Forum Post: Two Types of Wealth - Assets are more enduring than Income
Posted 13 years ago on Nov. 8, 2011, 7:02 p.m. EST by greentara
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Does it matter? Yes. Let's start with the difference between income and wealth. The top 1% of today's earners make more than $700,000 annually, and the top 1% in terms of wealth have assets of more than $9 million.
There's a big difference between the two kinds of money. Income lasts only as long as you have the job, and it has a tendency to get spent once it's earned. Income taxes, which are hard to evade on earnings, come out of it, as do the expenses of daily life. But wealth is forever, as long as the possessor can resist risky investments and live on the income from it rather than the principal. Many of the returns on acquired wealth come from capital gains, which are taxed at a lower rate of 15%. Other returns are sheltered from taxes in a variety of ways.
It is a lot better for the pocketbook, it turns out, to have a trust fund than to work as a stock trader, especially in a downturn like ours. Enduring wealth also translates into enduring political power in our system
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