Earlier this week, I was talking with a wealth manager about our mutual experiences of the wealthiest Americans, the so-called “1%-ers.” It seems to us that many Americans have misguidedly bought into demonization of the “1%” as “greedy,” believing that “1%-ers” who oppose income and capital-gains tax increases do so simply to increase their own fortunes. (First off, let’s get the meaning of “greedy” straight: It’s “greedy” to endanger others in the pursuit of money, e.g. to knowingly sell a product with a hidden defect that could kill consumers. It’s not “greedy” to simply want to keep your own, lawfully-acquired money.)
Now, semantics aside, our experience has been that “1%-ers” generally advocate public policy less out of self-interest and more because it’s what they honestly believe is best for the country. How do we know? Well, some of them, Warren Buffet for example, actually do support tax increases on themselves (although I’m not aware of any of those people ever actually sending more money than they’re required to send to the government, which they’re free to do anytime). But those who don’t support tax increases, in our experience, tend to have accumulated enough wealth that their lifestyles, for the remainders of their lives, will be unaffected by any foreseeable tax increase. And generally, those “1%-ers” who make the many sacrifices necessary to pursue public office would be making particularly bad deals for themselves were they to divert all of that time and energy away from working on their own fortunes and toward working on the nation’s fortunes, simply in the hopes of defeating tax increases that wouldn’t impact their lifestyles (nor the lifestyles of most of their friends) anyway.
In our experience, members of the “1%” who oppose wealth redistribution and advocate small government, low taxes, and private charity instead tend to do so not because they’re worried about cutting back on their lifestyles if taxes go up but because they’re worried about cutting back on hiring and employing others if taxes go up. While they tend not to like the government confiscating and re-distributing their wealth, they do tend to like redistributing it themselves, by expanding their businesses, employing people who do honest days’ work for the money, and by giving (typically more than they ever talk about or even deduct on their tax returns) to charities that they’re confident will use the money more effectively and efficiently than the government ever will (as a friend recently pointed out, Warren Buffet gives billions to private charities, which proves that despite his tax-increase rhetoric, he too believes they‘ll make the money go farther than the government would). Whether you agree or disagree with these “1%-ers” on economic policy, in our experience, it’s misguided and unproductive to buy into the demonization of them as “greedy.”