How do the Rich/Wealthy keep getting Rich you know the saying the Rich get Richer my question is how do the Ri?
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How do the Rich/Wealthy keep getting Rich you know the saying the Rich get Richer my question is how do the Rich stay Rich if they are paying themselves less to avoid higher taxes ? also please read the links below but first read the debate from Thom Hartmann please don't reply with an answer that includes tax loopholes or tax havens offshore thank you my question is even if the Rich pay themseves less money to avoid higher taxes would they stil have more money than most middle class and poor people ? Thom Hartmann: But it seemed, just common sense. I remember back in the ‘80s, I owned a business, International Wholesale Travel in Atlanta, Georgia. That business has, since we sold it done over 200 billion dollars in business. And there was a year when we were doing really, really well and I could either write a big check to myself or not. And I decided not to, because I didn’t want to pay the increased taxes. I put it back into the business. How can cutting taxes on rich people, on high income people, do anything other than encourage them to take the money out of their companies, out of their businesses, and buy fancy paintings or yachts or put it in Swiss bank accounts? How conceivably could that help the economy? http://www.thomhartmann.com/blog/201...ate-jobsreally Raising Taxes Is Good for the Economy by Adam Eran – Observes Beinhart: “With high taxes, the only way to retain the bulk of the wealth created by a business is by reinvesting it in the business — in plants, equipment, staff, research and development, new products and all the rest. http://www.laprogressive.com/politic...or-the-economy If we didn't really need the money, that was an incentive to keep it in the company and to find ways to spend it that took it out of the taxable profit column but increased the value of the company. High taxes create an incentive to reinvest profits into long-term growth. With high taxes, the only way to retain the bulk of the wealth created by a business is by reinvesting it in the business -- in plants, equipment, staff, research and development, new products and all the rest. http://www.alternet.org/economy/106979/
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Answer:
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Much of the stated "wealth" of CEOs and corporate entities is retained in investments within the company, typically stocks. For example, if it is stated that Bill Gates is worth 2.5 billion dollars, well he doesn't exactly have that socked away in a savings account, he is only worth that much. This is computed by actual cash on hand, earnings, dividends, stocks, bonds and other valuable holdings. A business owner has two options regarding what to do with earnings: pay themselves or reinvest it in the company. If it is a publicly traded company, they can also pay their share/stakeholders a dividend. Obviously there is much to gain by reinvestment i.e. opening new stores, expanding inventory, modernization, etc., however the option to pay themselves via stock options is also on the table. So bottom line, when people are very wealthy and are worth x amount of dollars, I would say a good portion of that x is tied up in investments, which are tax free except for dividends or if the asset is sold.
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