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Author Topic: There aren't as many rich people as you think
Doug
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posted 24 June 2008 04:29 PM      Profile for Doug   Author's Homepage     Send New Private Message      Edit/Delete Post  Reply With Quote 
Their numbers are rapidly growing, but perhaps surprisingly, only 10.1 million people in the world are worth more than $1 million US.

http://news.bbc.co.uk/2/hi/business/7472436.stm

quote:
Their combined wealth also rose, by 9.4% to $40.7 trillion, according to Merrill Lynch and Cap Gemini.

The fast-growing economies of India, China and Brazil saw the biggest rises in the number of wealthy individuals.

The number worth more than $30m increased by 8.8%, while their total wealth grew by 14.5%.



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500_Apples
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posted 24 June 2008 04:39 PM      Profile for 500_Apples   Author's Homepage     Send New Private Message      Edit/Delete Post  Reply With Quote 
This seems like it's impossibly hard to measure, and I'd suspect a lot of rich people are discreet about their net worth.
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Sven
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posted 24 June 2008 06:05 PM      Profile for Sven     Send New Private Message      Edit/Delete Post  Reply With Quote 
And the funny thing? If you retire with a million bucks at, say, age 62 and if you want to live off that for 25 years, your income (assuming a relatively conservative 5%) would be a whopping $70,500 per year (and, if you lived more than 25 years, you'd be penniless).
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Michelle
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posted 25 June 2008 03:31 AM      Profile for Michelle   Author's Homepage     Send New Private Message      Edit/Delete Post  Reply With Quote 
The fact that there aren't as many rich people as we think is actually not a GOOD thing. It's a bad thing. When a very small percentage of people are rich and the rest of us are not (especially considering that the majority of the world's wealth is "owned" by that very small minority of people), that's a bad thing.

[ 25 June 2008: Message edited by: Michelle ]


From: I've got a fever, and the only prescription is more cowbell. | Registered: May 2001  |  IP: Logged
Yibpl
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posted 25 June 2008 05:59 AM      Profile for Yibpl     Send New Private Message      Edit/Delete Post  Reply With Quote 
Everyone knowsthat to be a true millionaire, to be truly rich, you have to have a million pounds; not a millions USD. D'uh!!!


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munroe
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posted 25 June 2008 06:27 AM      Profile for munroe     Send New Private Message      Edit/Delete Post  Reply With Quote 
Don't you mean euros?
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abnormal
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posted 25 June 2008 06:48 AM      Profile for abnormal   Author's Homepage     Send New Private Message      Edit/Delete Post  Reply With Quote 
quote:
posted by Sven:
And the funny thing? If you retire with a million bucks at, say, age 62 and if you want to live off that for 25 years, your income (assuming a relatively conservative 5%) would be a whopping $70,500 per year (and, if you lived more than 25 years, you'd be penniless).

And after adjusting for inflation, by the time that 25 years had gone by, you might be able to buy a good dinner with that much money.


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Sven
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posted 25 June 2008 08:03 AM      Profile for Sven     Send New Private Message      Edit/Delete Post  Reply With Quote 
quote:
Originally posted by abnormal:
And after adjusting for inflation, by the time that 25 years had gone by, you might be able to buy a good dinner with that much money.

That is, of course, an excellent point.

For example, if inflation is running at an annual rate of 3.5%, that $70,500 in the twenty-fifth year will have the purchasing power (in today’s dollars) of a mere $29,800.

And some people would classify that as being “rich”.


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Pogo
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posted 25 June 2008 08:14 AM      Profile for Pogo   Author's Homepage     Send New Private Message      Edit/Delete Post  Reply With Quote 
I spent the weekend following my daughter to a variety of sports events. Cheered like crazy and was a very proud dad. I am very rich indeed.
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Michelle
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posted 25 June 2008 08:29 AM      Profile for Michelle   Author's Homepage     Send New Private Message      Edit/Delete Post  Reply With Quote 
That's nice and all, but it's really not on topic.

It would be really nice if we could have a discussion about income disparity without all the classic derailing about how everyone is rich if they have love, or everyone is rich because what they pay for dinner now would have bought them a house 50 years ago or whatever.


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Sven
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posted 25 June 2008 08:36 AM      Profile for Sven     Send New Private Message      Edit/Delete Post  Reply With Quote 
quote:
Originally posted by Michelle:
That's nice and all, but it's really not on topic.

It would be really nice if we could have a discussion about income disparity without all the classic derailing about how everyone is rich if they have love, or everyone is rich because what they pay for dinner now would have bought them a house 50 years ago or whatever.


