Page 70 - MetalForming October 2010

Irv Blackman, CPA and lawyer, is a retired founding partner of Blackman Kallick Bartelstein, LLP and chairman emeritus of the New Century Bank (both in Chicago). Want to consult? Need a second opinion? Contact Irv:
Blackman, Kallick, Bartelstein 10 S. Riverside Plaza, Ste. 900 Chicago, IL 60606
phone: 847/674-5295
e-mail:
Blackman@EstateTaxSecrets.com www.taxsecretsofthewealthy.com
The United States is the greatest coun- try on the planet. Why? Our free society and, in a word, “Capitalism” (defined in Webster’s dictionary as “the economic system in which the means of production and distribution are pri- vately owned and operated for profit.”) “Capitalist” has two separate definitions: 1) “an owner of wealth used in busi- ness,” and 2) “wealthy.” This is a perfect description of the typical successful business owner/reader of this column.
For you entrepreneurs who have worked your tails off and have become affluent, you have been shoved into a separate new minority group, usually referred to as “the rich.” Make no mis- take about the rich in America, they are under a relentless attack—in the media, and in public and private conversations.
Certain politicians love to attack us and propose to take bigger portions of our wealth by various obscene taxing schemes (higher income tax and capital gains rates/killer estate tax rules and rates/a surtax/remove limits on taxing earnings subject to social security taxes). “They can afford it,” is the smug expla- nation. As a voting group we are a small minority. Our campaign contributions are valued more than our votes.
My research has failed to discover an authoritative source as to whom is con- sidered rich. Based on my years of con- sulting, here are three categories:
1) Rich: net worth of $4 million to $10 million, but to varying degrees are still concerned about maintaining their lifestyle to the day they die.
2) Ultra rich: net worth of $10 mil- lion to $25 million, no longer con- cerned about maintaining lifestyle.
3) Mega rich: worth more than $25 million, more concerned with not los-
ing any of their net worth, and conser- vatively growing it.
Almost all the rich have a fetish about:
1) Overpaying their taxes, yet they begrudgingly are honest taxpayers;
2) The value of their time;
3) The efficiency and competency of their employees (particularly top management) and outside professionals (i.e. their CPA and lawyers). Appropri- ate and timely follow up is a must.
4) Avoiding hassles and welcoming convenience.
Most of those still in business are on a constant search for relief from stress, time pressure and responsibility. Yet, they rarely become a member of the “paralysis-by-analysis” club. Try to rip ’em off and you are toast.
The rich are an essential ingredient of the fabric that makes America great. Let’s look at some undisputed facts that prove the rich are a necessary cog in the wheel of a prosperous American economy.
1) Taxes—The most recent IRS data shows that the top one percent of tax- payers (earned $410,000 or higher in 2007) paid a whopping 40.4 percent of all federal income taxes. Amazing, because those taxpayers only made 22.8 percent of all the reported adjusted gross income. So much for the myth that the rich don’t pay income tax.
In 1993, economist Burt Hauser, published new data about the income- tax system. Hauser’s Law: “No matter what the tax rates have been in postwar America, tax revenues have remained at about 19.5 percent of GDP (gross domes- tic product).” The simple truth is that an increase in GDP increases tax revenues, while an increase in tax rates (which sock only the rich) reduces tax revenues.
Want further proof? Three times in
68 METALFORMING / OCTOBER 2010
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BLACKMAN ON TAXES IRVING BLACKMAN
If You’re Wealthy, You Are Under Attack— It’s Time to Fight Back