How the Rich Avoid Paying Taxes

[you&me]

Originally Posted by Enoch Root

Luck plays a role, yes. But as I said earlier, people require motivation. You level the playing field, you douse motivation.

Also, while it is indisputable that luck is a factor, it is very difficult to determine how much, and it is easy to overstate it. And I think saying it is a disproportionate role is overstating it. You have to be lucky in order to be invited to the game, but from the group that has that luck, only one succeeds.

Suggesting luck plays a disproportionate role in Bezos' success isn't reasonable, IMO. Did it matter that his parents were able to support his efforts financially? Absolutely. Most people's parents can't throw in hundreds of thousands of dollars.

However, the question needs to be asked: would he have been successful without that support? No one can say, of course. But there are lots of other sources of financing, for those that have viable business plans.

As the saying goes; "luck is what happens when opportunity meets preparation"...

Bezo's parents being able to invest a couple hundred thousand into Amazon wasn't luck. It was an opportunity that he was able to take advantage of. And the fact that he was bright, with a solid idea surely also factored into their willingness to invest (that's the preparation).

Can anyone here honestly say the only thing standing between them and starting the next $100B company is their parent's ability to invest $300,000? Ha!

Whether you're talking about Jeff Bezos, or even just a partner at a law firm, pointing to their success and calling it 'luck' is disingenuous and shows a true lack of understanding of what it takes to achieve that level of success. No one claims an NHL'er is 'lucky' and it's much the same with anyone else at the pinnacle of their professional field.

Winning on your first pull on a slot machine is lucky; building a billion dollar business is almost anything but.

[I_H8_Crawford]

Originally Posted by blankall

Most people know that saving and investing are for their financial well being. That isn't going to stop people from lining up to buy expensive trucks the next time there's an oil boom.

People overextend themselves financially because they are tempted by material things and experiences, not because they've never heard of savings and budgets. A couple weeks of highschool education in the subject isn't going to make the difference.

I disagree.. most people don't have a clue about investing.

You would be shocked at how many people out there think a RRSP is an investment, and not an investment vehicle. Ditto for TFSA which most people treat as a vacation fund instead of a retirement vehicle.

I am not saying it should be 2 weeks, it should be throughout school. Start young with simple concepts like budgeting (money in vs money out) and move to complex ideas in high school like compounding, what RRSP/TFSA is, and even cover things like bonds and their relationship to interest rates, mutual funds, ETFs, etc.

[GGG]

Originally Posted by you&me

As the saying goes; "luck is what happens when opportunity meets preparation"...

Bezo's parents being able to invest a couple hundred thousand into Amazon wasn't luck. It was an opportunity that he was able to take advantage of. And the fact that he was bright, with a solid idea surely also factored into their willingness to invest (that's the preparation).

Can anyone here honestly say the only thing standing between them and starting the next $100B company is their parent's ability to invest $300,000? Ha!

Whether you're talking about Jeff Bezos, or even just a partner at a law firm, pointing to their success and calling it 'luck' is disingenuous and shows a true lack of understanding of what it takes to achieve that level of success. No one claims an NHL'er is 'lucky' and it's much the same with anyone else at the pinnacle of their professional field.

Winning on your first pull on a slot machine is lucky; building a billion dollar business is almost anything but.

If you don’t like the word luck then how about 95%-99% don’t have the opportunity to be a billionaire. I think Outliers by Gladwell is pretty good at discussing the problem. And NHLers need a tonne of luck (or opportunity) to get to the NHL. Just being born earlier in the year is a significant advantage. Having parents who can afford it is a huge advantage.

Why are people uncomfortable with saying they were lucky?

[blankall]

Originally Posted by I_H8_Crawford

I disagree.. most people don't have a clue about investing.

You would be shocked at how many people out there think a RRSP is an investment, and not an investment vehicle. Ditto for TFSA which most people treat as a vacation fund instead of a retirement vehicle.

I am not saying it should be 2 weeks, it should be throughout school. Start young with simple concepts like budgeting (money in vs money out) and move to complex ideas in high school like compounding, what RRSP/TFSA is, and even cover things like bonds and their relationship to interest rates, mutual funds, ETFs, etc.

In my opinion the vast majority of people are better off leaving actual investing up to professionals anyways.

As for budgeting, until you're actually living with an income and responsibilities, it's hard to understand that concept. Once again, I don't see a high school class all of a sudden stopping people from wanting luxuries they can't afford. I know people at all levels of education and income who can't budget at all.

