7 ms·

How the Rich Got Rich

68 points by technology 14y ago

deleted 14y ago
[deleted]
FrancescoRizzi 14y ago
when we see these reports/analysis it seems the answer is always the same: Capital Gain. However, I think this whole line of inquiry is mis-titled: these reports always tell us how the rich people are making now their income. Which, I feel, is not a good hint as to how you can become rich. For the greater public, the question of "how the rich people went from 0 to $1B" might more interesting than "how the rich people maintain their $1B+". Definitely I find the latter more interesting than the former (probably because I don't have $1B+)
- DanielBMarkham 14y ago
  I had the same exact reaction, but looking at the article again, it clearly says A total of over 3,800 taxpayers have made the top 400 since 1992, but only 27% appear more than once, and only 2% appear 10 or more times. That means these are not people who are necessarily rich and are raking in the money. These are most likely people who have a company, have stock options, and are cashing out. Most of them never come back to the list. The point here is that grabbing on to a company could be like catching a rocket -- your ticket to the stars. Whereas working an hourly wage is likely never going to do much more than make you upper-middle-class. I realize you could interpret these numbers differently, but that's what it looked like to me. You can't have big capital gains income without some kind of underlying company that's doing tremendously well.
  - leot 14y ago
    There are ~400 Americans with > $1 billion in wealth, and 200 with >$2 billion. $77 million in return on $1 billion is 7.7%. On $2 billion it's a mere 3.85%. Combined with the fact that only 27% appear more than once in the IRS's list, and the fact that people tend to stay billionaires for a long time, this suggests that once people get to this level of wealth they turn down the aggressiveness of their investing and become risk averse. For if every billionaire earned a healthy return on their capital, the top 400 earners would stay roughly the same from year to year, and correspond closely to America's top wealthiest. Furthermore, America would be generating a lot more wealth than it currently does.
    - DanielBMarkham 14y ago
      You're mixing wealth and income.
      - ef4 14y ago
        But when we're talking about capital gains income, we would expect the two to be correlated.
      - jaxn 14y ago
        No, he is saying that $1B in wealth (about 400 people) generates $77m (threshold to make list of highest earners) in income assuming a 7.7% rate of return (which seems unrealistically high to me).
        leot 14y ago
        Actually, I'm saying that if the 200+ Americans with >$2 billion in wealth consistently generated more than 4% return on capital, then at least 50% of the top 400 earners should stay relatively the same year after year (since those with >$2 billion usually stay billionaires). The fact that only 27% have appeared more than once suggests that those with more than $2 billion in net worth are reporting returns less than 4%.
        jaxn 14y ago
        Appreciating assets don't count as income. They very well may be minimizing income while still maintaining growth. When they sell those assets, they make the list.
    - nonce42 14y ago
      The important thing to remember is that AGI (which the article discusses) and how much money you "make" are not very correlated once you make above, say, 200K a year. A key reason is unrealized capital gains - I guarantee you that if a billionaire makes $77 million, most of that isn't going to appear as AGI. In a sense, realizing capital gains means something went wrong, not to mention income which is very wrong. Other factors that keep money out of AGI include tax-exempt bonds, business expenses, and capital loss harvesting. (And these are just some of the legal ways.) Please, when you read an article discussing AGI, keep in mind that it is a semi-random number. Unfortunately since it's the number available, it's what gets used.
