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Financial Planning > Tax Planning

Who’s Really ‘Rich’?

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A national debate about “rich” versus “poor” has erupted. We’re told the contest is between the top 1 percent of all income earners against the bottom 99 percent. We are also told the top 1 percent represents not just the dreadful essence of evil, but that they are “rich.” What exactly is “rich?” Does anybody know?

Since 99 percent of all statistics only tell us 49 percent of the story, we need to investigate this urgent matter further. Also, since most financial commentators are reluctant to go on the record to define the term “rich,” I’m left with no other choice but to take a stab at it. 

Many Definitions

Let’s consider the diverse spectrum of attempts to define the term “rich.”

Among the euro zone bloc, “rich” is currently defined as any country that is not Greece, Italy, Portugal or Ireland.

For the 14 million or so unemployed Americans, anyone with a job is “rich.” (And if you don’t think so, it’s probably because you have a job.)

Or perhaps, “rich” is anyone like himself who has money, says Warren Buffett, but doesn’t pay their fair share of income taxes. Interestingly, Buffett’s money was not made from tax evasion, but like a lot of folks, from blood, sweat and brains.   

In the National Basketball Association, “rich” and “poor” have distinct meanings. “Rich” refers to the billionaire owners, whereas “poor” refers to the millionaire players. As for the financial status of NBA fans, that will be considered in a sequel article using sabermetrics.

In the canton of Lucerne, Switzerland, “rich” refers to “Marc Rich,” the fugitive commodities trader who fled the United States on charges of tax evasion. Although Rich received a presidential pardon in 2001, he still refuses to accept invitations to visit the poor U.S.

For cartoon fans, “rich” automatically conjures up memories of “Richie Rich” and his beloved dog “Dollar” who both reside in “Richville.” Contrary to what his detractors say, Richie is not a greedy, self-absorbed or heartless tycoon. Why his very moniker is “the poor little rich boy”!

     To documentary filmmakers, “rich” is anybody who has not converted beautiful Zuccotti Park or another public space into their personal living room.

In the elite world of private country clubs like the Sebonack Golf Club in Southhampton, N.Y., “rich” is a yardstick in its own universe. Anyone that can afford the entry level initiation fee of roughly $500,000 is probably considered “rich.” Then again, if that type of entry fee would make you instantly “poor,” you’re definitely not “rich.”

“Rich” by investment standards provided by the SEC, is a person or organization that can afford to absorb market losses in contraptions like hedge funds, venture capital, private equity, etc. that would make the average citizen instantly bankrupt.

In certain third world countries, “rich” can be defined as anyone with clean drinking water.

King Solomon, one of the wisest men to ever live, said, “The one trusting in his riches — he himself will fall.” While this is arguably the best advice I’ve seen on the subject, Solomon did not provide any income thresholds for “rich” versus “poor.”

According to the IRS’ 2011 income tax brackets, the term “rich” might be defined as anyone in the 35 percent tax bracket who earns $379,150 or more.

One final definition of “rich” can be applied to a much broader audience of anyone who is unquestionably not “poor.”

Inconclusive Conclusions

As illustrated, there is no single all encompassing, comprehensive definition of “rich.” As it turns out, “rich” is just like other states of relativity, such as “beautiful” and “ugly.”

Likewise, the very expression “rich” is a moving target. People who were thought of as “rich” a generation ago or today may not be considered so in the future.

Ultimately, the final definition that we choose to accept for “rich” — or for that matter “poor” — will be based upon our own biases and experiences, along with our own uniquely deranged viewpoint of the world. •

Ron DeLegge writes ETP Reporter and is author of the new book Gents with No Cents: A Closer Look at Wall Street, Its Customers, Financial Regulators, and the Media (Half Full Publishing).


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