Approximately 10.5 million families in America have reported annual incomes of one million dollars or more. The recession of 2008 seemed to have little to no impact on their finances. It is also estimated that by the year 2020, the number of millionaires in America will actually double to over 20 million!
Statistics show that the same Americans who were either unaffected by the 2006-2008 economic crunch or bounced back quickly are those who currently hold the most wealth. While some were devastated and lost millions, others found a way to seize the moment and capitalize on the crisis.
The reality is, the wealthy are getting wealthier, and this will remain relatively unchanged over the next few years. All the while, the middle and working-class families are finding it increasingly difficult to move ahead at all. These are the people who were affected most by the recession and the stagnate job market.
How did America’s millionaires get so wealthy?
The majority of millionaires in America became wealthy through inheriting the assets of their relatives. Almost everyone has heard the stories of the Robber Barons like J.D. Rockefeller and J. Pierpont Morgan. They became the wealthiest people of their times because they were captains of their industries. For Rockefeller, it was oil and for Morgan, it was the financial industry. As these men forged ahead to create new technological advances, they enriched the nation as a whole and in doing so, became infamous for their knowledge and wealth. Over time, their descendants followed suit and kept the dream alive and the money flowing.
Others worked diligently in the finance industry and began to capitalize on the stock market. While there have always been fluctuations in the day-to-day operations of the stock market, some had the foresight to invest wisely and suffer few losses. Their gains allowed them to soar above their competitors and reach higher levels of income.
The wealthy achieved wealth because they had more resources than those of the average, working-class. They used their influence in politics and finance to retain their wealth and this continues in many ways today. Of course, some have become rich overnight, like lottery winners, but they seldom have the business savvy to know how to make their winnings work for them.
The difference between being rich and being wealthy is simple. Rich people work for their money, wealthy people let their money work for them. Once you understand this concept, it is very easy to understand why the millionaires in America continue to succeed.
Should millionaires pay higher taxes?
Most Americans believe millionaires should pay higher taxes because of their income bracket. Unfortunately for the middle-class and working-class, many do not. In fact, according to the Internal Revenue Service, the average number of millionaires reporting a tax return for the 2010 tax year were only required to pay 24% of their total income.
If you compare their annual income to someone who makes approximately 10% of that amount, or $100,000, you will find that millionaires are actually paying less. The average tax bracket for someone with an annual income of $100,000 is approximately 26.4%. For most, this does not compute.
For years, Democrats have been pushing for a tax law that will place millionaires in the appropriate tax bracket, but to date, no changes have been implemented. Even Warren Buffett, arguably one of the wealthiest men alive has voiced concerns over his personal tax responsibility. He is pushing for reform and in 2011, joined with President Obama to create the Buffett Rule.
This rule would require a 5.6% surtax for everyone who has an income of one million dollars or more. Unfortunately, by the end of 2011, the Senate, led by Republican outrage, argued against the rule. They stated this would cause small business to suffer and discourage the public from saving or investing.
Are we becoming a tiered society?
Many feel we are becoming a tiered society, especially after 2008 when millions of hard-working Americans lost their jobs. While the national employment rate is trending down from 10% to 8.3%, it seems as if those who are gaining employment are not making the same salaries. Unlike the uber-rich who continue to see their money grow.
In looking at the United States of America as a whole, the nation appears strong, resilient, and able to bounce back after numerous financial setbacks. However, when you begin to dissect the nation, you will find gaping holes between those who have and those who have not and the gap is growing.
It has been reported that as of the year 2020, the top three nations with the most wealth will be the United States, Japan, and Russia. Ironically, these nations will also suffer the most disconnect between the wealthy and the working-class. If the divide continues, it is very likely that we will only have two classes of people, the wealthy and the poor.
Millionaires in America should be proud of their earnings and hard work. It is an accomplishment that many may never reach in their lifetime. However, millionaires should also be held to a higher standard than the average middle or working-class family because they have advantages that others are not privy to. It is indeed a privilege to be wealthy, but it also carries hefty responsibilities.