The Shy Millionaires

In response to my last post on taxation, there are a few of you who feel that "rich" people, those making over $500,000 a year, should be hit with extremely high taxes. One commenter mentioned that many of the people he knows inherited money or found a "rich trophy wife " (Huh, where are these rich trophy wives?). Another commenter at Megan McArdle's blog referred to those with over $500,000 in income as "fat cats," who don't work:

I'm not ideologically opposed to taxing wealth, mainly because I know a lot of fat cats that aren't working. But it seems to me that there's no pragmatic way (or at least, not one we've discovered yet) to penalize them without also hitting a lot of people who are working.

In his book, Microtrends: The Small Forces Behind Tomorrow's Big Changes pollster Mark Penn describes the trend of the "shy millionaire" as Americans who live below their means. He states that we have a bit of a skewed perception about American wealth:

According to recent surveys, most Americans think there are far more millionaires in America than there really are--by about 4-fold. A survey done in the late 1990's--when only about 4 percent of households had net assets over $1 million--showed that the public believed that 15 percent of households were that rich. (Today there are 9 million people in America worth $1 million or more, exclusive of their homes.)

...According to the authors of the best-selling book, The Millionaire Next Door: The Surprising Secrets of America's Wealthy,the average millionaire in America went to public school, drives an American made car (and not this year's model), and received zero {my italics} inheritance.

...he isn't interested in telling you how much money he has. Most millionaires would not be caught dead in a limo. It is the antithesis of what they believe in...

Penn describes six different types of millionaires (I won't go into all the types here) with the most prevalent group being the most quiet--the Satisfied Savers--these people are made up of welding contractors, pharmacists, pest controllers, etc. The Satisfied Savers are those millionaires who have worked hard, saved much, and lived below their means.

Penn makes a very good point about why "class warfare" polemics rarely win in American politics:

Promising to give the rich their comeuppance on behalf of the "little guy" has its shortcomings when many Americans believe that they, too, can be millionaires. Class warfare language directed at people who have worked hard to get where they are is a very unpredictable way to talk to American voters. It is quite different in Britain, where privilege is presumed to be behind success, but in America, equal opportunity is one of our most cherished values.

So rather than a bunch of "fat cats," most millionaires are just the opposite: people who worked, lived below their means and saved a lot of money. Or as one politician put it, people who "worked hard and played by the rules." All of us could learn from them. Jealous that they have not achieved this level of wealth, now many controlling types of people are scheming to take money from others through high tax rates that penalize the "shy millionaire" as much as the real "fat cats," whatever that means. Instead of scheming like a bunch of thugs, perhaps the government and those that approve of their thuggery should learn to be more like the shy millionaires by spending below their means, saving, and showing some class.