Separating the Rich From Their Money

Much easier said than done, I’m afraid.

The Robin Hood variable is a popular sales tool for the left. Always has been. Always will be. Those who don’t have “money” want it, and after fifty years of constant Robin Hood talk from leftists (and several REALLY bad movies), the people at the bottom of the food chain think they are entitled to it. After all, “rich” people live in the biggest houses, drive the best cars, reportedly are healthier, yada, yada. They can do without some of what they have.

All that might be true, but what on earth makes anyone think that the people who have money are just going to roll over and let the government take what they’ve worked for just because, well, just because. Anyone who works in fundraising can tell story after story of trying to pry donations from “the rich” and getting nowhere even for the most noble causes, like shelters for battered and abused women, veterans assistance groups, food banks and pantries, and fighting childhood disease. If the rich aren’t interested, they’re just not going to write a check. They’ll use that money another way. Really, any donor wants to be sure that major gifts are spent wisely (and frequently want to be updated with how the money was spent and the status of the programs financed). They don’t just give money away to give it away. At the same time, in a whole lot of cases, if they don’t get something out of it, they just don’t do it.

I happen to live in the city that wrote the book on modern fundraising, or separating the rich from their money. It started with building multiple archdiocesan schools under Joseph Cardinal Ritter, and spread to the major cultural institutions (Zoo, Art Museum, Botanical Garden, Science Center and more) which, thanks to generous wealthy citizens are now not only world-renowned and really quite beautiful, but either free or VERY reasonable to visit.* (from a native: get to the Zoo early and park on the street close to the Art Museum rather than the lots. Much cheaper) They are also littered with “Made Possible Thanks to a Generous Donation from….” signs. The names on the signs are easily recognizable and are the families that profited from companies like Anheuser-Busch, Monsanto, The May Company, McDonnell Douglas, Ralston Purina, Emerson, A.G. Edwards, Enterprise Rent-a-Car and more. (We used to have quite a number of Fortune 500 headquarters and all of us benefitted. For the most part, that’s now gone, thanks to boards of directors voting for short term gains over longevity.) Other than the signs thanking them and the prestige that goes along with that, the other big perk donors receive, thanks to the tax laws of the USA, is a gigantic tax deduction on federal income taxes (that was designed just for this purpose: to get wealthy people to help finance non-profits of all shapes and sizes. Well, and to benefit the ruling and lobbying classes). My state also offers tax credits to get more wealthy people to either donate to non-profits or invest in business in distressed areas. Non-profits and business districts have to apply for them, they are awarded by the state to worthy causes, and they are attacked as being just for “the rich” (there is a significant return on the investment for the community that is conveniently ignored). In that way, the rich get something out of a donation or the investment from both the fed and the state. They get to keep more of their own money (that non-profits can use cash far more efficiently than government is a subject for another post).

In order to have this sort of money to spare, and I’m talking be able to write checks or donate stock worth $100,000 or more in one chunk and not miss it, a prospect has to have significant accumulated wealth, like to the tune of well into eight figures (that’s $10,000,000 or more). If the money is not inherited, generally, it took decades to build. That there are less than 2,000 such people (that number is probably high) in a metropolitan region of about 3 million should be telling: in the grand scheme of things, there just isn’t enough of “the rich” to soak to give freebees out like cherry Pez for over 300,000,000 people even at the national level.

Aside from that, since the wealth is ACCUMULATED, it’s not annual income, so with the current laws, the base amount is not subject to taxing. The income on what is sitting in savings accounts, certificates of deposit, money market accounts, IRAs, stock, etc., or wealth, is a combination of interest, dividends and capital gains (also a tax hike target). Many times, that is what is being donated to non-profits, and what makes that income ripe for confiscation. Wealth is generally not taxed until death, and even then, when the Clinton Administration pushed through the 55% “death tax” on estates valued at $535,000 or thereabouts, the truly monied started putting their wealth and assets in something called an “Irrevocable Living Trust” where the trust owns the estate, and the individual owns nothing, but is administrator of the estate so can use the trust any way they wish. A trust is subject to a different set of tax laws and is not subject to death taxes at the federal level. Convenient, huh?

So, did the Clinton Administration succeed in soaking the rich with the death tax? Not even. The rich found a way around it – and that was just the death tax (who knew it cost so much to die). Then there was the luxury tax.

