

The Wild Ride Of The Top 1% - jkuria
http://online.wsj.com/article/SB10001424052970204346104576638981631627402.html

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wanorris
The simplest explanation for the volatility is that brutal tax rates prior to
the Reagan tax cuts led the wealthy to keep their money safe and to try not to
realize too much income in any given year -- and if possible, hide their
income entirely so that they didn't have to pay taxes.

Slashing the tax rates made it more practical to just go ahead and realize any
income you can get. Since earning an anomalously high income is -- obviously
-- itself anomalous, it stands to reason that a high percentage of the highest
incomes were due to one-shot gains, whether from cashing in on options in a
company after an IPO or a vesting, making a huge trade in the market that pans
out impossibly well, or simply making the deal of a lifetime in a business
arrangement.

Any disagreements? Other possible explanations? This is pretty interesting
macroeconomic data, so I'd love to hear more thoughts.

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patio11
A major portion was an IRS rule change which made it less tax efficient to do
conspicuous consumption on the company dime. Japan has a treatment closer to
the old way, and Japanese CEOs have wages which are not too dissimilar to
American engineers but lifestyles which are similar to American CEOs. (e.g.
Want a private flight to a vacation in Europe? That can be arranged, sir.)

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vinhboy
Which do you think happened first? Firing half of his work force, or deciding
to finally put his house on the market. That's a pretty important distinction.
In time of stress, who gets sacrificed first? Your employees or your luxuries?

Also --- _"from the Occupy Wall Street protesters in New York to the tax
battles in Washington, portrayals of millionaires and billionaires are being
shaped more by partisan ideologies than economic realities"_ \--- really?
Thousands of people in LA lining up to receive free health care because they
are insured is "partisan ideologies"?

What is "economic realities" then? The price of a Gulfstream?

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joshmlewis
I was browsing through real estate in SF the other day and saw a few mansions.
I like clicking through the pictures and seeing what that kind of lifestyle
would look like. At a price tag at 20mil and amazing views you'd think you'd
be happy there but then I looked up the monthly payments for a 30 year loan
and they would be 80,000 month. I was shocked and baffled at how someone could
be ok spending that much money a month on a house. Who can afford this? You
think of the common stereotypes but really who could do this. Someone list
some names and what they did beside the mainstream people.

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lbarrow
This sort of article is why serious people tend to roll their eyes when the
Wall Street Journal comes up. Their agenda -- to humanize and sympathize with
the 1% -- could not be more obvious. Why should I feel bad for someone who
describes losing their $100m house as heartbreaking?

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jimbokun
You must have read a different article. The article I read went to great pains
to point out the staggering extravagance of many wealthy people in the U.S.

EDIT: I mean "Versailles"? Seriously? Like just building the largest residence
in the U.S. wasn't ostentatious enough by itself?

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lbarrow
I suppose it's dependent on how you read the article. I assumed that we were
supposed to be sympathizing with these people -- although we both realized how
ridiculous that would be.

~~~
wanorris
I started off sick at my stomach at the same thing you were complaining about
-- the sad story of this unfortunate woman losing her 90,000 square foot
house. But it became pretty clear that while they weren't mocking her to her
face (which would be mean no matter who she was), they definitely weren't
expecting everyone to sympathize with the plight of the extremely wealthy.

They make this point most clearly here:

> Of course, the trauma of giving up a Gulfstream or a yacht can't compare
> with the millions of Americans who have lost their only job or home. The
> Siegels will make do in their current 26,000-square-foot mansion.

