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Who Rules America: An Investment Manager's View on the Top 1%

sociology.ucsc.edu

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Re: Who Rules America: An Investment Manager's View on the Top 1%

#111

Post by sigil »

Common fallacy: personifying "the top N%" as if it were some mostly static set of people -- hard for anyone else to break in, rare that anyone falls out once they make it in. The old class system anxiety.

In reality, the further you get towards the top, the harder it gets to stay there:

The composition of the very top income groups changed dramatically over time. Less than half (39 percent or 42 percent depending on the measure) of those in the top 1 percent in 1996 were still in the top 1 percent in 2005. Less than one-fourth of the individuals in the top 1/100th percent in 1996 remained in that group in 2005. [1]

Here's another study with similar results across all income brackets. [2] None of the brackets are very stable; people move around quite a bit.

Or, we could just sit around reading collections of personal anecdotes. Seriously, why is this article on the front page?

[1] http://www.entrepreneur.com/tradejournals/article/206340741....

[2] http://books.google.com/books?id=lhiIyq8ylUMC&lpg=PA146&...

Re: Who Rules America: An Investment Manager's View on the Top 1%

#112

Post by dodo53 »

>One of our clients, net worth in the $60M range, built a small company and was acquired with stock from a multi-national. Stock is often called a "paper" asset.

This seems odd (also the example of programmer with stock options later) - so is he saying that because the payment is in equity you're in the financial sector / not producing real value? I'd read that last line as being disparaging about stock because it's "paper". The only example with any bite is the investment banker admitting they think they add no value.

Re: Who Rules America: An Investment Manager's View on the Top 1%

#113

Post by namdnay »

daemin wrote: post #101
potatolicious wrote: post #42

Earlier quoted context omitted.

Echoing what rayiner said - where are the rich going to go? Europe is less friendly to the rich - extremely so in the most pleasant of places. China? India? Neither are very pleasant places, and even with truckloads of cash has a hard time competing with the quality of life enjoyed in the US even under onerous taxation. I think you're not giving enough credit to the American quality of life - it's why my family immig…

Monaco does not have an income tax and I believe it's located in Europe, in a rather nice part of Europe.

Monaco is quite nice, if you're willing to live in a flat. If you want a nice garden, maybe a few trees and a pool, you can pretty much forget it.

Re: Who Rules America: An Investment Manager's View on the Top 1%

#114

Post by watchandwait »

trunnell wrote: post #104
Astrohacker wrote: post #43

It makes perfect sense that most people in the top 0.1% are associated with the financial and banking industries if you know how banks work. Banks, and the Federal Reserve, create new money. They give this money to themselves, and then loan it out. This is as bad as, and effectively equivalent to, counterfeiting. Creating new money, i.e. counterfeiting, i.e. inflation, does not create new wealth. It merely changes th…

This misses the point of the article, which is that many in the top 0.1% got there from some form of self-dealing. His argument is that they are profiting from their position in the economy rather than from the value they add. And by position, he doesn't mean nearness to the money press. I think he means nearness to the center of wealth and power, which at the moment happens to be the financial industry. > This is wh…

The self-dealing by the banks since 2008 has been almost wholly underwritten by the Fed and the Treasury. Beyond TARP there are myriad guarantees, lending programs, and regulatory exemptions, all designed to provide the banks with greater profit and allowing them to offload risk, usually to the Fed or the taxpayer. Indeed, if you look closely, much of the "profit" in the banking system today is coming from banks borrowing at Fed subsidized rates and lending that money back to the U.S. government.

Re: Who Rules America: An Investment Manager's View on the Top 1%

#115

Post by _delirium »

philiphodgen wrote: post #61
lionhearted wrote: post #35

Earlier quoted context omitted.

