$5,000 For a Pair of Sandals: The Rich Are Different, Right Down to Their Shoes
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First of all, Johnston said: remember that Neiman-Marcus has made its name selling over-the-top stuff (up to and including bespoke Learjets), so it thrives on the attention it gets from items like this. And second, for women in the top income level, "$5,000 is like chewing gum money" -- they hardly miss it.
"We've reached a point where this very, very narrow band of people -- the top 1 percent of the top 1 percent -- has these incredible amounts of money coming at them constantly from their investments. But they pay relatively light taxes compared to people who work and have big incomes but make nothing like they're making -- and they have literally no place to put this money."
So, Johnston continued, "They have more money than they have any utility for...Money at a certain point loses all meaning, in the same way that if you are unbelievably beautiful, it loses all meaning and distorts what you do.
"And I don't have any doubts that they'll sell at least a few pair of these shoes. You can imagine some incredibly rich guy simply sending a pair of these to his wife or his mistress or his second mistress." And then a joke: "The second mistress is always more expensive than the first one because it's a newer model and you're an older guy."
This kind of extravagance may be uniquely American, Johnston observed. It's certainly not possible in most of the rest of the world. "If they lived in Bangladesh, they'd have nowhere near this kind of money," he noted, referring to the vast public and private infrastructure that makes wealth acquisition so much easier here than almost anywhere else. And in other countries where that infrastructure does exist, it's far more aggressively taxed. "This is a reflection of how the enormous fruits of the American economy are not being distributed in any relationship to their contributions to that economy."
And worst of all: Guess who's picking up the tab?
Then Johnston mentioned something else that should piss people off a whole lot more than over-inflated shoe prices. It's this: in some cases, there are absolutely legal ways for rich women to shunt some of the cost of an absurd shoe purchase off onto taxpayers. For some of the buyers of the Wave wedge, we may end up picking up part of the tab.
Johnston explains how this works. A famous actress -- say, Angelina Jolie -- buys a $5K pair of shoes and wears them to an event. Then, she donates them to a charity auction, which may sell them for more than $5K (whee! Angelina's actual shoes!) -- and takes the value of the sale as a tax deduction. Which means we end up subsidizing roughly 40 percent of the the purchase of a pair of once-worn $5K shoes. And she may actually end up making money on the deal.
Of course, the amount of the deduction varies directly with the fame of the person wearing the shoes. Kim Kardashian routinely sells her once-worn shoes on eBay for a hefty profit. Regular gals like me can only deduct the going thrift-store rate -- and that's only if we itemize our taxes, which most Americans don't.
In other cases, studios and production companies buy things like this, and take them as a business deduction. All those Hermes handbags and Manolo Blahnik shoes worn by the Sex and the City cast? We also subsidized it all to the tune of about 40 percent -- the amount of the tax deduction the show's producers were able to take because they were used in a show.