Look no further than New Jersey if you want to see how imbalanced American society and the economy have become. The Garden State is one of the wealthiest in the nation and yet hosts Newark, the East Coast's version of Detroit, right on the glittery doorstep of Manhattan. While it does live up to its moniker with farms, plentiful markets, and leafy, landed properties and estates, its poverty level is one of the highest in the nation, at 50-year highs. It's one of the few states where the number living below the true poverty line is actually higher than before the 2008 economic crisis. Calls for ever-more donations from local township food banks are reminders that life for nearly 3 million people here is hardship.
But we've reached a fresh benchmark here, this gap between the top tenth and the lower third, when one man, one individual -- not one corporation, mind you -- has the potential to wreck havoc on a state's finances simply by moving out of state and with it taking his income tax payments. Meet David Tepper, hedge fund maestro of Appaloosa Management. Never heard of him? He'd probably prefer it that way -- the new barons of our financial age love to lay low unless a business school is being named after them. But when your net worth of $10.4 billion is the size of Armenia's GDP and could plug Alberta Canada's deficit with a few billion left over, it's kind of hard to sometimes.
One of these times is now when word is out that Tepper moved his residency out of NJ, his home of two decades, to Florida. It's not known whether he moved because of NJ's high tax rate -- it's 8.97% for the top rate -- or family concerns or just the need for more sunshine in his middle years. Regardless, the loss of his income tax is worrying lawmakers in Trenton because it might leave a gap in the budget of about $140 million -- the amount of taxes that Tepper was estimated to have paid one year on several billion dollars of earnings.
States, like NJ, Connecticut, New York and California have become super-dependent on the super-wealthy. It's the top tenth of the top 1% who continue to see the fastest income gains in the first place. It's such a small group to suddenly find yourself relying on for public aid and healthcare, our 'justice' system, our roads, education, and rebuilding infrastructure so lead doesn't leach from old school pipes into drinking water for children. It's also a notoriously self-interested group, too, with its masters-of-the-universe willful plowing ahead through life; all the offshoring, calculated charitable donations, and facility to strategise every decision based on profit-loss equations.
Tepper made his billions by buying 'distressed assets', code for businesses and companies that had hit hard times, and then selling them later at a profit. He did this in 2009, buying bank stocks for cheap after the subprime mortgage lending bubble blew up and pushed banks near the brink. That trade alone made him $7 billion, made possible through government bailout funds. Maybe Tepper and others can apply distressed investing to other assets, the human kind, and realize the pay-off can come in lots of ways that help everyone. That quote "with great wealth comes great responsibility" was never truer than today when one man moves and a state wonders how it might pay its bills.
But we've reached a fresh benchmark here, this gap between the top tenth and the lower third, when one man, one individual -- not one corporation, mind you -- has the potential to wreck havoc on a state's finances simply by moving out of state and with it taking his income tax payments. Meet David Tepper, hedge fund maestro of Appaloosa Management. Never heard of him? He'd probably prefer it that way -- the new barons of our financial age love to lay low unless a business school is being named after them. But when your net worth of $10.4 billion is the size of Armenia's GDP and could plug Alberta Canada's deficit with a few billion left over, it's kind of hard to sometimes.
One of these times is now when word is out that Tepper moved his residency out of NJ, his home of two decades, to Florida. It's not known whether he moved because of NJ's high tax rate -- it's 8.97% for the top rate -- or family concerns or just the need for more sunshine in his middle years. Regardless, the loss of his income tax is worrying lawmakers in Trenton because it might leave a gap in the budget of about $140 million -- the amount of taxes that Tepper was estimated to have paid one year on several billion dollars of earnings.
States, like NJ, Connecticut, New York and California have become super-dependent on the super-wealthy. It's the top tenth of the top 1% who continue to see the fastest income gains in the first place. It's such a small group to suddenly find yourself relying on for public aid and healthcare, our 'justice' system, our roads, education, and rebuilding infrastructure so lead doesn't leach from old school pipes into drinking water for children. It's also a notoriously self-interested group, too, with its masters-of-the-universe willful plowing ahead through life; all the offshoring, calculated charitable donations, and facility to strategise every decision based on profit-loss equations.
Tepper made his billions by buying 'distressed assets', code for businesses and companies that had hit hard times, and then selling them later at a profit. He did this in 2009, buying bank stocks for cheap after the subprime mortgage lending bubble blew up and pushed banks near the brink. That trade alone made him $7 billion, made possible through government bailout funds. Maybe Tepper and others can apply distressed investing to other assets, the human kind, and realize the pay-off can come in lots of ways that help everyone. That quote "with great wealth comes great responsibility" was never truer than today when one man moves and a state wonders how it might pay its bills.
RSS Feed