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By now, we have all heard the reverberating tome: “The top 10% control 75% of all the wealth in this country!” Yeah, I’ve heard it all before, the rich get richer and the poor get poorer, the rich pay little or no taxes, the rich are all trust-fund babies who live lives of leisure and luxury, while the rest of us slave away, bogged down by debt, inflation and taxes, never to get an even break.
Heck, a surprising number of folks are seriously considering electing an avowed socialist, Bernie Sanders, to the office of President of the United States, hoping that he can bring about the end of income inequality with his bold plans of wealth re-distribution and punishment of those who do well! But, what is the truth? The numbers don’t match the narrative, unfortunately.
To have enough income to qualify for the top 1% of earners in this country, you need to make $380,354.00 a year. That may or may not seem like a lot of money, but if you consider that 19 people employed by the University of Minnesota, for example, are at or above this threshold, it is really not an unimaginable sum. If Bernie Sanders was elected President, he would be immediately vaulted into the ranks of the one percent, with his annual salary of $400,000.00
The top 1% pay 38% of all of the Federal income tax paid, with an effective average rate of 23.27%. The bottom 50%, (those with an income less than $33,048.00) pay 2.7% of the income taxes, with an average rate of 2.59%. Nearly 47% of Americans pay no income tax at all.
So who are these people? Are they all a bunch of lucky heirs to great fortunes? Thieves? What? In Duluth, the one percenters are most likely to be doctors or medical industry executives, entrepreneurs, or executives of large corporations headquartered here. Most of the remnants of great mining and logging and railroad families that once populated the mansions of Congdon Park are long gone. The Twin Ports is home to two, relatively inexpensive public universities, The University of Minnesota-Duluth and The University of Wisconsin-Superior, ranked 36th and 92nd, respectively. (U.S. News - Midwest Regional Universities) With that going for us, one would think that cracking into the one percent is possible, even here.
Let’s take a look at the very top, the 10 richest Americans, and see how they made their fortunes.
Number 1, Bill Gates was born into a middle-class family in Seattle, Washington, in the mid-Fifties. He was fascinated by computers, and dropped out of Harvard College to pursue his dream of starting his own company, Microsoft.
Number 2, Warren Buffett was the son of a Nebraska congressman, who bought his first 3 shares of stock at age 11, bought his first farm at age 14, with money from his paper route. He attended Wharton School for two years, graduated from the University of Nebraska-Lincoln, applied to Harvard Business School, but was rejected, so he ended up getting his MBA from Columbia. He became a stock and investment broker, based in Omaha, NE, made a few shrewd buys, and started Buffett Partnership Ltd., the investment powerhouse that would become Berkshire Hathaway at age 26.
Number 3, Larry Ellison was born to a single mother in New York City, then adopted by a family in Chicago as an infant. He attended the University of Illinois at Urbana-Champaign, for two years, but dropped out. He attended the University of Chicago for one term, but moved to California where he got a job working for Ampex Corporation. While there, he worked on a database project for the CIA, which he named “Oracle.” At age 33, he founded the database software company that would become Oracle Corporation with $2000, $1200 of which was his own money.
Number 4, Jeff Bezos was born in Albuquerque, New Mexico, to a teenage mother and young father, who divorced when he was an infant. Bezos showed an early mechanical aptitude and sparks of intelligence. He was a National Merit Scholar, Silver Knight Award recipient, and valedictorian of his high school class. He graduated summa cum laude from Princeton and went to work on Wall Street. In 1994, he quit his job at a hedge fund in New York and drove to Seattle, mapping out his plan for an internet catalog retail business, along the way. He would call the business he set up in his garage, “Amazon.com.”
Number 5, Charles and David Koch (tie) were both born in Wichita, Kansas, the sons of Fred Koch, a small oil refiner who operated the company, Rock Island Oil & Refining Company. After graduating from MIT in 1960, Charles went to work with his father. After his father’s death in 1967, Charles renamed the firm Koch Industries, and expanded into other lines of business, including forest products, polymers and fibers, pollution control equipment and carpet, among other things. David joined the company in 1970 after graduating from MIT, as well.
Number 7, Mark Zuckerberg was a middle class child from White Plains, New York. His father was a dentist and his mother was a psychiatrist, and Mark showed an early interest in computer programming. He launched his website, Facebook.com, from his Harvard dorm room. He dropped out soon after to tend to the business.
Number 8, Michael Bloomberg was born in Boston Massachusetts, to first-generation American parents. Bloomberg excelled at school, was an Eagle Scout, attended Johns Hopkins University, and later got his MBA from Harvard. A driven, hard working investment banker, Bloomberg became a general partner at Salomon Brothers, in 1973. Salomon Brothers was bought out in 1981, so Bloomberg found himself unemployed. Using the money from his severance package, he developed a network of private terminals that would stream breaking business news to private subscribers, giving them an edge over non-subscribers. It was a private internet years before the internet of today was developed. Today Bloomberg L.P. has over 310,000 terminals worldwide and is one of the largest business news organizations in the world.
Number 9, Jim Walton grew up in Bentonville, Arkansas, and graduated from the University of Arkansas-Fayetteville, in 1971. In 1972, he started working for his father, Sam Walton at Wal-Mart. He became president of Walton Enterprises in 1975. He is on the Wal-Mart Board of Directors.
Number 10, Larry Page was born in East Lansing, Michigan, the son of a Computer Science teacher at Michigan State University. He graduated from the University of Michigan with honors, then got a Master of Science in computer science from Stanford University. He was working on a theme for a dissertation when it occurred to him that one could map the entire World-Wide Web by visualizing it as a giant graph. He worked on this concept with another student, Sergey Brin, and together, using both of their dorm rooms for equipment and office space, and Stanford’s computer network as host, they created the search engine, Google.
As you can see, none of these people were born into extremely privileged circumstances. Walton joined his father’s company, Wal-Mart, when it was only ten years old and nowhere near the powerhouse it is today. The Koch brothers turned their father’s small refinery into a massive conglomerate that he could never have conceived of. Look at their companies, Microsoft, Facebook, Google, Wal-Mart, Amazon, etc. These are things we use every day, places we shop every day. We created the one percent, why are we being stirred up by politicians and the media to hate, envy and destroy them? Anyone reading this could do exactly what these people have done, there are plenty of opportunities, even here in the Northland.