  - larrys 14y ago
    "the list" The title to the article is "How the Rich got Rich". But "the list" doesn't deal with "the rich". It deals with "400 Individual Income Tax Returns Reporting the Largest Adjusted Gross Incomes". It is entirely possible for someone to own an asset (which they could, for example, borrow against) that was passed down to them (or that they themselves bought in 1992) that makes them "rich" by generally accepted "de facto" standards of our society. The Forbes list tries to come across as a list of the richest americans but it is obvious that there are quite a few people with considerable wealth who for one reason or another don't make that list until they have some kind of liquidity event. (Added: As you mentioned). "Whereas working an hourly wage is likely never going to do much more than make you upper-middle-class." While that would seem to be true I don't think it is to the degree you are implying in your statement. (By "hourly wage" I'm assuming you don't mean "hourly wage" you are including "salary" workers as well.) Someone in a nice corporate job making a stable salary that invests in the right assets at the right time can become wealthy. (An example might be a physician making $250,000 per year or an attorney, both in a stable situation (no fear of loss of job) that decides to invest in real estate or be a partner with someone else who manages a project. Or decides to be an angel investor (as if, ok..). The key here is that they make a stable income from a job and that they dedicate a portion of their income to investments. (I've personally seen this happen several times with attorneys and real estate they become the partner with the real estate person providing the legal work needed for projects as well as physicians who do a similar thing). Here's the key though: stable job. My wife has a very stable job with a predictable income that will rise every year (healthcare). So she can afford to take a portion of her income that exceeds what she needs and invest it in something that could make her rich. Will she make "the list". No she won't. But she could become "rich" by the standards that most people care about.
antidaily 14y ago
Their parents mostly.
- deleted 14y ago
  [deleted]
- fromdoon 14y ago
  Hmm .. it would be really interesting to check out, how many of today's billionaires inherited most or part of their wealth and how many made it big starting from modest backgrounds. Any pointers folks?
  - SatvikBeri 14y ago
    For millionaires (defined as people with >$1MM of capital goods that can be easily reinvested), Capgemini claims that "only 16% of high net-worth individuals inherited their stash"[1]. I'm not sure what the precise definitions are since it's not defined in the article. The Millionaire Next Door claims that 80% of millionaires in the USA are the first generation in their family to be rich.[2] I also did my own research looking at (non-Forbes) biographies of the top 10 richest people in the world according to Forbes in 2009. 3 out of 10 came from millionaire or richer families (Eike Batista, Bernard Arnault, Stefan Persson). If you trust Forbes, you can simply go through their website[3], it classifies each billionaire's wealth as self-made, inherited, or inherited + grown. [1]: http://www.economist.com/node/17929057 http://www.economist.com/node/17929057 [2]: http://www.investopedia.com/financial-edge/0810/7-Millionaire-Myths.aspx#axzz1zwr9WPZw http://www.investopedia.com/financial-edge/0810/7-Millionair... [3]: http://www.forbes.com/lists/2010/10/billionaires-2010_Carlos-Slim-Helu-family_WYDJ.html http://www.forbes.com/lists/2010/10/billionaires-2010_Carlos...
    - _delirium 14y ago
      Bill Gates also came from a millionaire-or-richer family, so that'd make 4, if that's the cutoff you're using. (He inherited several million from his grandfather, in a generation-skipping trust fund, although I don't believe he yet had access to that money at the time of founding Microsoft.)
dmix 14y ago
