(MONEY Magazine) – More than ever before, it pays to be rich. By rich--and this may come as a surprise if you consider yourself solidly middle class--we mean the roughly 6 million U.S. households with annual gross income above $100,000. If you're among them, you have a far better chance of living well in the new, do-it-yourself America that's taking shape today than do those in the middle of the income chain or, heaven help them, on the bottom. That's because the incredible shrinking government envisioned by Gingrich-style Republicans will punish those without the resources to get ahead on their own and will reward those who can save, invest and work harder for themselves. In other words, the rich have the best shot at getting richer.

Consider:

The rich have the money to save for an uncertain future. The $100,000-plus club has a median net worth of $569,000--and the ability to invest and grow more. According to Money's 10th exclusive Americans and Their Money survey (see Money Newsline on page 24), the average rich household intends to save or invest some $20,000 in 1995; that's more than what 25% of the country's families earn in a year.

The well-off will win with new tax breaks, such as a cut in the capital-gains tax, that will make it possible for them to keep as much as 50% more of what they earn on their investments.

The rich will benefit far more than any other income class from the reduction of government regulations that hamstring business. That's partly because 11% of the rich run their own business, vs. 2% of the population as a whole.

Still, not all among the wealthy will find the age of self-reliance to their liking. Some of yesterday's kings may get dethroned: Lawyers could see their incomes drop if tort reform slams the legal profession. Doctors will feel some pain too, because of continued health-care cost cutting. And rich farmers will lose out when the ax falls on agricultural price supports.

Who are today's rich? How will the age of self-reliance affect you, if you are fortunate enough to be among them (24.7% of Money subscribers have household income above $100,000)? And, specifically, what can you do to protect or enhance your financial well-being? Read on and find out.

WHO IS RICH IN AMERICA?

The box at the bottom of the page gives a snapshot of America's affluent. In fact, there are actually two classes of affluence--the rich, as we described them above, and the superrich (those Americans pulling down at least $200,000 a year or having assets of more than $3 million).

The plain-vanilla rich, according to market researcher PSI of Tampa, are not terribly different from the middle class: A quarter work for corporations; 11% are business owners; 40% are in sales or technical fields such as stock brokerages and computer programming, while 7% are attorneys and 4% are doctors or dentists. Another 13% are retired.

As for the superrich, it's clear that most are self-made: According to a survey of these privileged few by U.S. Trust, 46% say they prospered by owning their own business (see the chart at upper right). Perhaps most intriguing is that 70% of them describe their family background during childhood as poor, lower class or middle class. This, says Johnette Beacham, president of Financial Market Research in New York City, "runs against the common wisdom that most of the rich were born with a silver spoon in their mouths. Most bought their own spoons."

HOW THE WEALTHY WILL FARE

In the years ahead, the more self-reliant America will generally favor society's haves over its have-nots. But not always. Here's a rundown of who wins and who loses among the wealthy:

Investors will hit the jackpot. A bill that recently cleared the House Ways and Means Committee would allow individuals to exclude from taxes half of their capital-gains income on investments held for more than a year. An investor in the 39.6% bracket, for instance, would pay tax of 19.8% on profits from the sale of assets, vs. today's top levy of 28%. Furthermore, such an investor would have to pay tax only on gains that exceed inflation, provided he or she has held the asset for three years or more. The capital-gains reduction would apply to all investments sold after Jan. 1 of this year that have been held for at least a year.

Under current law, anybody who invests in a business with assets of $50 million or less and holds the investment for five years gets taxed at half the regular rate. During 1993's tax law debate, President Clinton supported that break on the grounds that it creates jobs by encouraging long-term investing in growing companies. For the President to sign a new capital-gains tax reduction into law, it must promote job growth. "I don't want to rule out the possibilility of working with this Congress to come up with something that meets that standard," he told Money in an Oval Office interview (see page 146). "But I am clearly opposed to the proposal that's moving through the House, because it applies to investments that plainly won't create jobs." The probable compromise: a reduction in the capital-gains tax rate, but no indexing of profits for inflation.

Wealthy retirees will pay more for health care and doctors will earn less. To pay for their $189 billion tax-cut package and slice the deficit, House Republicans want to take a scalpel to some popular entitlement programs, including Medicare. One probable outcome will be means testing-in other words, the rich will pay more for their benefits. For example, last fall the House Budget Committee considered raising monthly premiums for doctors' services covered under Medicare Part B-currently $46.10--to $164, on a sliding scale for Medicare recipients with income of more than $95,000 for individuals and $115,000 for married couples. They're now exploring additional options. But, says Gail Wilensky, former head of Medicare and Medicaid in the Bush Administration: "There's widespread bipartisan support for reducing the subsidy that wealthy Americans get for Part B."

