At the risk of dating myself, I grew up watching Gilligan’s Island on television. As I did not grow up in a wealthy household, my youthful image of a “rich” person was Thurston J. Howell, III, the extremely wealthy and rather lazy member of the marooned “Gilligan” castaways.
Demographic statistics (and my own anecdotal experience) tend to show that wealthy individuals in the United States do not resemble Thurston Howell. Rather, many are owners of small and entrepreneurial businesses. This conclusion has certainly been supported by the research of Dr. Thomas J. Stanley, co-author of the bestselling book The Millionaire Next Door. Dr. Stanley’s central finding is that wealthy individuals in America acquire their wealth through hard work, careful savings, and living a lifestyle well below their means. Often these individuals are “self-made” business owners whose hard work and good ideas have brought them economic success.
As I mentioned in my previous post, Congress is currently considering proposals to increase the top two tax brackets from their current 33% and 35% tax rates to 36% and 39.6%, respectively. Congressional leaders have proposed additional surtaxes that will be “layered” on top of the new higher tax rates. Newly developed data from the Joint Committee on Taxation indicates that 55% of the tax from the higher rates will be borne by small business owners with income over $250,000. These same small businesses create 70% of all new private sector jobs in the United States.
I am neither an economist nor a politician. However, I am concerned that all too often, those seeking to soak ol’ Thurston Howell may really be hurting the owner of the corner store down the street, not to mention the employees that work at that store. Is that the intended consequence of the new tax policy?
I welcome your thoughts and comments!