The Rockefeller quote is interesting "If your only goal is to become rich, you'll never achieve it." But I've always felt Citizen Kane's was more accurate: "It's easy to make a lot of money, if that's all you want to do is make a lot of money."
- bluekeybox 14y ago
  Not so sure. I've met enough people whose only wish was to make a lot of money, yet who failed to achieve it. In a competitive environment, you almost certainly have to be ridiculously good at something else (anything from programming, I suppose, to brain surgery to dealmaking to leadership) to make a lot of money. Also, Rockefeller's quote applies in the sense that, once you make a lot of money, your definition of what "a lot of money" is changes.
  - deleted 14y ago
    [deleted]
- tluyben2 14y ago
  I think if your goal / all you want to do is make a lot of money you have a pretty sad life. However it's not very hard. I don't know in what context the Citizen Kane quote was used. A lot of money varies a lot from where you are and what kind of insane thoughts you picked up from the internet. A lot of money can be $1 million in a lot of countries, $10 million in most countries, $100 million in all countries, $1 billion in silicon valley. Your first million is the hardest they sometimes say but if you have that, you SHOULD not ever have to work ever again if you are smart. That smart part messes most of those cases up. If you have $10 million you are done unless you are a complete idiot. Again, this idiot part messes most of those cases up. So currently most blahblah about getting rich is focused on $100 million or above. I read with much amusement how people in Monaco who have 'only $10 million' feel poor and unhappy. What a sad moron you are. Even in Monaco you can easily live a super nice life, the rest of your life, with $10 million, but apparently people IN Monaco are so insane they consider this poor. Anyway; I believe Citizen Kane was right if he means 'a lot of money' in the sense of being rich/never having to work again in your life. If he means $100 million or over, he is wrong IMHO. Nor did I ever met anyone who had as only goal to make money while I know a lot of rich people (who are rich in the sense they never have to work); even 2 with the magical 'over $100 million and they didn't even ever think about money much, they did what they did best and it shot to the top. That's the best way IMHO, but then again, I don't live in SV.
cagenut 14y ago
great example of why arguing over the income tax rate is a distraction from the real issue: the capital gains rate
- DanielBMarkham 14y ago
  You'll need to explain yourself a little more. Why is the real issue capital gains? No matter what the rate is, it wouldn't amount to much of anything compared to the money brought in from income taxes.
- readme 14y ago
  All taxes are theft.
rayiner 14y ago
The huge amount that comes from capital gains got me thinking... why is the return on capital, versus say the return on labor, so high? Our society is awash with capital. We apparently have more of it than we know what to do with (see, e.g., the real estate bubble, the tech bubble). If the capital markets were efficient, shouldn't supply and demand equilibrate things to drive down the price of capital? I think the structure of the capital markets, VC's and funds and the like, are still holding back efficiency by limiting the market of sellers. Things like Kickstarter that "democratize" the capital markets may also play a huge role in making them more efficient.
- pmjordan 14y ago
  why is the return on capital, versus say the return on labor, so high? Because labour, by and large, isn't particularly mobile, whereas capital is highly mobile, despite governments' best efforts. It's simply cheaper to enforce labour taxation than capital gains taxation. A second reason is stability: in a recession, employment drops by a few percent, whereas consumption (sales taxes) typically drops much more sharply, and capital gains even more so.
- cynicalkane 14y ago