Being "rich" in love is a bit off-topic. But, understanding what "rich" means is quite another (the term is used in the title of the thread, after all).

What does it mean to retire with, and to live off of, $1 million? It means, for example, that at a 5% return with a 3.5% inflation rate, that retiree will have (in real 2008 dollars) about $29,000...and then nothing...in the twenty-fifth year of living off of that money.

Now, some people would say that person is “rich”. I would not.


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Pogo
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posted 25 June 2008 08:45 AM      Profile for Pogo   Author's Homepage     Send New Private Message      Edit/Delete Post  Reply With Quote 
Fair enough, but I have problems with people monopolizing the term rich as being only who has the most toys.
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abnormal
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posted 25 June 2008 08:59 AM      Profile for abnormal   Author's Homepage     Send New Private Message      Edit/Delete Post  Reply With Quote 
Despite the thread topic, the linked article doesn't use the word "rich" once. (It does use the word wealthy with respect to individuals in India, China and Brazil.)

Like 500_Apples, I'd argue that this is difficult to measure. I'd like to see how the authors of the article valued private companies or real estate for example.


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abnormal
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posted 25 June 2008 09:18 AM      Profile for abnormal   Author's Homepage     Send New Private Message      Edit/Delete Post  Reply With Quote 
I found the original report.

http://www.ml.com/media/100502.pdf

Forty pages that really doesn't say huge amounts. The number of HNWI (High Net Worth Individuals) is apparently calculated by applying theoretical wealth distribution tables to the total wealth of the country and those wealth distribution tables are in turn based on a theoretical link between income and wealth. I suspect the margin of error in the conclusions is significantly in excess of the percentage changes in the numbers of HNWI's the publication is actually discussing.

One thing that is important. Wealth, as used in the paper does not include the individual's principal residence or a number of other things.


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bruce_the_vii
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posted 25 June 2008 03:48 PM      Profile for bruce_the_vii     Send New Private Message      Edit/Delete Post  Reply With Quote 
quote:
Originally posted by Michelle:
The fact that there aren't as many rich people as we think is actually not a GOOD thing. It's a bad thing. When a very small percentage of people are rich and the rest of us are not (especially considering that the majority of the world's wealth is "owned" by that very small minority of people), that's a bad thing.

[ 25 June 2008: Message edited by: Michelle ]



I don't have statistics at my finger tips but I don't think the worlds wealth is concentrated in capitalists any more. In the modern situation the broad middle class saves for retirement especially through corporate pension plans and there's a lot of money in that. Old age is really what propels savings. However, I've repeatedly read that in the USA the bottom 100m or something are worth less than Bill Gates alone. In the USA there's a steep death tax whereas in Canada the rich's offspring have no such tax. In the emerging economies the savings rate is very high, average people save, such that China is financing the US deficits.

[ 25 June 2008: Message edited by: bruce_the_vii ]


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Stephen Gordon
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posted 25 June 2008 03:58 PM      Profile for Stephen Gordon        Edit/Delete Post  Reply With Quote 
It looks like this study is concerned with *financial* wealth. My co-author Pascal St-Amour calculates that financial wealth accounts for less than 10% of total wealth in the US.
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bruce_the_vii
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posted 25 June 2008 04:10 PM      Profile for bruce_the_vii     Send New Private Message      Edit/Delete Post  Reply With Quote 
10%?!
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Stephen Gordon
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posted 25 June 2008 04:19 PM      Profile for Stephen Gordon        Edit/Delete Post  Reply With Quote 
Something like 85% of wealth is human capital: the ability to generate labour income.
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bruce_the_vii
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posted 25 June 2008 04:33 PM      Profile for bruce_the_vii     Send New Private Message      Edit/Delete Post  Reply With Quote 
I've been educated to pay attention to what these things are worth. My University Degree in Computer Science cost maybe $80,000 and was 80% payed for by the state. The degree is only the start as your on the job training is costly as well.
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Doug
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posted 26 June 2008 05:41 PM      Profile for Doug   Author's Homepage     Send New Private Message      Edit/Delete Post  Reply With Quote 
quote:
Originally posted by Sven:

What does it mean to retire with, and to live off of, $1 million? It means, for example, that at a 5% return with a 3.5% inflation rate, that retiree will have (in real 2008 dollars) about $29,000...and then nothing...in the twenty-fifth year of living off of that money.

Now, some people would say that person is “rich”. I would not.


By global standards they are. As mentioned above, only a little over ten million people own at least that much. Divide that into, oh, roughly 5 billion adults and you can appreciate what a tiny proportion of people that is.


