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Why Don’t We Love The Rich?

By John Dietz - Email Editor

Date : April 14, 2009

Dear Valued Reader,

We often speak about the subject of wealth preservation. Wealth preservation is about much more than getting rich or acquiring assets. It is an intelligent, systematic, coordinated approach to develop, maintain and keep prosperity by using Asset Protection and estate planning techniques. There has never been a more important time for this field of practice since there is a heightened discrimination against “the rich.”

The estates referred to in the bill by Ms. Lincoln and Mr. Kyl are the top 0.2 percent of estates. The amendment would increase the level at which the estate tax kicks in to $10 million. It would also lower the top estate-tax rate to 35 percent from 45 percent.

For the record, the bill mentions that from this point forward the tax referred to should be considered an “estate” tax that affects estates and should not be considered a “death” tax that affects everyone.

The bill was coined by many as fiscally irresponsible and especially so in the economic times headed toward soaring deficits. The explanations featured in the realm of journalism were in the spirit of outrage. It did not make sense to give the rich a break on taxes. Most reporting claimed that people could easily fathom that hard working plumbers, electricians, teachers and other working professions should get a break on taxation.

However, the Obama budget already takes care of them, because it retains the existing law, which imposes the estate tax only on couples with property worth more than $7 million, or individuals with property worth more than $3.5 million. That means 99.8 percent of estates will never pay a penny of estate tax.

The Senate is weighing whether the wealthiest of wealthy Americans should get a tax break worth some $250 billion over 10 years. Senate Finance Committee Chairman Max Baucus (D-Mont.) said, “Why in the world should these folks get more of a tax cut?”

Aside from politics, why don’t we love the rich?

John D. Rockefeller reached a peak wealth of around $1.5 billion ($218.3 billion in today’s dollars) at age 74. He worked very hard and gave an enormous amount of money to charity. Rockefeller started in a grocery store.

Andrew Carnegie immigrated to Pittsburgh from Scotland and went to work at 13 as the bobbin boy in the textile mile. He worked 12 hours a day, 6 days a week for two dollars. He reached peak wealth $298.3 billion (today’s dollars) at 68 and also gave enormous amounts of money to charity.

Henry Ford reached a peak wealth of $188.1 billion (today’s dollars) at age 57 and started as a farmer.

Andrew Mellon reached peak wealth of $188.8 billion (today’s dollars) at age 80 and worked in the lumber company that he started ten years previous to taking over his father’s bank.

Bill Gates, one of the world’s greatest philanthropists, commented on being the world’s richest man in an interview with Donnie Deutsch on CNN in 2006 after he reached a peak of $90 billion.

"I wish I wasn't. There is nothing good that comes out of that," said Gates, whose personal fortune has sunk by billions since last week when the software giant disappointed investors by saying new investments would crimp earnings.

And, how can you not like a guy whose favorite meal is a cheeseburger and a Cherry Coke; who invested in Sears and Dairy Queen and still lives in the house that he bought in 1958? If you did not know these things about Warren Buffet, understand this, Berkshire Hathaway Inc. slumped 38 percent and Warren Buffet’s direct income is directly tied to his company. His net worth was $55.9 billion in 2008.

Here is one more pitch for the rich and the charitable giving hearts of America. Warren Buffet gave $36.1 billion to the Bill and Melinda Gates Foundation to eradicate hepatitis B, AIDS and malaria around the world in what is known to be the largest gift ever. That was in 2008 and now where will 2009 and 2010 lead us?

I am not sure I know the answer to why we do not love our greatest philanthropists and those who may follow their footsteps. At the risk of being redundant, we cannot let stories like Bernie Madoff mar our perspective on the wealthy; we should use these lessons to increase our perception and wisdom. Our thoughts about the rich are focused on AIG and Wall Street, but our thoughts should reach toward a society whose goals promote wealth preservation. I would hate to conclude that we are developing jealousy in place of success, but then again the rage of litigation is certainly against those with “deep pockets.”

This entire scenario exemplifies why you should choose secure options for your estate rather then to expose your assets to the trends in politics. Rich is not about income; the proper and fair term is “wealth” and we are entitled to accumulate it and protect it.

Often the wealthy work just as long and hard, and their journeys are not always the glamorous situations we envision. The successful learn to employ the strategies of wealth preservation and hold steadfast to their beliefs even on a rocky road. We too must utilize this conception for our protection and preservation.

Until next time,

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