  Two things: 1) Buying capital is much, much riskier than earning wages. If we suppose people who are good at being capitalists are also approximately as good at earning money, the economic equilibrium will tend toward capital being then much more profitable. Us being "awash" in capital is a red herring; in your garden variety market equilibrium model it's the incentives that matter. The returns are exponential, which just makes things more unequal when your actors are risk-averse. 2) The current tax treatment of capital gains rewards what I call "super-capitalists", people who get one tax-sheltered blob of capital and grow it and grow it. It's a compromise between the need to tax income and the need to not tax capital, but the downside is you get all these Mitt Romneys that only pay 15% taxes. #2 is why there's bipartisan support among economists for progressive consumption taxes, not income taxes, but you don't hear much about it since it's currently in the "pipe dream" category of economic policy.
  - 14y ago
flibble 14y ago
No no no. If capital gains tax is less than income tax, then of course the IRS stats show most income comes via capital gains.
wallflower 14y ago
I remember reading some article about how a private banker had a ultra-high net worth family who wanted to name their latest blind trust, 1066 - as in 1066 - the year in which their family acquired most of their wealth.
- lifeisstillgood 14y ago
  The impressive thing there is keeping and growing the wealth for a thousand years. Quite literally the family of William the conqueror did not do that so this family really pulled a trick
roguecoder 14y ago
Given that the tax structure massively prefers capital gains to other forms of income, it is unreliable to look at the reported tax percentages as a measure of where the money is actually coming from. For example, many of the uber-rich structure payments for their labor such that they are taxed as capital gains.
- einhverfr 14y ago
  But typically this is only possible by being a part-owner (and an owner of a significant part) of a business with defined shares.
- brown9-2 14y ago
  Exactly, the article is ignoring any sort of cause and effect for why the numbers are the way they are. If the US changed tax policy to favor other types of income, how the rich divide their income would change to fit.
eli_gottlieb 14y ago
In this article, Inc Magazine confirms what any follower of Marx or George could have told you long ago: the rich get rich from owning things, preferably productive assets like businesses, rather than from working.
canttestthis 14y ago
How is "Partnerships and corporations" different from capital gains?
toddh 14y ago
Here's the IRS pub that's the basis for the article: The 400 Individual Income Tax Returns Reporting the Largest Adjusted Gross Incomes Each Year, 1992-2009 http://www.irs.gov/pub/irs-soi/09intop400.pdf http://www.irs.gov/pub/irs-soi/09intop400.pdf The Tax Foundations take (http://taxfoundation.org/article/fortunate-400 http://taxfoundation.org/article/fortunate-400) is a little different. Interesting that in the 18 years that the report covers none of the taxpayers were on the top 400 list for all years. & only 4 (1%) were on the list for 17 years. 73% were on the list for just 1 year.... Their take was that most folks were on the list due to one time event...sale of assets, etc Also wages were flat for all 17 years (as a % of total income). Partnership & S Corp income was up ~400%, which could be because of the growth in publicly traded partnerships.
- technology 14y ago
  Good point. There is a similar report by Harrison Group which surveyed 3,000 pentamillionaires ($5 million net worth) and found that almost all pentamillionaires made their fortunes in a big lump sum after a period of years. http://finance.yahoo.com/news/pf_article_103017.html http://finance.yahoo.com/news/pf_article_103017.html
gareth_at_work 14y ago
Anybody who has a 401k or IRA in the US is benefiting from capital gains, and as we all know from 4 years ago, it can be very risky.
countessa 14y ago
I like that "do a lot of small things right"....kind of sounds like "the more I practice, the luckier I get"