[WhiteTiger]

Originally Posted by GGG

Why are people uncomfortable with saying they were lucky?

Because luck discounts effort/work significantly.

Our society is set up (theoretically) to reward work. You work, you reap the benefits. You pull yourself up by your bootstraps. You work hard, and you are rewarded with a 'good' life.

Society looks down on the lucky as undeserving. "He didn't earn that, he just got lucky", "He just got a lucky break, he's nothing special. Anyone could do what he did, with the same break."

[Fuzz]

Originally Posted by Enoch Root

The really frustrating thing about the church - and particularly evangelicals - demanding donations, is what it means for their flock.

Many ministers suggest that donations should be 10% of income. The problem with that number is that it is also the minimum that everyone should be saving for their own, and their family's, future.

And the problem is that most people cannot do both. So when they donate 10% of their salary, to make the minister wealthy, they forego making a donation to their own family's wealth.

that is a very high price for spiritual support, IMO. It makes me sick.

The fact that people donate money to a church because some dude says it will get them into heaven is pretty selfish in itself. "Buy your way to a happy afterlife!"

[GGG]

Originally Posted by WhiteTiger

Because luck discounts effort/work significantly.

Our society is set up (theoretically) to reward work. You work, you reap the benefits. You pull yourself up by your bootstraps. You work hard, and you are rewarded with a 'good' life.

Society looks down on the lucky as undeserving. "He didn't earn that, he just got lucky", "He just got a lucky break, he's nothing special. Anyone could do what he did, with the same break."

The phrase pull your self up by your bootstraps is perhaps the perfect phrase for this given it’s original literal meaning and current figurative meaning. It’s dripping with irony.

In a literal sense pulling up your self with your boot straps is impossible. You pull up on your boots and it doesn’t raise you off the ground. In its original sense it was something that wasn’t possible. Then in the 20s and 30s the meaning changed to the self made man version today. So it is rather ironic that the phrase the wealthy use to describe how success occurs is an idiom that when taken literally is physically impossible.

I like your first sentence, Calling it luck devalues an accomplishment and therefore people don’t like it. So I probably should use the word opportunity not available to x% of people as it better describes the situation.

[RichieRich]

Originally Posted by stone hands

Why are you talking about a relatively piddly amount of money when the discussion is around people with extraordinary wealth and trying to use it as any kind of indicator?

Let's run this thought experiment with 10 million dollars and wait 5 years so they can do some truly rich people #### other than maybe get a new car or 1/5 of a middle class mortgage

Oops bit of a delay responding… why did I only use $100k and not $10MM?
Simple… most people can relate to $100k, it’s conceivable they could get that much from an inheritance. Or more. It also represents ~2 years earnings for the average Canadian (ok that’s a rough WAG). Arguably there are maybe a small handful of people on all of CP that would ever see $10MM. Granted $10MM really changes lives and should do so permanently… but $100k also has huge potential IF USED WISELY.
Example; assume you’re 20 yrs old… win $100k. If ALL is invested and doubles every 8 years you’d never have to save again if you left it. by 60 you’d have over $3MM.

[RichieRich]

Originally Posted by I_H8_Crawford

I disagree.. most people don't have a clue about investing.

You would be shocked at how many people out there think a RRSP is an investment, and not an investment vehicle. Ditto for TFSA which most people treat as a vacation fund instead of a retirement vehicle.

I am not saying it should be 2 weeks, it should be throughout school. Start young with simple concepts like budgeting (money in vs money out) and move to complex ideas in high school like compounding, what RRSP/TFSA is, and even cover things like bonds and their relationship to interest rates, mutual funds, ETFs, etc.

I FULLY agree with what you’re saying. It’s the same thing I’ve been pushing for years and attempting to educate my own family members about. Not entirely successfully.

But now you’re asking teachers and a school system to have adequate knowledge and education and life experience themselves. This definitely does not align with any schools or the very very many teachers I know. The CALM courses I’ve seen and looked over with my kid reinforce that our society is failing at the grade school level for teaching basic money management, understanding opportunity cost, supply and demand, and dealing with FOMO and instant gratification.

[Locke]

Originally Posted by Fuzz

The fact that people donate money to a church because some dude says it will get them into heaven is pretty selfish in itself. "Buy your way to a happy afterlife!"

By the way, I've got your order of a Dozen Indulgences ready for you whenever you want to come and pick them up.

[you&me]

Originally Posted by GGG

Why are people uncomfortable with saying they were lucky?

Because 'luck' and all of the implications minimize what actually goes into being successful.

