Quick Thought About Being Rich

Except for those poor souls who win life's lottery early by being born into wealth, most of the people in this country who are rich, are rich by choice.

Having been in business for 30 years, I know a little bit about pricing and profit. I make a comfortable living, my employees make a decent salary, I pay enough taxes for myself and a few others, but I don't make Bill Gates-like amounts of money. I don't make Steve Jobs, Richard Branson, Alex Rodriguez, Lil' Wayne, Bill Clinton or Warren Buffet type of money.

Why not? Are they that much smarter than me? Mmmm, maybe. Lucky? Probably quite a bit of that. Maybe they ask for too much money and then people give it to them.

I have always had a bit of a problem with people who can sell something for $1000 when it takes them $100 to make it. Even more so, if they sell 100,000 or even 1,000,000 of them with the same margin. Now that is gross profit.

Sure, I know what value is. It is the price someone is willing to pay for what you are selling. When Apple came out with the first iPhone, millions of people wanted to buy them and when they did, they paid dearly. Apple plowed a lot of that money back into R & D, but a whole lot more was plowed into off-shore bank accounts, much of it still sitting there.

The responsible fiduciary thing to do when demand is high is to keep the price as high as it can be as long as people are willing to pay that price.When oil companies do this, it is called greed. When two companies do it, it is called price-fixing. When a tree surgeon does it after a storm, it is called gouging. When Apple does it, their stock price sets records. People stand in line (literally) to give Apple more of their money.

When you make this kind of money, there is a lot to spare. You won't hurt my feelings if it gets taxed at a higher rate.

Athletes making over $100 Million? Let's get real. Is anyone worth that kind of money? A rapper busts out a few beats and everyone buys his song? Millions? C'mon... Bill Clinton makes a 40 minute speech (is this even possible?) and he gets $100K?

There are a LOT of people in this country that make a LOT of money by churning or repeating. Should they lower their price when they reach a certain level of income? Wouldn't that be fair? It takes no more of their mojo to make the 1000th item or the 1000th transaction as it did to make the 999th.

But, technically speaking, as long as they are providing the value, they should make the profit, right?

Should the people of the United States feel they have the right to confiscate a large portion of this profit just because they were collectively willing to give their hard earned money to Apple for that iPad, to Richard Branson to fly on Virgin American, to Lil' Wayne for that dreck he calls music, to Bill Clinton for that speech or to A-Rod for watching him attempt to hit a ball?

This I know: These people hang onto their money as tightly as a street corner musician hangs onto his tip jar. In order for the government to get 'their fair share' from these very wealthy people, they will need to force them to hand it over. If the rich roll over and pay the extra marginal tax rate, the Obama tax on dividends, various surcharges and whatever else comes out of the fiscal cliff negotiations, I will be shocked.

I still think the best way to extract tribute from everyone is a tax on consumption. The more you spend, the more you pay. And who knows, when Wall Streeters buy and sell stocks, that is consumption, right? Tax it!


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