$ 250,000 per year sure is rich by US standards
It appears that someone (who I am sure has family income under $250,000 per year and is just interested in social science) contests my view that families with income over $250,000 per year are rich. He or she notes that two earner families can be rich by working real hard and that price levels are high in some parts of the country, so $250,000 doesn’t buy as much as it buys in other parts of the country.
One can look at two earner families only. $250,000 will be huge compared to the income of most two earner families. The vast majority of two earner families have incomes under $250,000 / year. This remains true of a very large majority after making an absurdly generous correction for local price levels.
Calculations after the jump.
Let’s see. In 2006 44.9 % of married couple families had two earners
According to the same source, 1.5% of households have income over $250,000. If they are all two earner married couple families, then roughly 6% of households are two earner married couple families with incomes over $250,000 per year.
Non family households typically contain two or more families and, in fact, there are more families than households. I won’t bother to look it up, but 6% is being very generous to those who claim that families with incomes over $250,000 per year are not all that rich by US standards.
According to this study (the first I found) the highest bicoastal local price indices are about 1.3 times the national average.
The highest price index was for Honalulu, which I will ignore as it is not on the West or East coasts.
2.67% of households had income over 200,000 in 2005. 250/1.3
Being insanely generous and assuming that all households with income over 250,000 live in the very costliest areas, and that they are all two earner married couple families, and that there are no more families than households, I get to a two earner married couple family with income of $ 250,000 is only richer than 86% of two earner married couple families given the correction for the local price level.
This is very very far from the average Joe married to the average Jane and both working.
There is no way that any numerate person who is willing to google for 10 minutes can believe that a family with income over 250,000 per year is not rich by US standards. All of the corrections are already considered when getting from an income most people consider rich up to $250,000 per year.
It is amazing how we have become so jaded by the multi-million dollar salaries of entertainers. I would be happy to make $100,000. Six figures would certainly make me feel rich.
It would be useful to differentiate between high income and high net worth. Its also useful to recall that some people may have one “high income” year which reflects many years of effort, e.g. an engineer who excercises a decade of stock awards or a novelist who finally sells his book after 5 years of writing.
But more fundamentally, you have implied that an income materially above the average, and hence (assuming a realisitic distribution) above most (say above 86%) of the two income families, is de facto “rich”.
I think you need to first define “rich”. Compared to many in India, or Africa, all Americans and Europeans are rich. Compared to George Lucas, few people in the world are rich.
My guess is that a lot of people on Angry Bear would think “rich” starts are about twice what a professor of economics makes. Funny how that works.
People who say $250k for a married couple “isn’t rich” are probably professional couples or small business owners who are painfully aware of people in the better neighborhood a mile or two away who inherited $10M and enjoy the same standard of living without a fraction of the same workload or stress. Being ‘rich’ has a lot to do with how few people you still envy. Can a couple earning $250K still feel a whole lotta envy? You betcha!
So per salary.com …
The median expected salary for a typical Asst. Professor – Economics in the United States is $67,573. This basic market pricing report was prepared using our Certified Compensation Professionals’ analysis of survey data collected from thousands of HR departments at employers of all sizes, industries and geographies.
So does this mean that in fact “rich” begins at ~$140,000? or did you mean a full professor of econ who doubtless receives the big bucks
I am not in social sciences, and those are close to real nos. of actual costs in California. Take a copy of turbo tax and see for yourself. Try to call a few child care centers and see for yourself. Look at Californias tax bracket. Everyone making above ~50K is taxed the same as Schwarznegger. 9.3%. Payroll taxes are even worse.
Here are the minimum AGI from IRS data to fall into different buckets. (link in comment in prev post)
for 2007
Top 0.1% $2,155,365 minimum
Top 1% $410,096 minimum
Top 5% $160,041 minimum
Top 10% $113,018 minimum
Tax brackets are set to max at 350 K. Why? What relation do we have – making 250K – about 4 times median income to people making more than 2 million?
I am seeking an answer to why that should be 350k? Why not 400K Why not 500K?
What is it that make it ok to raise taxes above 250K as Obama says? Everyone above 250K is “rich”?
I see people who earn 350K placed in an bracket where average income is 7 million. i.e. it is ok if someone making 350K pay the same tax as someone on average who earns 20 times my income.
Why not a tax bracket above a million income? Another at 2 million and another at 5 million? There are lot of ways to have more progressive taxes. Why stop brackets at 350K? I never see this being
http://wealthforcommongood.org/shifting-responsibility/
This is my personal situation – not a social science inquiry.
>>get to a two earner married couple family with income of $ 250,000 is only richer than 86% of two earner married couple families given the correction for the local price level.