68 points by technology 14y ago

deleted 14y ago

[deleted]

when we see these reports/analysis it seems the answer is always the same: Capital Gain. However, I think this whole line of inquiry is mis-titled: these reports always tell us how the rich people are making now their income. Which, I feel, is not a good hint as to how you can become rich. For the greater public, the question of "how the rich people went from 0 to $1B" might more interesting than "how the rich people maintain their $1B+". Definitely I find the latter more interesting than the former (probably because I don't have $1B+)

DanielBMarkham 14y ago
I had the same exact reaction, but looking at the article again, it clearly says A total of over 3,800 taxpayers have made the top 400 since 1992, but only 27% appear more than once, and only 2% appear 10 or more times. That means these are not people who are necessarily rich and are raking in the money. These are most likely people who have a company, have stock options, and are cashing out. Most of them never come back to the list. The point here is that grabbing on to a company could be like catching a rocket -- your ticket to the stars. Whereas working an hourly wage is likely never going to do much more than make you upper-middle-class. I realize you could interpret these numbers differently, but that's what it looked like to me. You can't have big capital gains income without some kind of underlying company that's doing tremendously well.
- leot 14y ago
  There are ~400 Americans with > $1 billion in wealth, and 200 with >$2 billion. $77 million in return on $1 billion is 7.7%. On $2 billion it's a mere 3.85%. Combined with the fact that only 27% appear more than once in the IRS's list, and the fact that people tend to stay billionaires for a long time, this suggests that once people get to this level of wealth they turn down the aggressiveness of their investing and become risk averse. For if every billionaire earned a healthy return on their capital, the top 400 earners would stay roughly the same from year to year, and correspond closely to America's top wealthiest. Furthermore, America would be generating a lot more wealth than it currently does.
  - DanielBMarkham 14y ago
    You're mixing wealth and income.
    - ef4 14y ago
      But when we're talking about capital gains income, we would expect the two to be correlated.
    - jaxn 14y ago
      No, he is saying that $1B in wealth (about 400 people) generates $77m (threshold to make list of highest earners) in income assuming a 7.7% rate of return (which seems unrealistically high to me).
      - leot 14y ago
        Actually, I'm saying that if the 200+ Americans with >$2 billion in wealth consistently generated more than 4% return on capital, then at least 50% of the top 400 earners should stay relatively the same year after year (since those with >$2 billion usually stay billionaires). The fact that only 27% have appeared more than once suggests that those with more than $2 billion in net worth are reporting returns less than 4%.
        jaxn 14y ago
        Appreciating assets don't count as income. They very well may be minimizing income while still maintaining growth. When they sell those assets, they make the list.
  - nonce42 14y ago
    The important thing to remember is that AGI (which the article discusses) and how much money you "make" are not very correlated once you make above, say, 200K a year. A key reason is unrealized capital gains - I guarantee you that if a billionaire makes $77 million, most of that isn't going to appear as AGI. In a sense, realizing capital gains means something went wrong, not to mention income which is very wrong. Other factors that keep money out of AGI include tax-exempt bonds, business expenses, and capital loss harvesting. (And these are just some of the legal ways.) Please, when you read an article discussing AGI, keep in mind that it is a semi-random number. Unfortunately since it's the number available, it's what gets used.
- larrys 14y ago
  "the list" The title to the article is "How the Rich got Rich". But "the list" doesn't deal with "the rich". It deals with "400 Individual Income Tax Returns Reporting the Largest Adjusted Gross Incomes". It is entirely possible for someone to own an asset (which they could, for example, borrow against) that was passed down to them (or that they themselves bought in 1992) that makes them "rich" by generally accepted "de facto" standards of our society. The Forbes list tries to come across as a list of the richest americans but it is obvious that there are quite a few people with considerable wealth who for one reason or another don't make that list until they have some kind of liquidity event. (Added: As you mentioned). "Whereas working an hourly wage is likely never going to do much more than make you upper-middle-class." While that would seem to be true I don't think it is to the degree you are implying in your statement. (By "hourly wage" I'm assuming you don't mean "hourly wage" you are including "salary" workers as well.) Someone in a nice corporate job making a stable salary that invests in the right assets at the right time can become wealthy. (An example might be a physician making $250,000 per year or an attorney, both in a stable situation (no fear of loss of job) that decides to invest in real estate or be a partner with someone else who manages a project. Or decides to be an angel investor (as if, ok..). The key here is that they make a stable income from a job and that they dedicate a portion of their income to investments. (I've personally seen this happen several times with attorneys and real estate they become the partner with the real estate person providing the legal work needed for projects as well as physicians who do a similar thing). Here's the key though: stable job. My wife has a very stable job with a predictable income that will rise every year (healthcare). So she can afford to take a portion of her income that exceeds what she needs and invest it in something that could make her rich. Will she make "the list". No she won't. But she could become "rich" by the standards that most people care about.

antidaily 14y ago

Their parents mostly.

