Building the Wealth of Nations - 2009

Written for those that think the wealthiest 1 percent should be taxed to the hilt!

I am a "one percenter". That means I live on less than 1 percent of my yearly income. I have been a "one percenter" all my life. I made $12 million (USA dollars) net income in 2009. I re-invested 99 percent of what I didn't spend. I pay personal tax on the 1 percent I live on but I pay zero tax on the remaining 99 percent that is re-invested and there is a reason why.

I started out in life at zero net worth. My net worth has grown exponentially since then.

Here is the trick I used: Many many years ago I learned the more you make the more you get taxed. A year or two of getting taxed at 46.222 percent woke me up. I hated paying tax on money I was trying to put to work to make more money so I thought about it awhile and came up with a plan.

I started a company (ABC) in 1967 and hired the poorest people I could find. I had them sign secrecy and confidentiality agreements and then trained them in basic finance. The tax code entitles everyone to earn a certain amount of income tax free. The next dollar earned beyond that is subject to income tax at some rate.

I agreed to pay my employees their full tax free earned income amount if they agreed to claim the income on their tax return and also agreed to re-invest 99 percent of the total back into the company. They were allowed to keep 1 percent of the money to live on.

The first years produced next to nothing for them to live on as their 1 percent share amounted to very little but the 99 percent that was re-invested in the company was put to work immediately. Employees were encouraged to work at anything they could find (ie waitress, farmhand, etc) to make money but try to make it under the table because every single dollar earned above the table would now be taxed. It was their choice how they chose to earn what they needed to live on in the early years.

After about 10 years of investing and re-investing each employees tax free income allotment each year in the company, the 1 percent share was soon big enough that each employee could notice a difference.

Employees were also slowly trained in the art of frugality. The yearly carrying costs of a McMansion are 10,000 times higher than living in a glorified cardboard box like the one Warren Buffet lives in. Live within your means ... far within your means.

I started out with 1 employee, then there were 2, then there were 4, then there were 8 ... etc. We now have 1,000 employees. $12,000,000 net income / 1,000 employees = $12,000 per employee

As employees reached and surpassed 10 yrs with the company, the percentage they could keep of the income they claimed each year increased by 1 percent per year. ie. at 20 years, each employee could keep 11 percent of the income claimed and it got better as more years passed

Employees of the company were also trained to USE the knowledge the company taught them to help themselves throughout their lives.

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The above story is based on "trickle up economics" verses "trickle down economics" that failed.

It is also based on "the cookie test" economic theorem. A group of 5 yr old's were each put in a room and given 2 choices. They could have 1 cookie immediately or wait until the instructor came back and get 2 cookies.

The children that held out for 2 cookies did far better in careers and financially in life than the other children.

Do you understand why?

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