It is actually ludicrous to encourage rich people to run for president, but in general, it is good for the economy and democracy to have well-funded candidates blowing their cash on local ad buys. In the end, some of these new candidates may be more disliked after spending lots of money, while some may actually bring something new to the table. With the economy of President Trump at a 50-year record high with the highest employment in three generations, the New York “Blue Collar Billionaire” seems well-positioned to win 30 or more states and to lead the country for another 4 years.
Here are 10 reasons why Steyer, Schultz and Michael Bloomberg should continue to run for president:
- To generate $1 billion in cash, Steyer, Schultz, and Bloomberg may need to sell highly appreciated assets to generate cash and income, but it also creates tax obligations in the form of capital gains taxes and several other forms of tax on Mr. Schultz and Mr. Bloomberg.
- Federal (LTCG) long term capital gains taxes from President Barack Obama rose from 15% to 20% to be paid to the federal government. The 20% is the rate that should apply to Schultz and Bloomberg or others such as Tom Steyer or Mark Cuban.
- New York and California state taxes are huge, as much as another 8.82%-13.3% on a capital gain sale. To spend a billion on a campaign is a bonus for New York, California, and the U.S. Department of Treasury’s coffers: 8.2% in New York and up to 13.3% in California. However, I would presume that a billionaire would claim residence in a low tax state like Florida before running for president. Mark Cuban lives in Texas, and so he has an edge on the competition.
- Because Schultz and Bloomberg are high tax bracket taxpayers, they are also now subject to the various new Obama era taxes which affect capital gains sales.
- The 3.8% New Obama Special Net Income Tax: Bloomberg and taxpayers earning income above certain thresholds ($200,000 for singles, $250,000 for married couples filing jointly) pay an additional 3.8% tax on all investment income. Thus, the hardest working families that previously paid 15% capital gains tax now pay 18.8%.
- Clinton Taxes and Obama Medicare Taxes: Medicare withholding remains unlimited (employee tax rate of 1.45%). Obama’s new tax surcharge is about another one percent at 0.9%
- Clinton’s Social Security Income Tax: Bill Clinton also added to the tax bill. Because of Bill Clinton, Bloomberg and Shultz or their wives must pay income tax on 85% percent of Social Security benefits.
- The effective tax rate on Schultz or Bloomberg equals 32% in federal tax plus state taxes of another 8-13% or more for New York or California. That is a whopping 40% or MORE.
- Total Tax Cost to Bloomberg on a 600 million dollar Presidential run using a 1 billion stock sale to finance the campaign is a minimum of: $400 million in taxes on the sale of $1 billion of stock.
- After paying 40% or more in tax that leaves the billionaire with $600 million after-tax to spend on a presidential campaign.
Overall, the super-rich folks such as Warren Buffett, Bill Gates, Cuban, Bloomberg, and Schultz are not keen on paying taxes as they have all held vast amounts of stock without paying any taxes at all. Additionally, most of the super-wealthy are putting much of their appreciated assets into foundations which they control during life to avoid taxes.
Nobody would advise a wealthy person to pay undue taxes, but some of the super-rich are sitting on stock assets that have gone untaxed for as long as 50-70 years. Further, it would be good for the economy if people like Steyer and Cuban to spend lots of money during the election also funding PACs and campaigns.
With Bernie Sanders and other advertising socialist tax policy, these billionaires may inadvertently convince the public to boost taxes on the super-wealthy in the form of “wealth protection taxes” or “idle asset taxes.”
Only time will tell, but with the working families paying up to 20% tax just in local taxes, voters are getting angry. The hardest working families are paying a basket of taxes that include: city, state, phone, internet, gas, sales, and real estate taxes which can be 20-30% of a middle-class family budget.
Even more disturbing, the new Congress has now introduced bills that may destroy any new billionaire’s credibility if they want to run for office. These laws would expose 10 years of a presidential candidate’s taxes.
Further, it is likely that some of these super-rich politicians pay less percentage in taxes than a typical union worker. Depending on the wording of these newly crafted laws, these regulations may expose the tax activity of: foundations, corporations, LLCs, charities and any other organization where the candidate has material control.
I hope all billionaires run and bring some boldness and new ideas to the table as Trump has done in the last 3 years. Today, the oddsmakers are giving President Donald J. Trump a 62% chance of winning and Trump could win over 30 states again.
About Counselor George Mentz
George Mentz JD MBA CWM Chartered Wealth Manager ® is a licensed attorney and CEO of GAFM ® global education, which is an ISO 29990 Certified professional development company operating in over 50 nations. Mentz is an award-winning author of over 40 books and audiobooks and advisory board member to several companies around the world in education, charities, and FinTech organizations. Mentz is the owner of the New York Gazette ®, an Associate of St. George’s House Windsor Castle and he serves on the Commission for Presidential Scholars in the United States. Mentz has promoted nationally-accredited business schools of the CHEA ACBSP and AACSB for a generation and Mentz assists with scholarship programs worldwide. Mentz as a General Counsel of the Financial Analyst Certification body has been seen in Yahoo Finance, the Wall Street Journal, The Week, The Hill, The Hindu India, The Arab News, The El Norte Mexico, The China Daily, NBC, FOX, and others commenting in educational standards, accreditation, economics and wealth management.