Let's think about secondary effects. What percent of very wealthy Americans do you think would renounce their citizenship based on this? How much less investment capital would there be in the USA based on that? Note: Not asking for a value judgment ("good riddance if they do!" - not productive). Just your estimate as to what percent of wealthy Americans would give up their citizenship and how much less investment cap…

For those of you responding skeptically to Lionhearted's question, I'm in the business of helping these people exit the United States. At any given point I have four or five of these cases going. They go everywhere. Their money goes with them.

The total number for 2009 was 743, though, which is pretty small peanuts by the scale of the U.S. economy. It's not even large as a proportion of very-rich people.

Re: Who Rules America: An Investment Manager's View on the Top 1%

#116

Post by Klinky »

sekou wrote: post #99

If there is a reluctance among the very wealthy to pay taxes, I'd guess that they don't trust a government that they believe to be inefficient, and that they see no benefit in paying taxes for themselves or their businesses. It seems like in order to get into that top .5 percent, you'd usually have to have a certain kind of perspective about reality, and to change the mindset of someone who takes every possible actio…

I think most of the reason you can't trust the government is because these people are pulling the strings of the government. When you have a political structure where money means everything, money buys power. These people don't pay taxes because they have built the system so they don't have to. It's not that they don't trust the .gov, they essentially are the .gov.

Re: Who Rules America: An Investment Manager's View on the Top 1%

#117

Post by dharma1 »

yummyfajitas wrote: post #33
wisty wrote: post #26

Earlier quoted context omitted.

But typically, they are working there, not setting up a virtual office. If these super rich are working in the US, they should pay tax. If they are not working, why don't they deserve to be taxed?

The super rich working in the US do pay tax on their income. You seem to be conflating many separate issues, so let me explain in detail how it works. Sergei Brin pays taxes on his income to the US. Google Ireland doesn't pay taxes to the US on income earned in Ireland until they transfer the money to the US. (They do, however, pay taxes to Ireland.) A guy working at a diner in Ireland will, as far as I know, never p…

Google UK also pays most of it taxes to Ireland, despite the revenue being from the UK. Wonder if that has anything to do with Ireland having lower taxes?

http://www.bloomberg.com/news/2010-10-21/google-2-4-rate-sho...

They call it "transfer pricing" but really it's tax avoidance, and should be illegal.

Re: Who Rules America: An Investment Manager's View on the Top 1%

#118

Post by jules »

webXL wrote: post #93
Astrohacker wrote: post #84

Earlier quoted context omitted.

There's no reason to create new money[1]. As I argued in my post, all inflation can do is change the distribution of the purchasing power of the money... not create new wealth. But the market already handles the distribution or purchasing power just fine through normal market forces. Good businesses get more purchasing power and grow. Bad businesses lose purchasing power until they collapse. The only reason to inflat…

Right, new dollars have to enter the economy somewhere, and the purchasing power is increased at those points of entry, decreased everywhere else by an proportional amount. I'm all for bitcoin but the powers at be will find a way to stop it if it catches on. But the cat is out of the bag. I just can't see the dollar standing up to all the benefits a technology like bitcoin affords.

What he's saying is that new dollars don't have to enter the economy. If you remove one penny and inject 100 penny pennies, you've only split up the penny, nothing else. With electronic banking this doesn't even have to be anything, as you can just work with fractional dollars (yes I know current software doesn't work like that, but it could).

Re: Who Rules America: An Investment Manager's View on the Top 1%

#119

Post by cellularmitosis »

jwhitlark wrote: post #46
lionhearted wrote: post #35

Earlier quoted context omitted.

Let's think about secondary effects. What percent of very wealthy Americans do you think would renounce their citizenship based on this? How much less investment capital would there be in the USA based on that? Note: Not asking for a value judgment ("good riddance if they do!" - not productive). Just your estimate as to what percent of wealthy Americans would give up their citizenship and how much less investment cap…

Renouncing your citizenship for tax reasons triggers secondary tax laws that offset any benefits. (It's been a few years since I reviewed any tax law, but I've not heard of any changes in this area.)

according to Neil Strauss in "Emergency", recently changes in law require you to pay some taxes up to 10 years after renouncing citizenship.
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