Saturday, January 28, 2012

Analysis of Avarice

A wealthy American’s tax returns were recently in the news, and I made a post on Facebook about it. My interest was doing some number-crunching that I had not heard performed in any of the news coverage on these tax returns. I pointed out that this person earns nearly $60,000 every day from investment income (and thus pays a tax rate of less than 15%). The thought of raking in this lofty level of income every 24 hours is both incredible and sad to me.

In my prior posting, I did not use his name, in an effort to stay non-partisan, but everyone knows I am referring to Mitt Romney. In previous elections, I could probably have written similar essays on Nelson Rockefeller, Ross Perot, Steve Forbes, or Teresa Heinz Kerry’s husband. I want to acknowledge that this is not a vendetta against Romney. He seems like a nice guy who has done some good things in his life. Plus, I can remember when his dad ran for president, and as a kid who was into cars, I thought it would be cool to have a former auto maker as a president. I am really not trying to say anything about this candidate’s current campaign. I’ll wait until closer to Election Day to decide who gets my vote.

He is quite rich, but he is far from the richest American. It is just that his tax returns went public, and so I decided to do a little math on the numbers. Extrapolating further (and just to keep it simple), if he is getting a 10% return on investment, then his roughly $21 million annual interest payments come from a total corpus of only $210 million. There are lots of folks from both political persuasions who are way richer than he is (Gates, Buffett, Soros, Koch Brothers, Walton family, Zuckerberg, Bloomberg, etc., to name just a few of the billionaires).

The point I was trying to make in my posting was how I have a hard time understanding this wealth accumulation mentality. To me, at some point one has to worry if they are crossing into avarice (also known as greed), one of the “seven deadly sins.” I grew up with a sense of charity such that I could never stand to have so much money—I’d be giving it away once I could live comfortably. I’m proud that I will never be that rich!

However, many of America’s rich seem to have the same interest in collecting money and holding onto it as some of those demented folks I saw the one time I watched that TV show about hoarding. It just does not seem Christian to me to accumulate that much wealth. I prefer to think that if asked “WWJD,” He would not be controlling such a fortune.

It is clear to me that no one really needs that kind of money for themselves. Since it is more than you can spend in a lifetime, one of the goals of this kind of capital accumulation is to ensure your future generations are set for life (e.g., Rockefeller, DuPont, etc.). It is one thing to want to help out your own children, it is another thing altogether to set up an everlasting dynasty. Remember, America was created with the idea that unlike Europe, we would not have a nobility class of inherited wealth—ours would be a merit based society where anybody could pull themselves up by their bootstraps and make a name for themselves. We seem to be forgetting this early maxim.

Dating back to my college days, I always felt that a good benchmark for knowing when one was really well off would be when you are making more than the salary of the MOST IMPORTANT job in America—the Presidency. Even when it was only $200,000 per year (now it is $400,000), I advocated a higher tax rate for anyone making more than the President makes each year. I’m not opposed to capitalism, but when you are making more money than the President, you should help contribute more to the country that made this possible (and do so without complaining—especially when your country is in dire straits with its finances).

After all, the 16th Amendment creating the income tax would never have been approved by American citizens had it not been for the fact that the original intent was to let those who had prospered in our country to help pay for it. The first income tax, when converted to today’s dollars, only applied to those who made about a hundred grand. Anyone making less than that did not have to pay income taxes. No wonder the citizenry clamored for it to be added to the Constitution!

The release of these tax returns show someone who makes more in a week (~$60,000 x 7 days = $420,000 per week) than the President makes in a whole year! I’m truly glad I’m not that person. I don’t mean to personally condemn him or any of the other millionaires and billionaires, but I think the general topic is worthy of reflection. I’ve written before on this topic (see and the Bible verse “For it is easier for a camel to go through a needle's eye, than for a rich man to enter into the kingdom of God.”

Some people may yearn for riches, and it is good to want to prosper. Even the Chinese have learned the values of capitalism. But at some point, my personal feelings are that if one is well off, then you should be giving it away as fast as it comes in. Charitable contributions can help the country just as much (if not more) than capital formation and investment.

I’m not saying that everyone should live as Mother Teresa—I’m certainly glad that after eight years of higher education (B.A., M.P.A., J.D.), I am ahead of the average annual income in America. In addition, I put as much as I can towards my retirement, so I can one day live off my meager investments. But I will never be mega-rich—I would feel too guilty if I was ever that rich.

That is one deadly sin I will never have to worry about.

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