Scott Mlyn | CNBC
If you’ve got amassed extra wealth than you want, there are a variety of things you possibly can do with the surplus cash, in line with billionaire investor Leon Cooperman.
Founder of the Omega Family Office, Cooperman — who has an estimated web value of $2.5 billion — shared his views on the stock market, tech valuations, taxes and easy methods to spend amassed wealth in a Friday interview on CNBC’s “Squawk Box.“
His feedback are well timed as they come amid a debate on how the wealthiest Americans should be taxed.
On Wednesday, President Joe Biden unveiled the $1.8 trillion American Families Plan, which might be paid for by elevating taxes on the wealthiest residents and closing sure loopholes such because the “step up in basis,” carried curiosity and particular actual property tax breaks.
Cooperman himself has been battling Sen. Elizabeth Warren, D-Mass., over a wealth tax, which she sees as a part of a fairer tax system. He not too long ago declined an invite from Warren to (*3*)
“I do believe in the progressive income tax structure, I do believe rich people should pay more,” stated Cooperman, including, “the wealth tax makes no sense to me for various reasons.”
He says there are different methods to perform Warren’s objectives, similar to elevating the marginal tax fee or eliminating loopholes like carried curiosity, which permits sure enterprise to defer taxes, and is included in Biden’s newest tax plan.
Here are three things that Cooperman says people shouldn’t do as soon as they’ve amassed wealth — and one which they should.
1. Don’t over-consume
If you’ve got extra cash, spend it on things you need, stated Cooperman.
“Buy planes, art, homes – stuff like that.”
However, over the long run, this is not as useful as saving, investing or discovering different makes use of on your cash. Cooperman stated he is not an enormous collector of things himself and prefers to be extra modest.
“My wife and I, we happen to have a view that material possessions bring aggravation,” he stated. “We’re ‘less is more.'”
2. Don’t give all of it to your children
Many households save and make investments their cash within the hopes of having the ability to go it on to future generations. But, for the ultra-wealthy, giving all their cash to their children may not be a good suggestion, in line with Cooperman.
“If you have a lot of money, giving all your money to your kids is a mistake because you deprive them of self-achievement,” stated Cooperman.
3. Don’t give an excessive amount of to the federal government
“Only a fool would give the government money more than they’re entitled to,” stated Cooperman. “You pay your taxes as a good citizen and the rest you keep.”
Cooperman added that everybody should pay their taxes however the investor has his personal concept on what constitutes a fair proportion for wealthy Americans.
“I’m willing to work six months of the year for the government and six months for myself, that seems reasonable to me,” stated Cooperman. “Beyond that it becomes confiscatory.”
4. Last and finest: Do donate it
The finest use of amassed wealth is donating it to charity or utilizing it to assist others, Cooperman says.
“Recycle it back into society and try to make the world a better place,” stated Cooperman. “And that’s kind of my commitment.”
Cooperman and his spouse in 2010 dedicated to provide most of their wealth to philanthropy or charitable causes by way of the Giving Pledge, an initiative created by Bill and Melinda Gates and Warren Buffett.
“I’m far from the most generous guy, I wish I had more money to give away,” stated Cooperman.
He stated the present tax system incentivizes the wealthy to provide their cash away — particularly those that can donate appreciated belongings similar to shares that they have not paid taxes on.
“The tax code was designed to encourage philanthropy,” stated Cooperman. “To the extent that you’re giving away pre-tax dollars that are appreciated, it reduces your cost.”
Beyond tax breaks, nevertheless, Cooperman has different causes for donating his wealth: It brings him pleasure, he stated.
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