,” he said, as she grabbed the sandwich wrapper and the empty soda that were still on his desk from lunch.

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She asked, “Do you need anything else from me today?”

“No, Eve,” Eddie responded, “Get out of here. Have a good weekend.”

Where did the day go, Eddie asked himself as he tossed some files in his briefcase. He had arrived before dawn. The day was a blur of activity. “Life as an entrepreneur,” he said to no one but himself.

He grabbed his briefcase and walked quickly to his car. He jumped into his car and sped off, hoping he would make his meeting on time. This meeting was with his best client.

As he traveled down the freeway, he thought about all the things he needed to get done this weekend. Then, another thought came crashing into his head.

His son, Troy, was in the Christmas play at their church tonight. Well, at his wife’s church. Eddie hadn’t been there since he started his business.

He texted Troy to wish him well. He remembered the look of disappointment on the little boy’s face when he heard that his daddy wouldn’t be there.

I’ll make it up to him at Christmas, he thought. I know he won’t be disappointed by the gift we got him. Eddie’s wife, Joyce, had taken Troy to see Santa. She had listened as he told Santa what he wanted for Christmas. Eddie couldn’t remember what it was, but he knew Joyce had gotten just what he wanted.

It reminded him – Eve had picked up Joyce’s gift earlier that day. He had stuck it in his pocket. It was a rare gem, mounted in a ring. Many people had never even heard of it.

Yes, this was going to be a special Christmas, he said to himself with a proud smile. Joyce will love it. She better, it set me back enough!

He arrived at the restaurant. The host led him to a booth in the back, where his client, Simon, was already seated.

“Good evening,” he said, as he extended his hand to shake Simon’s.

“You’re late,” Simon responded, as Eddie sat down.

“Traffic.”

“I’m not surprised,” Simon said, “It seems only fitting, given the service we’ve been getting lately from your business.”

So much for small talk, Eddie thought.

Simon continued, “That’s why I wanted to meet with you tonight.”

Eddie listened as Simon talked on and on about the problems his company was experiencing with Eddie’s firm. The waiter came to the table. They waved him off.

Simon kept talking. He finally concluded, “If we can’t get these problems fixed, we’re going to have to take our business elsewhere.”

Eddie leaned back in his seat and took a deep breath. “Boy,” he said as he leaned forward, “that’s an earful. Let’s order dinner and then we can address these issues, one at a time.”

They signaled the waiter to come back to their table. Once they had ordered, Eddie felt a sense of discomfort. He quickly excused himself and ran to the bathroom.

He opened the door and saw a sign: Please seat yourself. He rushed into the first stall, put the seat down and started doing his business.

He needed a moment to think. He remembered the sign and chuckled. He relaxed. He pulled Joyce’s ring with the rare gem out of his pocket.

He thought about Joyce. He loved her so much. Yet he never seemed to have time for her. She understood. He was building something for their family. She was a rare gem.

He thought about Troy. He’s growing up right before my eyes and I’m missing it all. He’s a rare gem.

As he sat there thinking, he leaned back on the seat. As he did, he bumped the toilet paper dispenser with his hand – the hand with the ring in it.

The ring with the rare gem fell into the toilet. He jumped up, not wanting to think about what he might have to do to get the ring back. He turned sideways. As he did, the toilet automatically flushed.

Down the toilet went the evidence of his dirty deed. Down the toilet went the ring with the rare gem. All that was left was clear water.

He didn’t know what to do. Then he got a new sense of resolve.

He went back out to Simon and said, “Simon, I’ve heard everything you said tonight. I want you to know I take it seriously. I will make it right for you. But right now, I have a little boy who’s getting ready to go on stage at our church. You’re a rare gem in my mind, Simon. I treasure your business. But there’s nothing we can talk about tonight that’s more important than seeing my son in this play. I’ll be in touch on Monday.”

With that he ran out and hopped into his car. As he drove to the church, he reflected some more on his life. He had been so focused on growing his business, on making something of himself. But it was costing him: he was in danger of losing the most important thing in his life – his relationships.

He would not let that happen. He would not flush BIGG success down the toilet!

Direct link to The Bigg Success Show audio file | podcast:
http://traffic.libsyn.com/biggsuccess/00653-121010.mp3