The Survivor's Guide For The Affluent Idiot

Rich People ThingsO RLYOh dear oh dear oh dear. Forbes magazine, which makes a point of being far too genteel for morale-boosting, is now dispensing Oprah-style advice to its plutocratic readership. Last week, a cover package was assembled: a “Survivor’s Guide for the Affluent,” and the introductory text wastes little time making with the tough love. There’s the chilling report from New York society photographer Patrick McMullan that his subjects are stinting on party comestibles: “There used to be caviar; now we are seeing a lot more carrots.” There’s Annelise Peterson, “a socialite and fashion consultant” (read: publicist) who testifies that “disguised shopping”-scoring the odd fur at a charity event or “celebrity-sponsored rummage sale”-has become “something of a surreptitious sport.”

Befitting the whole “Arrested Development” tone of mounting parvenu desperation, there’s even an unlikely dollop of political self-awareness: “It’s tough out there when everybody hates you,” write Daniel Fisher, Steven Bertoni, and Devon Pendleton (one lagging recession indicator is that Forbes is evidently flush enough to grace all this anecdotage with a triple byline) “or at least suspects you had a hand in the collapse of the global financial system, the shredding of trillion dollars of assets and the issuance of 5 million pink slips since January 2008.”

Yes, I can see how that could be a mite tough-ish. But never fear; our sage trio has divvied up sidebars explaining what’s needful to “survive the populist revolt against affluence.”

First, there’s the mandate of ‘Protecting Assets”-also the point where the Forbesian experiment with self-awareness abruptly ends, since it opens with a long quote on the virtues of conspicuous consumption from Thorstein Veblen, who clearly didn’t mean a word of what he was saying. But never mind; shielding your pelf from your creditors is serious business, and Forbes-itself the ideological plaything of a second-generation mogul-is here to remind its distinguished readers that “the best ways are the old ways.”

“Trusts for children are nearly impossible to crack.” Don’t forget, though: That only holds “as long as the assets weren’t derived from criminal activity.”

You can also park your assets in states like Alaska, Delaware and Nevada, which permit “self-settled trusts” that bypass charities and offspring for the sake of their originators-“(read: you)” the authors helpfully stipulate. But there are downsides: You actually have to establish residency in those backwater states, plus “you generally can’t hide behind [a self-settled trust] to avoid paying alimony.”

Even before President Obama announced his crackdown on offshore trusts, Forbes pronounced them “a waste of legal fees.” These days “judges have jailed debtors in order to cough up information about their foreign trusts.”

Like they said: tough. And don’t let your outrage get the best of you and renounce your US citizenship in snit-vowing to join the new wave of liberatarian seasteaders, for instance.

It’s one thing to buy a flat in London till things blow over, but “a 2008 law snags most citizens and permanent residents worth more than $2 million by requiring them to pay an exit tax-at 40 percent, the highest marginal rate-on paper gains on assets above $600,000.” That’s hardly sporting.

The smart thing to do, it seems, is to convert as much as you can into real property-gold, diamonds, and other stuff that won’t appreciate on paper-and move them into foreign holding services. But again-tread with caution: “getting the money offshore without reporting it to the proper authorities is still a minefield of potential felonies.”

The next bit of big-money counsel-“Sidestepping Taxes”-is of course the kind of advice Forbes can churn out in its sleep. And actually, the authors remain surprisingly level-headed here: Sure, Obama is pushing the marginal tax rate back up to 40 percent, eliminating capital-gains breaks on hedge-fund fees and whatnot. But remember, they were north of 90 percent in Eisenhower’s day, making today’s rates “a sale” according to securities counselor Robert Gordon.

Besides, the real threat is from cash-starved state governments; well-heeled Manhattanites should spend at least half the year in a state without income tax-you know, “the house in Florida.” You can also engineer fake sell-offs of Treasury bonds that you can later re-purchase. “Thanks to the magic of bond-premium amortization, that maneuver reduces your taxable interest income over the life of the bonds.”

Likewise, “owners of low-basis stock in a public company can buy a put below the current price, sell a call above it and borrow most of the value of the stock,” thereby producing “the economic benefits of a sale without an obligation to declare a capital gain.” Sure, the IRS may come after you, but so long as “the option strikes aren’t too close to the stock’s spot price,” you’ll probably prevail in Tax Court.”

And now, let’s reward all this nervous-making reshuffling of assets! In “Keeping Your Toys,” Messrs. Fisher, Bertoni and Pendleton cannily invert that old Biden saw about tax-paying: “Spending is your patriotic duty.”

Just check out the sweet Lear jet deals now going. Grocery-chain baron (and alleged New York City mayor candidate) John Catsimatidis reports that he “was recently offered a Gulfstream once worth $40 million or so for $15 million.” The reason? “I was told that it belonged to one of the people who accepted TARP money,” Catsimatidis said. “They didn’t want to anger Washington.”

The discreet market for such now-stigmatized baubles is online, where high end bargain hunters can hoover up their toys “anonymously,” our correspondents report. The high-end Web retailer Net-a-Porter.com (sorry, but I’m running out of steam-please inset your own scornful aside here) had a 45 percent upsurge in sales for the fiscal year ending Jan. 31. T

here was the Balman embroidered minidress for a mere $12,355; the $19,5000 Bottega Veneta crocodile bag; and the Halston peep-toe ankle boots that fetched $2,325.

Oh, and yes-the ever-awkward servant problem. The upside to being forced to lay off some of your domestic support staff, our investigators find, is that “the recession provides a good smoke screen for disposing of a servant you don’t like anyway.” And hey, come to think of it, that one’s probably a twofer-after all, the intro piece helpfully suggested countering public outrage with a little strategically leased muscle: “Have you hired a security firm yet?”

Just be sure you let the right sort of disgruntled servants go, and presto-a significant reduction in the complement of people likely to cut your throat in the dead of night. Now, who’s up for some tennis?

Previously:
· Understanding How Obama Is Not Robbing The Rich For His Scary Social Agenda
· On ‘New York’ Magazine