Are You the 1% or Who Are They?
The below article was written by Gary Halbert. Gary D. Halbert is the president and
chairman of Profutures, Inc. Subscription rates for Forecasts & Trends is $197 for 12
issues and may be obtained by visiting his website at www.profutures.com.
Given the large response to a previous article that focused on members of Congress and
how they fare so much better than the rest of us financially speaking, I did some digging
to discover some fascinating information about the so-called Top 1%. The question is
who are those top 1% of wealthiest Americans we’re all supposed to despise?
If you listen to President Obama, the Occupy Wall Street protesters and much of the
media, most of the wealthiest 1% are either trust-fund babies who inherited their
money, or greedy bankers and hedge-fund managers. Certainly, they haven’t worked
especially hard, if at all, for their money, critics say.
While the recession has thrown millions of Americans out of work, the Top 1% have
been getting even richer. Worse, they don’t even pay their fair share in taxes, according
to Obama and the critics. Most millionaires and billionaires “ as Warren Buffet claims “
are paying a lower tax rate than their secretaries, the critics say. But this is not true as I
will explain below.
In reality, each of these stereotypes is largely misleading. Sure, there are some
undeserving bad apples among America’s Top 1%, but there are some bad apples in
every demographic group. Consider this: Roughly 80% of millionaires in America are the
first generation of their family to be rich according to the Cato Institute. They didn’t
inherit their wealth; they earned it. For the most part, the wealthy have worked hard for
their money. New York University sociologist Dalton Conley says that higher-income
folks work more hours than lower-wage earners do, based on several studies.
So who are the Top 1%? According to a recent survey of the Top 1% of wealthiest
Americans, less than 14% were involved in banking or finance (including hedge fund
managers). Roughly a third were entrepreneurs or managers of non-financial businesses.
Nearly 16% were doctors or other medical professionals. Lawyers made up slightly more
than 8%, and engineers, scientists and computer professionals another 6.6%. Sports and
entertainment figures in the Top 1% composed almost 2%.
The career categories noted above alone represent almost 80% of the Top 1%. And there
are members of the Top 1% in other demanding career fields. So much for the notion that
most of the Top 1% are trust fund babies, bankers or hedge fund managers!
Much attention has been paid recently to a Congressional Budget Office study that
showed incomes for the Top 1% rose far faster from 1980 until 2007 than for the rest of
us. Yet because so much of their income is held in investments, the recession and the bear
market have hit the rich especially hard. The nonpartisan Tax Foundation has found that
since 2007, there has been a 39% decline in the number of American millionaires.
The number of super-rich “ those earning over $10 million a year “ has plunged by
55% since 2007. In 2008, the Top 1% earned 20% of all income in this country, but by
2010, that number declined to 16%. As for not paying their fair share, the Top 1% pays
36.7% of all federal income taxes. Because they earn just 16% of all income, that
certainly seems like more than a fair share.
Maybe Warren Buffett is paying a lower tax rate than his secretary, as he claims. But the
comparison is misleading because Buffett’s income comes mostly from capital gains,
which were already taxed at their origin through the corporate-income tax, and are
currently taxed at a rate of 15% at the individual level. Moreover, the Buffetts of the
world are clearly an exception. Overall, the rich pay an effective tax rate (after all
deductions and exemptions) of roughly 24%. For all taxpayers as a group, the average
effective tax rate is only about 11%.
Beyond taxes, the rich also pay in terms of private charity. Households with more than $1
million in income donated more than $150 billion to charity in 2010, roughly half of all
US charitable donations. Greedy? It hardly seems so.
And let us not forget the fact that the rich provide the investment capital that funds
ventures, creates jobs and spurs innovation. The money that the rich save and invest is a
big part of the money that companies use to start or expand businesses, buy machinery
and other physical capital and hire workers.
It has become fashionable to ridicule the idea of the rich as job creators, but if the rich
don’t create jobs, who will? How many workers have been hired recently by the poor?
No doubt dishonest or unscrupulous businessmen have gotten rich by taking advantage of
others. No doubt there are trust fund babies, some of which have never worked or worked
very little. But the vast majority of the Top 1% worked hard and in the process created
jobs for millions of Americans.
Remember this the next time you hear President Obama criticize the wealthy for not
paying their fair share. And feel free to share the above with others.
[Dan’s Comment: Ask yourself how many poor folks provide housing for others? This
1% thing is nothing but a misleading marketing campaign. A campaign to convince
voters into believing that it is fair to take money away from people who earn it and give
it to those who do not earn it and then convince us that it’s fair. Please consider that
if you provide housing for more than just your own family, you are part of the 1%! By
our President’s definition of fair, how could it be fair for you to have housing for
more than just yourself when some of the 99% do not even have housing for
themselves? We’ll just take some of your extra housing and give it to those who are
And if you don’t think you look rich to the 99%, then you are in for a big shock. The
definition of that 1% will soon include an income of $250,000 or excessive assets
such as ownership of more real estate than you can personally use. Remember, you
are dealing with dishonest people who are already distorting the true meaning of
what’s fair “ they call themselves progressives. And even that word is misleading!
Keep in mind that progressives believe in harsh rent control that is nothing but
tenant welfare paid only by property owners. Oh, but they prefer to call it rent
stabilization. They love to force government inspections of your property. As a result
of these inspections, they have been able to confiscate over 1,700 apartment buildings
in the city of Los Angeles alone AND bribe the tenants by making them a deal that cuts
their rents in half. And they call this progressive? They consider it fair because
those dirty, capitalist landlords represent the 1% while those poor tenants represent
You decide. Will you stand up and fight for our old American economic system of free
enterprise (capitalism) or will you give in to these progressive ideas of redistributing
wealth and lowering everybody’s standard of living!
Please email or write us and express your opinion of these old and tired progressive
ideas. Don’t be too harsh, remember, our President proudly calls himself a