It seems as though you consider success to be like a single event, like flipping a light switch at exactly the right (lucky) moment. Instead, I view success as the culmination of hundreds, or thousands of opportunities that the individual was able to seize and leverage into the next... there is no single event that stands on its own without the occurrence of others before it... That's a heck of a lot of luck.

Let's forget about corporate success for a second... Neil deGrasse Tyson is successful - would you say he's lucky? Michael Jordan is successful - is he just lucky?

[Winsor_Pilates]

Calling the rich lucky is no better than calling the poor lazy

[Itse]

Originally Posted by you&me

As the saying goes; "luck is what happens when opportunity meets preparation"...

Bezo's parents being able to invest a couple hundred thousand into Amazon wasn't luck. It was an opportunity that he was able to take advantage of. And the fact that he was bright, with a solid idea surely also factored into their willingness to invest (that's the preparation).

Can anyone here honestly say the only thing standing between them and starting the next $100B company is their parent's ability to invest $300,000? Ha!

Whether you're talking about Jeff Bezos, or even just a partner at a law firm, pointing to their success and calling it 'luck' is disingenuous and shows a true lack of understanding of what it takes to achieve that level of success. No one claims an NHL'er is 'lucky' and it's much the same with anyone else at the pinnacle of their professional field.

Winning on your first pull on a slot machine is lucky; building a billion dollar business is almost anything but.

My dad and a friend of his literally had almost exactly the same idea as Jeff Bezos and about at the same time. Their book-selling site was very likely one of the very first on the internet that actually made a profit, although it was rather small and ultimately didn't last long.

It didn't last very long for multiple reasons, but a main one was that a couple of middle-aged nerds from Finland could not find financing, especially when Finland was going through a heavy depression.

On the other hand Jeff Bezos was an American and the VP of a hedge fund at 30, which helped him secure the funding he needed to run Amazon at a loss for years. I mean, it's not like Amazon was actually built with just 300k. Jeff Bezos needed a hell of a lot more than than to turn Amazon into what it was, and most of that was other people's money.

The internet especially at the early years was extremely prone to producing monopolies, and it's 99.999999% luck to be one of the people who managed to cash in on that. I mean, there are only about half a dozen internet billionaires, and 100% of that generation of internet billionaires are white cishet males of roughly the same age from the United States with roughly the same background.

If Jeff Bezos couldn't have found financing for his extremely non-unique idea, we would have this exact same discussion with only the name changed. It was just a matter of timing.

There are probably millions of people just in America who are as smart and as hard workers as someone like Jeff Bezos. There were very likely at least hundreds of people who had roughly the same idea as Jeff Bezos at the same time. Yes Jeff Bezos certainly contributed to his personal success, but mostly it was still about being the right white cishet male with the right background at the right place and at the right time.

[MoneyGuy]

I believe that luck has less to do with success or failure than hard work and good decisions. Certainly, the country into which you’re born, intelligence, and your family’s economic standing have an impact but there are many examples of people overcoming those barriers.

[nik-]

Jeff Bezos also had basically a totally different idea that was couched in a book selling site. So that might have had something to do with getting financing.

[Locke]

Originally Posted by Winsor_Pilates

Calling the rich lucky is no better than calling the poor lazy

Hmmm.....not really.

One of the things is that Wealthy people often are lucky insofar as they tend to get a head start.

Bezos' family could afford to help fund his business, thats fortunate, my parents couldnt. I'm not saying thats the difference between blowing up rockets for fun and asking me if I 'want fries with that' but fortune can still be a factor.

A fascinating experiment was once done where College Students played Monopoly. One of the players by pure chance, a flip of a coin, was selected to start the game with twice as much money as the other players.

That player typically won and more often than not attributed that victory to their sheer superior Monopoly-playing skillz (<- yes with a 'z') as opposed to their starting with a huge advantage.

[Itse]

Originally Posted by nik-

Jeff Bezos also had basically a totally different idea that was couched in a book selling site. So that might have had something to do with getting financing.

Nah, very likely it had a lot more to do with my parents having a really leftist background that was considered extremely sketchy at that time especially, plus my mom being unemployed and extremely depressed at that time took up most of my dads time. Three kids and a wife is a lot to support for one guy. Oh and then dad died of pancreatic cancer at the point when his new career in IT consulting was starting to bring in real money, so that kinda put an end to his chances of ever being successful in that field.

But when I mean "almost exactly the same idea", I literally mean that they had the idea that books are just a starting place etc.