At this point, anyone who is paying attention knows that the 50% tax on “luxuries” like yachts and furs backfired. More or less, centuries of tradition of hand-crafted yacht building on the east coast died because the wealthy went to other countries to have their yachts built. It’s not very well known, but articles of clothing bought in a foreign country are not subject to US taxes if worn before returning home. Buy something really nice overseas and wear it on the plane and customs can do nothing without a receipt or the box. Many of us have done it. I actually heard a story about a friend’s mother who went to Toronto during the summer one year after the luxury tax was passed, bought a full length mink coat, wore it to the airport, walked through customs and said she had nothing to declare. True story. (BTW, they vote democrat) Anyone who has been on a cruise to the Caribbean knows that jewelry, cameras and the like bought in non-US ports of call should be bought with cash and either used on the trip or worn on the journey home. Lose the receipts and boxes, of course. So much for tax revenue on any of that.

And then there’s the “off-shore”tax havens. The federal government can’t tax it if it’s not in the country and the wealthy among us have the means to make their money disappear this way. It’s just the nature of the beast. The rich are going to protect what they have and will give it up when and where they are ready.

One other point about wealth and assets: once it is all sold off, confiscated or given away, it’s gone. One of the major lefty complaints against the Catholic Church is that it holds billions of dollars worth of assets. Assets, not cash. (For the most part, the Church is pretty cash poor, whether anyone believes it or not.) This is mostly property and artwork which is only worth billions because open markets say it’s worth that much. (Although, flood the private markets with that many pieces of art, and the prices may well go down.) That the assets are held in trust for the inspiration of future generations doesn’t come into any discussion, like all rich vs. poor arguments from the left. It’s also never mentioned that in the hands of the Church, these masterpieces are, for the most part, free for all to see and very public. Sell it to private collectors, as many secular pieces have been, and it’s gone from the world for all intents and purposes. They’re plain and simply inaccessible unless the owner donates or loans the piece to an institution. The main interest of leftists is that the cash is then used to feed the poor here and now. It has been estimated that if the Church sold off all Her treasures, She would have enough money to feed the world for seven days. Then what? The artwork and the magnificent houses of God are gone and those of us who savor visual stimulation as part of divine inspiration, and work to continually feed the poor are still going to have fundraise and hold food drives and Church will be stark. In the end, it’s a lose-lose.

So it is with the American “rich”. If the government could succeed in confiscating their wealth, sending it down the rathole, it would be gone forever. It would all be “spent”. In the end, though, because the wealthy and rich have different spending habits and know how to make money, the playing field would still not be levelled. Is this fair? Who said life was fair? And if one really wants communal living, ask the leftists what they are willing to give up in the way of comforts and luxuries to achieve universal living standards. All the ones I know balk. It’s a little different when they are the ones being Robin Hooded.

For further reading on how the rich got to be that way, I recommend The Millionaire Next Door by Thomas Stanley (and adopt their spending/no spending habits).

* There is, of course, more to this story. The Zoo and Art Museum are free due to the state charter and five of the major cultural institutions are part of the Zoo Museum Tax District which was voted into place by the people in 1971 and remains a significant source of their revenue.

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Categories: Culture, Taxes

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3 replies

  1. Great article… Loved it…

  2. The Robin Hood scenario is false, especially the idiot lefties who believe it. READ THE STORY, the Sheriff of Nottingham aka the gov’t was the person who was the target of old Robin Hood, and the people he worked for, once again AKA THE GOV’T. Perhaps if the left ever wrapped their feeble brain around that things could be different. And how is it that the “rich” who ACTUALLY WORKED for their wealth and used actual common sense, such as NOT SPENDING UNWISELY, the demons in this story. Once again the left with their never ending NOT UNDERSTANDING of how capitalism works seems to be the issue. In economics trickle down can be good or it can be bad (lefts version), once you start to take the money off the table that the “rich” infuse in the economy, and all the small business (now also part of the “rich” in lefties terms) that make the products to keep the larger corporations products working that are SOLD AND BOUGHT by the rich, trickle down providing jobs and more tax revenue the raising taxes on them is a NIGHTMARE TO BEHOLD that only the left wants to be part of.

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