Wednesday, February 06, 2013

Millionaires are cheapskates

Consider the following:

At the annual Kol Nidrei appeal, the ordinary guy will pledge $180, while the millionaires announce their wealth with a pledge of $1000. It seems like the millionaires are far more generous -- until you look at the math:

An ordinary guy might earn $150,000. So his contribution is .12 percent of his income. If the richie earns a cool million every year his $1000 gift is just .1 percent of what he takes home.

Moreover, the millionaire likely has more money in the bank; more importantly, he has more money left over after he makes his contribution. If Mr. Ordinary has a few kids he might have only a few thousand dollars of disposable income, while the millionaire likely has hundreds of thousands left to play with after he's covered his expenses. So who gave more of himself?

But, you'll say, this example isn't fair. Who knows how much the millionaire gives to other causes? Perhaps Mr. Ordinary writes one charity check per year, while Mr. Millionaire is supporting several institutions. A fair point. So let's make it apples to apples.

Say Mr. O and Mr. M are both tight friends with a third fellow named Frank. Frank is making a bar mitzvah, and of course he's invited his close friends O and M.

The going rate for a Bar Mitzvah today is about $125, so Mr. O dutifully writes his check. $125 represents .083 percent of his $150,000 salary

To make a present representing an equal sacrifice --.083 percent of $1 million-- Mr. M would have to give a gift of $830.Which is unheard of. He might give his close friend's son $180 or even $250, but an $800 present is out of the question.

But - and this is the truly galling part - by giving a $250 check (.025 percent of his income) Mr. Millionaire looks generous - munificent, even -- while poor old O looks like a cheapskate, when really its the other way around.

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