Confessions of a (fairly) Rich Man
In 2016 I made $717K. I didn’t put in a single hour of labor.
I vacationed in Costa Rica, Yellowstone, Hawaii (4 times!). I ate at fancy restaurants. I drove my Tesla around the streets of one of the toniest towns in the country. I retained a team of people to tend to my lawn, clean my house, and make my breakfast.
I am indebted to this great country’s police, justice system, and prison system for keeping the domestic baddies in check and to our powerful military for keeping the foreign baddies in check. Not to mention the welfare system to keep the poor from becoming hungry and restless.
And how much am I going to pay in taxes for all of these services? $32K! 4%!
Isn’t America great? And Donald Trump says he’s going to make it even greater! I can’t wait to find out what fabulous tax cuts he has in store for rich guys like me!
To be clear, I’m just rich, not super rich. I still manage my own money and file my own taxes. Super rich people have teams of CFAs and CPAs to create offshore accounts and navigate through tax loopholes. If I paid 25% when I was working and 4% now that I’m rich, imagine what I would pay if I were super rich!
I’d love to see Mr. Trump’s tax returns to see how little he pays! I was sad to see that Trump wasn’t willing to share the mathemagic of his tax returns with the rest of the country. I think people would be impressed at how close to zero he paid. I know I would!
Remember the “Occupy Wall Street” protests? I do. They made me feel bad. They made me feel like maybe I should pay more than 4% in taxes.
Thank god Trump has refocused everyone’s attention on the Mexicans and the Muslims.
My daughter has a good friend who’s Mexican. She’s worried that her friend is going to get rounded up and deported. The truth of the matter is that yes, Rosa’s family might be woken up in the middle of the night and sent to Mexico but Donald Trump is planning to eliminate the estate tax, giving my daughter millions of dollars in tax savings when I die. I’d like to reassure my daughter by explaining that tradeoff but I worry that I might damage her psyche with the idea that daddy might die someday.
And the Muslims! I know some Muslims and they’re really nice people. Personally, I don’t think Donald Trump is really scared of Muslims. And he probably knows that he’s going to enrage more Muslim Americans like the Orlando and San Bernadino shooters. But you have to give the people and the press something to focus on and I think we can all agree that it’s better to focus on the Muslims than on making wealthy people pay more taxes.
When’s the last time you read an article about scary muslims. Today? Yesterday? When’s the last time you read an article about wealth inequality? I can’t remember either!
If you want an example of Trump using Muslims as a smokescreen, watch this. He manages to redirect a question about his support for abortion to focus on scary muslims “cutting Christians heads off”. That man is a genius.
But I’m getting off track. Back to me and my taxes. You might ask how I made so much money and why I pay so little taxes.
One money maker for me in 2016 was an investment in World Acceptance Corporation. They’ve been raking in enormous profits for decades making small loans to hard working people in southern states. How do you make money from small loans? Charge enormous interest rates and fees!
I bought shares in the company back in 2002. By 2014 the shares had increased 12-fold. I was sitting pretty, congratulating myself. Unfortunately, Barack Obama and his bleeding heart liberal administration, created the Consumer Financial Protection Bureau which started investigating World Acceptance for “predatory lending”. Would a real predator detail its attack in many pages of fine print and hand it to its prey before attacking? Of course not.
After the CFPB announced an investigation, shares of the company dropped 75%. I was sad. My 12-fold returns had dropped to 3-fold. But over the course of last year as Wall Street started to realize that the very same southerners getting “protected” by the CFPB might elect Trump into office and allow him to dismantle the bureau, the shares started to creep up. And then once Trump actually was elected, it shot up 37% in a week! And neither the press nor the people noticed! They were all focused on Trump and the Muslims!
Anyway, as of now, you’ll be happy to hear that I’m up $200K on my 2002 investment. And I haven’t paid a cent in taxes. The IRS doesn’t even know that I’m invested in it. And it’s all legal! If I hold the shares until my wife dies, I’ll get a “stepped-up basis” allowing me to sell half of the shares without paying any taxes.
Add to that, a Roth IRA, tax loss harvesting, a slew of deductions, and a number of other strategies and I end up with 4% tax on my $717K of gains. Isn’t America great!
P.S. All of the facts above are true. Except for Rosa’s name.