deleted 14y ago
[deleted]
fromdoon 14y ago
Hmm .. it would be really interesting to check out, how many of today's billionaires inherited most or part of their wealth and how many made it big starting from modest backgrounds. Any pointers folks?
- SatvikBeri 14y ago
  For millionaires (defined as people with >$1MM of capital goods that can be easily reinvested), Capgemini claims that "only 16% of high net-worth individuals inherited their stash"[1]. I'm not sure what the precise definitions are since it's not defined in the article. The Millionaire Next Door claims that 80% of millionaires in the USA are the first generation in their family to be rich.[2] I also did my own research looking at (non-Forbes) biographies of the top 10 richest people in the world according to Forbes in 2009. 3 out of 10 came from millionaire or richer families (Eike Batista, Bernard Arnault, Stefan Persson). If you trust Forbes, you can simply go through their website[3], it classifies each billionaire's wealth as self-made, inherited, or inherited + grown. [1]: http://www.economist.com/node/17929057 http://www.economist.com/node/17929057 [2]: http://www.investopedia.com/financial-edge/0810/7-Millionaire-Myths.aspx#axzz1zwr9WPZw http://www.investopedia.com/financial-edge/0810/7-Millionair... [3]: http://www.forbes.com/lists/2010/10/billionaires-2010_Carlos-Slim-Helu-family_WYDJ.html http://www.forbes.com/lists/2010/10/billionaires-2010_Carlos...
  - _delirium 14y ago
    Bill Gates also came from a millionaire-or-richer family, so that'd make 4, if that's the cutoff you're using. (He inherited several million from his grandfather, in a generation-skipping trust fund, although I don't believe he yet had access to that money at the time of founding Microsoft.)

dmix 14y ago

The Rockefeller quote is interesting "If your only goal is to become rich, you'll never achieve it." But I've always felt Citizen Kane's was more accurate: "It's easy to make a lot of money, if that's all you want to do is make a lot of money."

bluekeybox 14y ago
Not so sure. I've met enough people whose only wish was to make a lot of money, yet who failed to achieve it. In a competitive environment, you almost certainly have to be ridiculously good at something else (anything from programming, I suppose, to brain surgery to dealmaking to leadership) to make a lot of money. Also, Rockefeller's quote applies in the sense that, once you make a lot of money, your definition of what "a lot of money" is changes.
- deleted 14y ago
  [deleted]
tluyben2 14y ago
I think if your goal / all you want to do is make a lot of money you have a pretty sad life. However it's not very hard. I don't know in what context the Citizen Kane quote was used. A lot of money varies a lot from where you are and what kind of insane thoughts you picked up from the internet. A lot of money can be $1 million in a lot of countries, $10 million in most countries, $100 million in all countries, $1 billion in silicon valley. Your first million is the hardest they sometimes say but if you have that, you SHOULD not ever have to work ever again if you are smart. That smart part messes most of those cases up. If you have $10 million you are done unless you are a complete idiot. Again, this idiot part messes most of those cases up. So currently most blahblah about getting rich is focused on $100 million or above. I read with much amusement how people in Monaco who have 'only $10 million' feel poor and unhappy. What a sad moron you are. Even in Monaco you can easily live a super nice life, the rest of your life, with $10 million, but apparently people IN Monaco are so insane they consider this poor. Anyway; I believe Citizen Kane was right if he means 'a lot of money' in the sense of being rich/never having to work again in your life. If he means $100 million or over, he is wrong IMHO. Nor did I ever met anyone who had as only goal to make money while I know a lot of rich people (who are rich in the sense they never have to work); even 2 with the magical 'over $100 million and they didn't even ever think about money much, they did what they did best and it shot to the top. That's the best way IMHO, but then again, I don't live in SV.

cagenut 14y ago

great example of why arguing over the income tax rate is a distraction from the real issue: the capital gains rate

DanielBMarkham 14y ago
You'll need to explain yourself a little more. Why is the real issue capital gains? No matter what the rate is, it wouldn't amount to much of anything compared to the money brought in from income taxes.
readme 14y ago
All taxes are theft.

rayiner 14y ago

The huge amount that comes from capital gains got me thinking... why is the return on capital, versus say the return on labor, so high? Our society is awash with capital. We apparently have more of it than we know what to do with (see, e.g., the real estate bubble, the tech bubble). If the capital markets were efficient, shouldn't supply and demand equilibrate things to drive down the price of capital? I think the structure of the capital markets, VC's and funds and the like, are still holding back efficiency by limiting the market of sellers. Things like Kickstarter that "democratize" the capital markets may also play a huge role in making them more efficient.