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Sven
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posted 26 June 2008 07:52 PM      Profile for Sven     Send New Private Message      Edit/Delete Post  Reply With Quote 
quote:
Originally posted by Doug:
By global standards they are.

That's true.

And, by global standards, most of the North American poor are "rich" (when considering that 2+ billion people in the world live on $2 per day (or less).

Clearly, by global standards, everyone on babble reading these words is "rich".


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Lard Tunderin' Jeezus
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posted 27 June 2008 04:31 AM      Profile for Lard Tunderin' Jeezus   Author's Homepage     Send New Private Message      Edit/Delete Post  Reply With Quote 
quote:
Originally posted by Sven:
Being "rich" in love is a bit off-topic. But, understanding what "rich" means is quite another (the term is used in the title of the thread, after all).

What does it mean to retire with, and to live off of, $1 million? It means, for example, that at a 5% return with a 3.5% inflation rate, that retiree will have (in real 2008 dollars) about $29,000...and then nothing...in the twenty-fifth year of living off of that money.

Now, some people would say that person is “rich”. I would not.


The disconnect here is incredible. what incredibly tiny fraction of the world has the option of retiring?

Even in N. America, it is a matter of class and privilege, Sven. You would do well to try to recognize the privilege you enjoy.


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bigcitygal
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posted 27 June 2008 05:05 AM      Profile for bigcitygal     Send New Private Message      Edit/Delete Post  Reply With Quote 
What LTJ said.

Paul Kivel writes:

quote:
1% of the population controls about 47% of the net financial wealth of the country and the next 19% of the population control another 44%. This leaves 80% of the population struggling to gain a share of just 9% of the remaining financial wealth. That majority of 80% doesn't divide very easily into 9% of resources which means that many of us spend most of our time trying to get enough money to feed, house, clothe and otherwise support ourselves and our families.

Paul Kivel "Social Services or Social Change?". Please see the pyramid chart on page two of this pdf link.


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Sven
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posted 27 June 2008 05:44 AM      Profile for Sven     Send New Private Message      Edit/Delete Post  Reply With Quote 
quote:
Originally posted by Lard Tunderin' Jeezus:
The disconnect here is incredible. what incredibly tiny fraction of the world has the option of retiring?

And to that, I would respond as I did above:

quote:
Originally posted by Sven:
That's true.

And, by global standards, most of the North American poor are "rich" (when considering that 2+ billion people in the world live on $2 per day (or less).


quote:
Originally posted by Lard Tunderin' Jeezus:
Even in N. America, it is a matter of class and privilege, Sven.

Yeah, for people like janitors with an 8th grade education (Ms. Sven's father), file clerks (Ms. Sven's older half-sister), shoe-store salespeople (like my Uncle), and many other "privileged" folks...

...and, now that I think about it, we should have taxed the hell out them so they couldn't retire (that way, they wouldn't enjoy their "privilege" and everyone would be "equal").

Of course there are people who cannot, for a variety of reasons, retire. But, it's a tiny minority.


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Lard Tunderin' Jeezus
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posted 07 July 2008 05:30 PM      Profile for Lard Tunderin' Jeezus   Author's Homepage     Send New Private Message      Edit/Delete Post  Reply With Quote 
quote:
Originally posted by Sven:
...and, now that I think about it, we should have taxed the hell out them so they couldn't retire (that way, they wouldn't enjoy their "privilege" and everyone would be "equal").

Of course there are people who cannot, for a variety of reasons, retire. But, it's a tiny minority.


While there has been some decline in the past decade and a half, there is a huge plurality in N. America who are forced into mandatory retirement - and poverty. The declining poverty stats are not due to the policies of the neo-liberal agenda which has held sway during this period, but rather the relative wealth accumulated by this generation in the prosperous post-war period.

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Doug
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posted 10 July 2008 09:35 AM      Profile for Doug   Author's Homepage     Send New Private Message      Edit/Delete Post  Reply With Quote 
Oh yes, poor people can save for retirement too:

quote:
When 60-year-old Laxmi Das recently deposited her earnings in an Indian bank in Calcutta, it was a bit more than the usual mundane money transfer.

Ms Das handed over 91kg (200lb) of coins - the produce of 44 years of hard begging - enabling her to open an account and qualify for a credit card.

Laxmi began begging near Hatibagan, a busy road junction in northern Calcutta, at the age of 16.