Try talking to real people who pay actual taxes and childcare of making that 250K, as I said.
If your income is in the top 2% of the country, you are certainly NOT middle class. People who make over $250,000 are in the top 2%, therefore they are not middle class which makes them rich.
You have more than 98% of all American families so quit your bitchin’!
“It appears that someone (who I am sure has family income under $250,000 per year and is just interested in social science) contests my view that families with income over $250,000 per year are rich.”
As above. “Rich” is a measure of wealth, a stock. Income is of course a flow. so no, we cannot say that someone with any level of income at all is “rich” because we’re measuring something very different.
Your guess is certainly wrong in reality. Yes, precision needed.
I am confused…real people who pay actual taxes?? You don’t feel rich, and if you owe money on all your assets your net worth may be low, so your neighbor who owns the house is richer, but income flow for the year was good.
Lots of people who make $100,000 pay childcare and taxes (you appear to be pointing to federal income taxes). What is your point?
Many in the multi million to billion level have figured out ways to avoid many taxes. Taxing other forms of assets certainly needs visiting…is this what you are suggesting?
Hmmm…what is the word people should use to show the difference between income levels without regard to underlying asset value?
Jerry:
Actually the >$250,000 in income would be in the top 2.7% with 1.8% making between $250,000 and $500,000 annually. This group is comprised of ~2.7 million taxpayers.
http://www.taxpolicycenter.org/numbers/displayatab.cfm?DocID=2419&topic2ID=40&topic3ID=41&DocTypeID=1
Income secure vs. Asset secure?
I jest at the new term “food insecure” used to describe people who are hungry i.e. skipping meals.
Hi Robert:
I am not sure if we can just pick a moment in time and define “income rich.” I always like to draw a comparison to when the AMT (minimum tax) was created till now. It gives a pretty good perspective as to what was rich then and what is rich (income) now. In 1967, there were 155 taxpayers making >$200,000 who escaped all federal income taxes, 20 of them were millionaires. http://hnn.us/articles/11819.html The general feeling then was the income rich (> $200,000) were escaping paying their fair share of federal income tax through loopholes in the tax law, hence the creation of the minimum tax by Nixon (a Repub who believed in raising taxes on the income rich) with the Tax Reform Act of 1968. From that point the Minimum Tax was changed multiple times to what is the AMT today under which 4 million taxpayers fall paying ~$33.5 billion http://www.taxpolicycenter.org/numbers/displayatab.cfm?DocID=2419&topic2ID=40&topic3ID=41&DocTypeID=1 (2009).
3 tenths of 1% of the taxpayers (150,000 taxpayers in 1968) made >$50,000. The same percentage applied to today’s taxpayers would equate to those making >$1MM or 390,000 taxpayers. To me, this is the income rich. Those making $25M to $50M (~2.4%) in 1968 would be making $250M to $1MM today if we use the same percentages of taxpayers from 1968 till today. I am not sure I would call someone making $250,000 annually income rich. I would say they have greater disposable income and could afford to pay more tax. Median Income 1968 $9.6M and compared to $50M 2008.
EPI http://www.epi.org/publications/entry/bp224/ calculated a basic family income (2 adults + 2 children at ~$48M which varies by location in the US. $42 in OK City as compared ~$68M in NYC. Overall median Income is ~$50M. 1/3 of all familiies fall short of the ~$48M which approaches the US Median Income of ~$50M.
I wouldn’t say Middle Income (class) is Median Income. I think we have slipped and many people are at the lowest end of the income bracket to be considered Middle Income or class or have dropped even further since 1968.
Well the problem is that at some level, “rich” is a perjorative term, implying in these populist times “one of the people who’s taxes we’re willing raise.” People generally define rich as those who don’t have to worry about money, but of course a majority of people spend most of their income regardless of how much they make, so the never feel “rich.” That’s why in these sorts of discussions I prefer the term “well off.” People whose incomes are at ~85% of median don’t tend to get all up in arms about being told that they’re “well off.”
yes, if you use the word ‘rich’ you have to distinguish between ‘high income’ and ‘high net worth’.
but there is another effect worth mentioning.
the more money you make, it’s likely that you see your peers as people who make a lot of money. income distributions being what they are, some of these people will make A LOT more money than you.
personally, i’d say that since i started making a lot of money my poverty relative to my peers has increased wildly. i work with people who make 10-100x what i make. when i was making 40k/year that was never the case.
luckily, in my case, i don’t see this high income as a permanent thing for me, so it doesn’t get to my head.