pmjordan 14y ago
why is the return on capital, versus say the return on labor, so high? Because labour, by and large, isn't particularly mobile, whereas capital is highly mobile, despite governments' best efforts. It's simply cheaper to enforce labour taxation than capital gains taxation. A second reason is stability: in a recession, employment drops by a few percent, whereas consumption (sales taxes) typically drops much more sharply, and capital gains even more so.
cynicalkane 14y ago
Two things: 1) Buying capital is much, much riskier than earning wages. If we suppose people who are good at being capitalists are also approximately as good at earning money, the economic equilibrium will tend toward capital being then much more profitable. Us being "awash" in capital is a red herring; in your garden variety market equilibrium model it's the incentives that matter. The returns are exponential, which just makes things more unequal when your actors are risk-averse. 2) The current tax treatment of capital gains rewards what I call "super-capitalists", people who get one tax-sheltered blob of capital and grow it and grow it. It's a compromise between the need to tax income and the need to not tax capital, but the downside is you get all these Mitt Romneys that only pay 15% taxes. #2 is why there's bipartisan support among economists for progressive consumption taxes, not income taxes, but you don't hear much about it since it's currently in the "pipe dream" category of economic policy.
- 14y ago

flibble 14y ago

No no no. If capital gains tax is less than income tax, then of course the IRS stats show most income comes via capital gains.

wallflower 14y ago

I remember reading some article about how a private banker had a ultra-high net worth family who wanted to name their latest blind trust, 1066 - as in 1066 - the year in which their family acquired most of their wealth.

lifeisstillgood 14y ago
The impressive thing there is keeping and growing the wealth for a thousand years. Quite literally the family of William the conqueror did not do that so this family really pulled a trick

roguecoder 14y ago

Given that the tax structure massively prefers capital gains to other forms of income, it is unreliable to look at the reported tax percentages as a measure of where the money is actually coming from. For example, many of the uber-rich structure payments for their labor such that they are taxed as capital gains.

einhverfr 14y ago
But typically this is only possible by being a part-owner (and an owner of a significant part) of a business with defined shares.
brown9-2 14y ago
Exactly, the article is ignoring any sort of cause and effect for why the numbers are the way they are. If the US changed tax policy to favor other types of income, how the rich divide their income would change to fit.

eli_gottlieb 14y ago

In this article, Inc Magazine confirms what any follower of Marx or George could have told you long ago: the rich get rich from owning things, preferably productive assets like businesses, rather than from working.

canttestthis 14y ago

How is "Partnerships and corporations" different from capital gains?

toddh 14y ago

Here's the IRS pub that's the basis for the article: The 400 Individual Income Tax Returns Reporting the Largest Adjusted Gross Incomes Each Year, 1992-2009 http://www.irs.gov/pub/irs-soi/09intop400.pdf http://www.irs.gov/pub/irs-soi/09intop400.pdf The Tax Foundations take (http://taxfoundation.org/article/fortunate-400 http://taxfoundation.org/article/fortunate-400) is a little different. Interesting that in the 18 years that the report covers none of the taxpayers were on the top 400 list for all years. & only 4 (1%) were on the list for 17 years. 73% were on the list for just 1 year.... Their take was that most folks were on the list due to one time event...sale of assets, etc Also wages were flat for all 17 years (as a % of total income). Partnership & S Corp income was up ~400%, which could be because of the growth in publicly traded partnerships.

technology 14y ago
Good point. There is a similar report by Harrison Group which surveyed 3,000 pentamillionaires ($5 million net worth) and found that almost all pentamillionaires made their fortunes in a big lump sum after a period of years. http://finance.yahoo.com/news/pf_article_103017.html http://finance.yahoo.com/news/pf_article_103017.html

gareth_at_work 14y ago

Anybody who has a 401k or IRA in the US is benefiting from capital gains, and as we all know from 4 years ago, it can be very risky.

countessa 14y ago

I like that "do a lot of small things right"....kind of sounds like "the more I practice, the luckier I get"