If you have accumulated more wealth than you need, there are a number of things you can do with the excess money, according to billionaire investor Leon Cooperman.
Founder of the Omega Family Office, Cooperman — who has an estimated net worth of $2.5 billion — shared his views on the stock market, tech valuations, taxes and how to spend accumulated wealth in a Friday interview on CNBC's "Squawk Box."
His comments are timely 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 would be paid for by raising taxes on the wealthiest citizens and closing certain loopholes such as the "step up in basis," carried interest and special real estate tax breaks.
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Cooperman himself has been battling Sen. Elizabeth Warren, D-Mass., over a wealth tax, which she sees as part of a fairer tax system. He recently declined an invitation from Warren to testify at a Senate hearing on taxes.
"I do believe in the progressive income tax structure, I do believe rich people should pay more," said Cooperman, adding, "the wealth tax makes no sense to me for various reasons."
He says there are other ways to accomplish Warren's goals, such as raising the marginal tax rate or eliminating loopholes like carried interest, which allows certain business to defer taxes, and is included in Biden's latest tax plan.
Here are three things that Cooperman says people shouldn't do once they've accumulated wealth — and one that they should.
1. Don't overconsume
If you have extra money, spend it on things you want, said Cooperman.
"Buy planes, art, homes – stuff like that."
However, over the long term, this isn't as helpful as saving, investing or finding other uses for your money. Cooperman said he's not a big collector of items himself and prefers to be more modest.
"My wife and I, we happen to have a view that material possessions bring aggravation," he said. "We're 'less is more.'"
2. Don't give it all to your kids
Many families save and invest their money in the hopes of being able to pass it on to future generations. But, for the ultra-wealthy, giving all their money to their kids might not be a good idea, according to 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," said Cooperman.
3. Don't give too much to the government
"Only a fool would give the government money more than they're entitled to," said Cooperman. "You pay your taxes as a good citizen and the rest you keep."
Cooperman added that everyone should pay their taxes but the investor has his own idea on what constitutes a fair share 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," said Cooperman. "Beyond that it becomes confiscatory."
4. Last and best: Do donate it
The best use of accumulated wealth is donating it to charity or using it to help others, Cooperman said.
"Recycle it back into society and try to make the world a better place," he said. "And that's kind of my commitment."
Cooperman and his wife in 2010 committed to give most of their wealth to philanthropy or charitable causes through 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," said Cooperman.
He said the current tax system incentivizes the wealthy to give their money away — especially those who can donate appreciated assets such as stocks that they haven't paid taxes on.
"The tax code was designed to encourage philanthropy," said Cooperman. "To the extent that you're giving away pre-tax dollars that are appreciated, it reduces your cost."
Beyond tax breaks, however, Cooperman has other reasons for donating his wealth: It brings him joy, he said.
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Disclosure: NBCUniversal and Comcast Ventures are investors in Acorns.