A Tale of Two Billionaires Part Deux

A Tale of Two Billionaires (part deux)

        Donald Trump was born into a wealthy family, due to his immigrant grandfather and grandmother’s sound business sense. Following Fred the elder's death in 1918, his grandmother co-ran Elisabeth Trump and Son, the family’s profitable real estate business. His father, Fred, initiating what has apparently become a family tradition also married an economic immigrant, Mary Anne (McLeod) who worked as a maid until she married Fred, who, following his parent's footsteps took over the reins and became wealthy as a builder/developer.

        Consequently, young Donald was privileged to attend the exclusive Kew-Forest School at around $20k per year (adjusted to today’s prices) he was, however, forcibly moved by his dad to the New York Military Academy (NYMA) following one too many unauthorized excursions in Manhattan. In NYMA he asserts he received “More military training than most of those guys in the military.”  Apparently, this included turning a blind eye to hazing, which in 1964 got him relieved of immediate supervision of cadets. He calls it a “promotion,” but several others (fellow students and staff) who are hesitant to speak out, privately remember it another way.

        Four draft deferments later and with a degree from Wharton, Donald, with “A small loan” of $1 million from Daddy,  was on his way. The only job he had ever held to that point was, at his father’s insistence, picking up bottles at the family construction sites.

        Jeff Bezos’ mom, Jacklyn Gise was 16 and still in high school when she became pregnant with Jeff. His father, Ted Jorgensen, was a bike shop owner who soon added alcoholic and spouse abuser to his resumé. Four years later, having had enough, Jacklyn divorced him and soon married Mike Bezos, a Cuban immigrant, who adopted her four-year-old son.

         Jeff attended public schools from 1st through 12th grades. Following his adoptive father’s college graduation, the family moved to Florida, where Jeff attended Miami Palmetto High School. While in high school, Jeff worked at McDonald's as a short-order line cook during the breakfast shift. He attended the Student Science Training Program at the University of Florida where he received a Silver Knight Award in 1982 and was high school valedictorian and a National Merit Scholar. 

        In 1986, he graduated from Princeton University with a 4.2 grade point average and Bachelor of Science degrees in electrical engineering and computer science and was a member of Phi Beta Kappa. While at Princeton, he was also elected to Tau Beta Pi and was the president of the Princeton chapter of the Students for the Exploration and Development of Space.

        This then is how each man entered the post-collegiate world of work- Trump rich, funded by dad, Bezos bright, armed only with intelligence and useful college degree.

        From here on out I will use comparatives rather than straight narrative until we get to "taxes".

Business “jump start:”

 Trump about $450 million, Bezos, his intellect.

Marriages:

Trump 3, Two of them to immigrants, like his mother, who (immigrants) apparently, he now cannot abide unless he marries them

Bezos 1, same woman 25 years, recently amicably divorced

Children:

Trump 5, by three different women - Two daughters, one he rarely mentions, one married to a financial rascal. Three sons, one his mother works hard to keep safe and, seemingly, away from his father, two older sons cut in their father’s arrogant hedonistic self-aggrandizing mode, neither very bright.

Bezos 4, same mother, three sons and one daughter none in the public eye. Until 2013, MacKenzie Bezos still drove their four kids to school and then dropped Jeff off at work in their Honda. Family friend Danny Hillis told Vogue that the Bezos’ “…are such a normal, close-knit family, it’s almost abnormal.” The family also adheres to a fairly normal routine. The Bezos family reportedly starts off the day with a healthy breakfast. To spend more time with the family, Jeff never schedules early-morning meetings at Amazon.

Taxes:

Note, this is about personal taxes, not corporate taxes. Both Trump and Bezos are wizards at not paying corporate taxes. Bezos does it legally by basing Amazon in Belgium. Trump does it by, among other things, serial bankruptcies, while shielding personal assets. 

       Domestically, Amazon avoids most corporate taxes by plowing essentially all profits into the company. This is legal, regardless of what Trump would have us believe. Bezos sells both domestic and foreign made products on Amazon without favor. Trump manufactures most of what he sells under his brand in China. By the way, Walmart uses exactly the same tactic to avoid a lot of tax load, but being Walmart and the Walton spawn uber conservative, Trump is mute on the issue.  

       Amazon's corporate income tax bill is so small, though, because its corporate income (aka profit) is so small. Wal-Mart's pretax income since 2008 has totaled $209 billion, Amazon's less than $11 billion.  Most of the hoo-hah re: Amazon’s, and Jeff Bezos’ wealth, revolves around a paper profit – the share price of Amazon stock. Stock is only money if you sell it. Donald Trump would love to see his corporate stocks rise, but…..?

Trump -  refuses to release personal income tax documents as all his Presidential predecessors have. Claims he’s “brilliant” for not paying any in some years.

Bezos – pays personal income tax on salary and benefits. Doesn’t release the numbers because, like most of us, there is no expectation of his doing so.

Coda: There are many eager to lambast Bezos, when they should be more concerned over the tax code which allows a brilliant businessman to legally do what Bezos has done. Bezos, likewise has been criticized because he stops contributing to Social Security at $128,700, just like every other single American who earns more than that. Don’t like it? Urge your elected representatives to change the law.

        A typical story goes: “CEO Jeff Bezos may have had an income of $100.3 billion on 24 November 2017, because of his company’s ridiculous stock price. What’s truly outrageous is that Bezos might pay just $7,979.40 in Social Security taxes next year.” He is following the law, moron!  

        A note in critical thinking here, while we’re at it: In the brief quote above note the value of stock equated with income. That’s mistake number one. Only the increase in the price is income (capital gains). 

       Next the phrase “ridiculous stock price” reflects an opinion, and any market economist would simply point out that while there are ways to value stocks and corporations (price to earnings (P/E) ratios, for one), there are other factors which are at play in Amazon’s case:   Amazon’s stock price in August 2017 was $334.38 with a P/E ratio of 511.06. One of the reasons Amazon’s P/E is so high is that it had been sacrificing profits in order to expand aggressively on a wide-scale, thus, keeping earnings suppressed and the P/E ratio very high. A low P/E ratio doesn’t automatically mean a stock is undervalued, just like a high P/E ratio doesn’t necessarily mean it is overvalued. 

       Calling the stock “ridiculously” overpriced is Faux News worthy in its thinly veiled bias.  If as the quote implied Bezos’ income was $100.3 billion in November, that was a really, really, good month huh? Perhaps persons who cannot distinguish between net worth (the $100 billion) and income, should have paid better attention in high school economics class.

        Finally, the term “outrageous” is applied to Bezos’ SS contribution, but the criticism is based on the law which applies equally to us all. Sour grapes anyone?

More to come