Officials say she could have saved as much as 30,000 rupees ($692).


http://news.bbc.co.uk/2/hi/south_asia/7495478.stm


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St. Paul's Progressive
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posted 10 July 2008 12:01 PM      Profile for St. Paul's Progressive     Send New Private Message      Edit/Delete Post  Reply With Quote 
Certainly in a major North American city like Toronto, being worth $1 million does not make you all that rich, though you can certainly live a comfortable, upper middle class life. Remember the term millionaire was coined during the Guilded Age, when a million dollars was worth The truly rich and powerful don't welcome you to the "club" if you happen to be worth $1.0 million instead of $900,000.

But 10.1 million in the entire world sounds about right - remember that there are over a billion who live on a $1 per day or less.

[ 10 July 2008: Message edited by: St. Paul's Progressive ]


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Sven
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posted 10 July 2008 12:48 PM      Profile for Sven     Send New Private Message      Edit/Delete Post  Reply With Quote 
quote:
Originally posted by St. Paul's Progressive:
Certainly in a major North American city like Toronto, being worth $1 million does not make you all that rich, though you can certainly live a comfortable, upper middle class life.

I’m not so sure that the “upper” adjective applies.

Let’s say you retire at age 65 and plan on living off of $1 million for 25 years. At 5% interest, you would exhaust your full savings by age 80 by living off of $71,000 per year.

But, remember, assuming a 3.5% inflation rate, that last $71,000 would only be worth, in today’s dollars, $30,000.

Can a person survive on $30,000? Of course. Is it “upper middle class” living? Not so much.

quote:
Originally posted by St. Paul's Progressive:
Remember the term millionaire was coined during the Guilded Age, when a million dollars was worth [it].

In 1913, which was a couple of decades after the “Gilded Age”, the consumer price index was created. In 1913, a million dollars would be worth $22 million in today’s dollars. I would guesstimate that $1 million in the Gilded Age would be worth somewhere around $30 million to $40 million in today’s dollars.

So, yeah, being a “millionaire” today ain’t what it used to be...not by a long shot.

[ 10 July 2008: Message edited by: Sven ]


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M. Spector
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posted 10 July 2008 12:56 PM      Profile for M. Spector   Author's Homepage     Send New Private Message      Edit/Delete Post  Reply With Quote 
Just read this thread for the first time. I'm surprised nobody has mentioned the fact that there are (or were, as of three years ago) 1.1 million families in Canada with net worth of over $1 million.
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Fidel
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posted 10 July 2008 08:43 PM      Profile for Fidel     Send New Private Message      Edit/Delete Post  Reply With Quote 
They wouldn't be paying those overbloated CEO salaries if taxpayers weren't subsidizing them.
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Sven
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posted 10 July 2008 08:48 PM      Profile for Sven     Send New Private Message      Edit/Delete Post  Reply With Quote 
quote:
Originally posted by Fidel:
They wouldn't be paying those overbloated CEO salaries if taxpayers weren't subsidizing them.

Unless you're a shareholder, why do you care what a CEO is paid? Unless I have money invested in a company's stock, I couldn't care less. When I have money invested in a company's stock, I want to see the CEO's pay tied to performance of the company's stock.


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Fidel
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posted 10 July 2008 08:50 PM      Profile for Fidel     Send New Private Message      Edit/Delete Post  Reply With Quote 
Why would I care? Because I'm a taxpayer?

And if I'm a shareholder, I don't want foot soldiers laid off so the CEO is able to make a warm gesture to himself at the expense of company moral and overall performance.

[ 10 July 2008: Message edited by: Fidel ]


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Sven
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posted 10 July 2008 08:52 PM      Profile for Sven     Send New Private Message      Edit/Delete Post  Reply With Quote 
quote:
Originally posted by Fidel:
Why would I care? Because I'm a taxpayer?

Ah, so you're a taxpayers'-rights advocate now, eh?


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Fidel
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posted 10 July 2008 08:56 PM      Profile for Fidel     Send New Private Message      Edit/Delete Post  Reply With Quote 
What happened to fairness and equality?

How to limit excessive compensation (U.S.)


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Sven
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posted 10 July 2008 08:58 PM      Profile for Sven     Send New Private Message      Edit/Delete Post  Reply With Quote 
quote:
Originally posted by Fidel:
What happened to fairness and equality? [/URL] (U.S.)

Fairness to who? The shareholders whose money goes to pay the CEOs? It's their money, after all.


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Fidel
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posted 10 July 2008 09:44 PM      Profile for Fidel     Send New Private Message      Edit/Delete Post  Reply With Quote 
Not all of it. That's what I was getting at.
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Sven
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posted 10 July 2008 09:58 PM      Profile for Sven     Send New Private Message      Edit/Delete Post  Reply With Quote 
quote:
Originally posted by Fidel:
Not all of it. That's what I was getting at.

