Five Myths About Millionaires

JOHN STEELE GORDON-WASHINGTON POST: This past week, President Obama tried to sell his new “millionaires’ tax” to the Rust Belt. “What’s great about this country is our belief that anyone can make it,” he said in Cincinnati on Thursday, praising “the idea that any one of us can open a business or have an idea that could make us millionaires.” But who are the millionaires Obama is talking about? And will a tax on them help the economy? Let’s examine a few presumptions about the man with the monocle on the Monopoly board.

1. Millionaires are rich.

Being rich has gotten more expensive. A $1 million fortune was unusual in the early 19th century. The word “millionaire” wasn’t even coined until 1827 by novelist (and future British prime minister) Benjamin Disraeli. In 1845, Moses Y. Beach, editor of the New York Sun, published a small pamphlet called “Wealth and Biography of the Wealthy Citizens of New York City.” The price of admission to Beach’s list, which was wildly popular, was a mere $100,000.

By the time the first Forbes 400 list of the richest people in America was published in 1982, the smallest fortune featured was $75 million. There has been so much wealth creation in the past 30 years — much of it thanks to the microprocessor behind modern-day fortunes such as Dell, Microsoft and Bloomberg — that only billionaires are on the list. Today, $1 million in the bank generates only about $50,000 per year in interest. That isn’t chump change, but it’s roughly equal to the 2010 median household income.

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