Another idea the House is debating is encouraging more seniors to join health maintenance organizations, which contain costs, in part, by keeping a tight rein on doctors' fees. For the nation's 670,000 mostly wealthy Dr. Welbys (median income: $156,000), that solution is like a dose of Alka-Seltzer: It's good for the system but leaves a bad taste in your mouth.

Entrepreneurs will be given even more opportunities to thrive. "There's been a sea change in Washington," says James A. Thurber, director of the Center for Congressional and Presidential Studies at American University in Washington. "Small business means jobs, and many of the newer people in Congress are against any government action that burdens small business." For instance, bills have cleared the House, with Senate support likely, that would require extensive cost-benefit analysis before the feds can impose new health, environmental and occupational safety rules. The same legislation compensates property owners whose holdings lose value because of government regulations. Who benefits the most? Entrepreneurs like Alan Withrow, 52, of Charlotte, N.C., who owns 12 mobile-home parks in the Carolinas (see the photo essay on page 140). He says: "I'm excited about what's happening in Washington."

As they stand, the Republican bills would likely be vetoed by President Clinton, who is worried about their effect on environmental and consumer safety. But a compromise is anticipated, since the President is pushing his own initiatives, including relief for small businesses that unintentionally violate the rules.

Lawyers will share in fewer--and smaller--damage awards. The House has passed a troika of legal reform bills aimed at curtailing the explosion of federal lawsuits, which rose from 90,000 in 1960 to 250,000 in 1990. Among other things, the law would require the losers to pay the winner's legal fees if the court determines that the losing party's case didn't have merit. The legislation, which faces opposition from heavyweight lobbyists such as the Association of Trial Lawyers of America, also seeks to cap the amount of punitive damages that are awarded in those suits at $250,000, or three times the actual economic damages. Says Rep. Chris Cox (R-Calif.): "If there is a Robin Hood aspect to the Contract with America, it is to take from the lawyers and give to the common man."

Rich farmers will earn less as momentum builds to end agricultural price supports. Some 53% of farm subsidies-which this year will cost taxpayers $10 billion--go to the largest and wealthiest 6% of the country's 1.9 million farms. Both the House and Senate agriculture committees are considering farm bills that will substantially reduce this so-called cowboy welfare. Sen. Richard Lugar (R-Ind.), a presidential contender, has proposed cuts that would save $15 billion over the next five years. That would hurt folks like Colorado wheat farmer Reggie Wyckoff, 54, whose farm and household income last year totaled $122,000-including $42,767 from so-called government deficiency payments (see the photo essay on page 140).

WHAT THE RICH SHOULD DO

Investors should not sell yet. Given the uncertainties surrounding a capital-gains tax cut, you should hang on to any profitable investments unless you have a compelling reason to sell. Also consider investing in growth stocks. Reason: Growth stocks generate about 85% of their return from capital gains.

Wealthy retirees should set aside more for their health care. How? President Clinton, the House Republicans and a bipartisan group of senators have all proposed creating a so-called back-end IRA (dubbed American Dream Savings Accounts in the Contract with America). Because of such widespread support, the chances of passage this year are better than fifty-fifty. Although you would not get a tax deduction on your contributions, you would be able to withdraw your principal and earnings, after age 59è, tax-free. Furthermore, once the money has been in the account five years, withdrawals for such major expenses as medical care would be tax- and penalty-free.

Doctors, lawyers and farmers may need to rethink their traditional way of doing business. Physicians who haven't already done so should consider offering their services to an HMO or preferred-provider network. The reason: Doctors who augment their private practice by also seeing HMO patients earn 19% more than the typical physician who goes it alone, according to Phillip Miller, a medical recruiter in Irving, Texas. Why? Because affiliating with an HMO increases the number of patients you see. Trial lawyers may need to alter their mix of cases toward work in which they're paid by the hour, regardless of a case's outcome. Farmers, whose average liabilities top $69,000, should pare their debt. "Most farmers borrowed on the assumption of financial help from the government," says Colorado Agriculture Commissioner Thomas Kourlis. "Now they better pay it off fast on the assumption that the help is disappearing."

Entrepreneurs should invest more in their business. The surest way to get rich in America has always been to start your own business. Congress' current pro-small business attitude will make that path even smoother. Says Beacham of Financial Market Research: "What's been overwhelmingly true in the past will be even more so in the future. The way to make money in America is to invest in yourself." Said another way, in the new America you will have your best chance ever of getting rich, but you may never get the chance to be idle.