I really don't get why there's this worship of Jeff Bezos in particular, I mean Amazon seriously isn't that special as an idea. Journalists now love to call him a visionary because that fits a certain extremely American idea of success, but Amazon is no Facebook which was a genuinely new idea, or Google with an actual technological breakthrough that launched that company.

Amazon was just the most successful one of the many companies that tried to do internet retail. Bezos very likely is a very good CEO, but there are other very good CEO's. He's hardly a visionary.

[you&me]

Originally Posted by Itse

Nah, very likely it had a lot more to do with my parents having a really leftist background that was considered extremely sketchy at that time especially, plus my mom being unemployed and extremely depressed at that time took up most of my dads time. Three kids and a wife is a lot to support for one guy. Oh and then dad died of pancreatic cancer at the point when his new career in IT consulting was starting to bring in real money, so that kinda put an end to his chances of ever being successful in that field.

But when I mean "almost exactly the same idea", I literally mean that they had the idea that books are just a starting place etc.

I really don't get why there's this worship of Jeff Bezos in particular, I mean Amazon seriously isn't that special as an idea. Journalists now love to call him a visionary because that fits a certain extremely American idea of success, but Amazon is no Facebook which was a genuinely new idea, or Google with an actual technological breakthrough that launched that company.

Amazon was just the most successful one of the many companies that tried to do internet retail. Bezos very likely is a very good CEO, but there are other very good CEO's. He's hardly a visionary.

I don't think there's a worship of Bezos, and I don't know that anyone in this thread has described him as a visionary, but he was used as an early example in this discussion that's just kind of stuck...

That said, his life is a good example of opportunity meeting preparation. Bezos' family wasn't particularly well off and his childhood wasn't "lucky"... His mother was a teenager; his parents divorced; he moved around a lot; yet he was his high school valedictorian and graduated the top of his class at Princeton, two things that take far (far!) more than luck.

These preparations laid the groundwork to take advantage of future opportunities, such as his first job developing an international trade network (sounds vaguely familiar) at a fintech startup (another "lucky" opportunity) and transitioning to investment banking to be a VIP at 30... Though I guess some would call it "luck" that his first job, after working to reach the highest academic achievements in highschool and then at one of the most prestigious universities in the world, was to develop something that he'd then repackage and redeploy a decade later as the company he's known for today. And he was super lucky to be promoted to VP at a hedge fund at 30, where he could hone his skills in capital raising, etc, 'cause you know, if there's one thing a hedge fund isn't, is a meritocracy... Just a bunch of average guys with dumb luck.

I don't mean to take anything away from your dad, but there's a reason ideas are relatively worthless without execution... It sounds like, through a series of events (opportunities, preparations, choices) that your dad was simply not positioned to build Amazon... There's nothing wrong with that - none of us here are likely to do it either - but let's not kid ourselves and say the only difference between your dad and Bezos was some luck...

[monkeyman]

Amazons biggest innovation was in supply chain management. How amazing is it that you can order almost anything and have it delivered the next day? I don’t recall that being the case prior to Amazon and some companies still can’t manage that. They were also pretty innovative with the echo. Who would have guessed Amazon was going to lead the charge in the personal smart assistant space? I know google has closed the gap and passed them in some areas, but Amazon was the first.

[nik-]

Originally Posted by Itse

Nah, very likely it had a lot more to do with my parents having a really leftist background that was considered extremely sketchy at that time especially, plus my mom being unemployed and extremely depressed at that time took up most of my dads time. Three kids and a wife is a lot to support for one guy. Oh and then dad died of pancreatic cancer at the point when his new career in IT consulting was starting to bring in real money, so that kinda put an end to his chances of ever being successful in that field.

But when I mean "almost exactly the same idea", I literally mean that they had the idea that books are just a starting place etc.

I really don't get why there's this worship of Jeff Bezos in particular, I mean Amazon seriously isn't that special as an idea. Journalists now love to call him a visionary because that fits a certain extremely American idea of success, but Amazon is no Facebook which was a genuinely new idea, or Google with an actual technological breakthrough that launched that company.

Amazon was just the most successful one of the many companies that tried to do internet retail. Bezos very likely is a very good CEO, but there are other very good CEO's. He's hardly a visionary.

I think your view on Bezos is honestly pretty myopic. It's not that he had an online retailer and more market share just kept coming. It was the goal from the outset. Take a beating on profits, gain market share, take a beating on profits, gain more share, build your logistics network, gain more market share. Sell everything to everyone.

He's most certainly a visionary, unless you think he just set out to sell books online. He wasn't, it was just the door in.