Weekend Economists: "So much to do, so little done, such things to be." April 20-22, 2012

[Demeter]

42. What Rich People Fear Most By Kenneth Rapoza

http://www.forbes.com/sites/kenrapoza/2012/04/17/what-rich-people-fear-most/

...On Monday, the U.S. Senate blocked the proposed Buffett rule that would set a minimum 30% federal tax rate for millionaires in a 51 to 45 vote that fell like a stone, and far off the target of 60 votes needed to tax the wealthy. Washington fears the rich. But the rich, they fear something else.

Few Americans know what it is like to have one million dollars a year to their name. Whether it comes in the form of a salary, a lottery windfall, or investment income, a million dollars is luxury living at its best. After taxes, it’s $600,000 a year in high tax cities like Manhattan, or $50,000 a month. That’s more than the annual median income of the typical American household, which is around $46,000, according to the U.S. Census Bureau.

With $50,000 a month, you could rent out a $6,050 a month 1,100 square foot apartment at Trump Place on Riverside Blvd. You could send your teen to York Prep for a cool $3100 a month, or around $37,100 a year, and you’d still have $40,850 left over. You could send two kids there, and still have $37,750 to play with. You could invest $30,000 a month, or around $360,000 a year, and still have over $7,000 a month to pay your utility bills, insurance and eat. And that’s based on New York City, where the cost of living is designed for the wealthy. A million will go even further in Los Angeles and further yet in Buffet’s Omaha. The only thing you cannot do with a million a year, is live like you were bringing in a hundred million a year...Yet, despite all of this luxury that a million dollars a year provides, Washington is afraid to tax the wealthy, even those who say they can afford to pay more. Of course, more taxes means the wealthy will have less money to invest in the market, and that is bad for the financial services industry. President Obama put the Buffett rule in his platform on April 7, making it known to all that he wanted a vote on this and soon. By April 14, the Standard & Poor’s 500 index experienced its biggest weekly decline all year.

That the policy makers fear their campaign donors might not be anything new, but Monday’s vote is a bit revealing. The Buffet rule is probably dead, unless Obama is re-elected and the Democrats increase their numbers in the Senate....That’s right, political unrest, growing social inequality and a fear that governments will finally bend to the wishes of the 99ers is the top concern of the rich.