Here’s the lede from a Bloomberg article about rich people trying to avoid taxes in New York City:
At New Jersey’s Teterboro and Long Island’s Islip airports, dozens of private jets destined for Florida take off at times such as 11:42 p.m. or 11:54 p.m.
Over at JFK, a regular flight from San Juan, Puerto Rico, arrives at a seemingly purposeful time: about 15 minutes after midnight.
Meanwhile, tax attorneys tell stories of clients idling in their luxury SUVs near the New Jersey entrance to the George Washington Bridge shortly before 12 a.m., waiting for the clock to turn before crossing the state line to New York.
There’s a threshold on the number of days you can live in NYC in terms of tax status (the over/under is something like 184 days).
Taxes are so high in NYC that the ultra-rich could be saving millions by living in a lower-tax state like Florida. The problem is these people still want to be in the Big Apple for business or personal reasons.
So they go to great lengths to avoid exceeding the allotted number of days.
James Stewart wrote a story in The New Yorker several years ago about the lengths famed hedge fund manager Julian Roberton went through to avoid NYC tax status:
This was nearly a full-time job. One of Robertson’s assistants, Julie Depperschmidt, scheduled his appointments and maintained a contemporaneous computerized record of his whereabouts, carefully distinguishing between “NYC days” and “non NYC days.” Different colored boxes indicated confirmed and anticipated non-New York City days. Whenever the combined number fell below a hundred and eighty-three, she advised him to add more non-New York City days to his schedule. She said that she reminded him “ad nauseam” about what he needed to do to reach a hundred and eighty-two non-New York City days.
Friday nights were particularly risky, since Robertson or his wife often had social events scheduled in the city. In order to “earn a tax day,” as he put it, he usually left town on Friday before midnight, even if his wife stayed at the apartment. Robertson’s driver had to be on alert: as long as they crossed the Queens border en route to Locust Valley by midnight, Robertson didn’t have to “waste” a Saturday as a New York day. Even one minute of a day spent in the city counts as a day of residence. (Exceptions are made for people who are in transit from one destination outside the city to another–from Newark airport to Long Island, for example, or to LaGuardia for a flight.) Robertson said he never missed the midnight deadline, although when he couldn’t get his driver or a limousine service in time he occasionally had to hail a cab. On one occasion, Robertson came back from a trip and found himself crossing into Manhattan at 11:45 p.m. That mistake cost him a full New York City day, which he could have avoided by whiling away fifteen minutes at the airport.
At the time of this article, Robertson’s net worth was estimated at $2.4 billion. It’s now nearly $5 billion.
Sure, he could’ve saved tens of millions of dollars on taxes. But these don’t sound like the actions of a rich person to me. It sounds like a self-imposed tax prison.
I can’t imagine having more money than I could spend in 100 lifetimes and still spending that much time worrying about saving even more. Maybe that’s why I’m not a billionaire.
Now, you could make the case that these people wouldn’t have become billionaires in the first place if they hadn’t paid so much attention to detail like this.
Fair enough.
Everyone has their own definition of a rich life.
And it’s not exactly a newsflash that ultra-wealthy people hate paying taxes. I get all that.
However, if your desire to pay less money in taxes causes you to alter your lifestyle in a meaningful way, the money owns you. What’s the point of building substantial amounts of wealth if it requires your life to be a constant pain in the ass?
True wealth extends beyond money. Here are some other ways I look at what it means to have a rich life:
Convenience as a priority. The older I get the more likely it is that I’ll pay up for convenience. I am a patient investor but I’m not as patient in the rest of my life.
Paying for first class for a long flight makes sense to me.1
I used to shovel my own driveway. Now I pay for a service. Same thing with my lawn care. I used to haul around mulch every year. While I don’t mind working outside, that inconvenience meant time away from the kids. I’ll gladly pay someone else to handle that.
If we go to an amusement park once a year I’ll pay for the fast pass to skip a few lines here or there. Waiting in line can be soul-sucking.
Some may find this a waste of money but I prioritize convenience when it’s available.
Money can’t buy happiness but it can make you more comfortable.
Being in control of your time. No one has a perfect life so time management always boils down to trade-offs.
I place a high value on being in control of my own time. I don’t want someone telling me what I can and can’t work on. I don’t want someone telling me where I have to be and when.2
The ability to work remotely has been a massive game-changer for my career when it comes to time management. The flexibility it allows you from a personal perspective is enormous when it comes to well-being.
Sometimes you don’t have a choice.
I just don’t want money dictating the type of work I do or the kinds of people I work with. The money is not worth the misery.
It’s hard to put a price on working in a job you actually enjoy.
Michael and I talked about billionaires, time management and much more on this week’s Animal Spirits video:
Subscribe to The Compound so you never miss an episode.
Further Reading:
Rich People Who Don’t Feel Rich
Now here’s what I’ve been reading lately:
- Are you an investment historian or a futurist? (Morningstar)
- Join the investor class as soon as you can (Downtown Josh Brown)
- 5 things to be optimistic about America today (Noahpinion)
- 8 ways to spend more money (White Coat Investor)
- Dollar cost averaging for your health (A Teachable Moment)
Books:
1I never would have done this in the past.
2Other than my wife, of course (half kidding).