Who else's money is it?


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Sven
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posted 10 July 2008 10:03 PM      Profile for Sven     Send New Private Message      Edit/Delete Post  Reply With Quote 
By the way, with regard to taxpayers "paying" for CEO's compensation: If a CEO is paid $1 million, then the company that paid that money deducts that as an expense (so, let’s say that the taxes otherwise payable by the company are reduced by about $300,000). But, the $1 million is taxable income to the CEO (probably in the neighborhood of $300,000). So, I don’t see how the taxpayers are "paying for" any of the CEO's compensation.
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Sven
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posted 10 July 2008 10:09 PM      Profile for Sven     Send New Private Message      Edit/Delete Post  Reply With Quote 
Our company's CEO is paid in the neighborhood of $1 million a year. We have (roughly) 25,000 employees. $1 million spread among the remaining 24,999 employees is about $40 per year.

Our CEO has done a great job. He's smart, hardworking, ethical and the company has done very well with him at the helm. Besides, I wouldn't take his job even if I was paid $1 million because I'd likely screw several things up...thus endangering the jobs of thousands of employees. In my opinion, he's well worth 40 bucks of "my" money to have him running the show.

The vast majority of our employees are also shareholders (hell, my administrative assistant has stock in the company). So, as shareholders and employees, I don't see why anyone else would care what our CEO makes...


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Fidel
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posted 10 July 2008 11:29 PM      Profile for Fidel     Send New Private Message      Edit/Delete Post  Reply With Quote 
quote:
Originally posted by Sven:
By the way, with regard to taxpayers "paying" for CEO's compensation: If a CEO is paid $1 million, then the company that paid that money deducts that as an expense (so, let’s say that the taxes otherwise payable by the company are reduced by about $300,000). But, the $1 million is taxable income to the CEO (probably in the neighborhood of $300,000). So, I don’t see how the taxpayers are "paying for" any of the CEO's compensation.

I'm not sure what the upper limit is for writing off a CEO's pay in either country. What they are suggesting in the CSMonitor article is an upper limit for deductability be defined as "excessive pay" ie. 25 times lowest salary on the company's payroll. I presume there is no excessive pay plateau defined now for which to apply any sort of rule.

CEO's are often paid bonuses, and by stock options, preferred shares paying dividends etc, for which income tax is deferred or paid upon cashing out. Sometimes CEO's have been known to cash out at "opportune times" and usually just before the stock takes a swan dive.

In other instances, CEO's and upper management have downsized workers and channelled workers salaries no longer paid out into their own upper management bonus structures. AT&T was a bad example. And taxpayers pay for that through benefits paid to newly unemployed workers, and when other workers are laid off in local economies as a domino effect.


From: Viva La Revolución | Registered: Apr 2004  |  IP: Logged
St. Paul's Progressive
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posted 18 July 2008 09:30 AM      Profile for St. Paul's Progressive     Send New Private Message      Edit/Delete Post  Reply With Quote 
quote:
Originally posted by Sven:
So, yeah, being a “millionaire” today ain’t what it used to be...not by a long shot.

I should have made my point clearer. My point was that a net worth of $1 million or so is typical of an upper middle class professional. Surely you aren't arguing that there are lots of working class people with net worths like that.


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Sven
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posted 18 July 2008 10:02 AM      Profile for Sven     Send New Private Message      Edit/Delete Post  Reply With Quote 
quote:
Originally posted by St. Paul's Progressive:
I should have made my point clearer. My point was that a net worth of $1 million or so is typical of an upper middle class professional. Surely you aren't arguing that there are lots of working class people with net worths like that.

No, there are not a lot of working class people with a $1 million net worth.

At one time, a “millionaire” was someone with unreachable wealth (like a Bill Gates or a Warren Buffet). But, today, if a person has $1 million, it’s not like they are vastly wealthy.

Like I said above:

quote:
Originally posted by St. Paul's Progressive:
Let’s say you retire at age 65 and plan on living off of $1 million for 25 years. At 5% interest, you would exhaust your full savings by age 80 by living off of $71,000 per year.

But, remember, assuming a 3.5% inflation rate, that last $71,000 would only be worth, in today’s dollars, $30,000.

Can a person survive on $30,000? Of course. Is it “upper middle class” living? Not so much.



From: Eleutherophobics of the World...Unite!!!!! | Registered: Jul 2005  |  IP: Logged

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