WARNING: THE FOLLOWING SENTENCE IS NOT GOING WHERE IT AT FIRST SEEMS TO BE GOING. In 2007, 180,000 Wall Street gamblers earned average $180,000 bonuses on top of their average $120,000 salaries: average $300,000 (seems relevant to our discussion) — but even they are not the beneficiaries of the maldistribution of income in America’s upside down labor market.
http://money.cnn.com/2008/11/04/news/companies/wall_street_bonuses/index.htm
2006, average household income: $1,200,000. (Two 18s followed by two 12s: easy to remember.)
http://www.cbpp.org/cms/index.cfm?fa=view&id=2789
Since 1973, 15% of income has shifted from the bottom 90% of earners to the top 3% — apparently largely to the top fraction of 1%.
There is no healthy economic rationale for this happening (paying CEOs literally 25X what they used to make sends more kids to grad school to become better CEOs — ditto for ballplayers and news anchors? :-]).
“Food insecure.” Well, that just rips it. Hunger caused by poverty isn’t “skipping meals.” This is probably the only country on earth where people who are rich don’t want to be called rich, but they sure want to be rich. No, they insist on being called be “middle class.” We don’t have a problem defining rich. We have a problem defining poor.
So let’s say $50K is generally plenty. That does not come with health care in most places, but it’s average income and you can live on it. Compare this to incomes of $250K, five times more. Now tell me that incomes at that level are middle class.
Similarly, what do you call people who work three part-time jobs and still earn only $25K a year? There is only one correct answer to this question and it’s not middle class. Now, compare and contrast with the lives of people who earn $250K, 10 times higher. Rich or not?Robert, your point is well taken.
Yes Jim you catch the problem exactly as income increases the Joneses you use to compare your self to also rise in income and lifestyle. For example McMansions, private colleges for children (I suspect a good bit of pressure to pick comes from parents who hire consultants to help pick colleges). At some point keeping up requires a media room with a 60 inch flat panel high def screen etc.
A couple of thoughts. My wife and I do not make it to the $250K level, but we are in the neighborhood. I certainly think we are “well off” and argue with my more conservative friends who are in a similar economic boat that we certainly are not “middle class”. I have noted several times that as much as I abhor paying taxes I would pay more but I think there should be more progressivity for those who make much more than my wife and I. Now my wife and my income has staedily increased over the years and we are likely maxed out–at least in real terms now. We have saved pretty well over the years when raising and educating two children on less income and probably have a net worth if you include 401k’s–neither of us will get any pension benefits–home equity and investments of around a million. All of that being said, I would never describe us as “rich”. We have to work for a living and we would lose a lot of what we have accumulated if either of us lost our jobs, we certainly do not worry about buying groceries or having a roof over our heads, but we do shop bargains, limit eating meals outside the home and still have a mortgage payment after using the loan proceeds to pay for our kids college education–an automatic AMT deal–do not drive fancy cars and have taken exactly 2 vacations outside the continental US in 32 years. I am certainly not complaining and I am very grateful both to my parents who gave me an education which allowed me to make this sort of income and a country where I have been able to do it, but nothing I read in the comments is going to convince me that my wife and I are “rich”.
Here are the local govt salaries close to where I live
http://www.ibabuzz.com/tricitybeat/2010/04/16/fremont-2009-salaries/
A couple in their 40’s can easily hit the top tax bracket in similar jobs. These people are by no means rich – by any definition of rich – income or assets.
I posted the IRS stats from 2007. Here is it again. real nos. Not theoritcal studies, or tax rate based projections.
income %ile 0.1 1 5 10 25 50
—————————————————————————————
tax rate 21.46 22.45 20.53 18.79 15.98 14.03
income floor 2,155,365 410,096 160,041 113,018 66,532 32,879
no. of returns 141,071 1,410,710 7,053,549 14,107,097 35,267,743 70,535,486
By what means is this progressive? Maybe upto the top 25%. That is upto an income of 160K (family). After that, it is a flat tax. About 18.5% to 22.5%.
Now add the payroll tax to this, and it is much more regressive. Upto about 212K income (dual income, fica cap).
Hence why you see the table showing that the top 1% pays tax at 22.5% rate, but top 0.1% pays tax at 21.5% rate. That is the tax rate starts falling inside that top 1% group, as your income goes higher.
Taxpayers at the very top of the income are not paying their fair share, and spreading that pain on to the top 25% earners. And it disproportionatley falls on those in the bottom of the top 1% .
All I get back is responses like this.
— Your family makes 250K, you make a lot , you are rich. ( Huh, wasn’t rich a state of mind?)
— We don’t care, you are richer off than 99% (Or 98%) Americans
— You are greedy, and don’t want to pay your fair share (this after paying 22% + 9% state +8% FICA)
And the answer to all taxation issues is raise taxes on the rich.
I am trying to make a few points
– I am not that different from a family making about half what we make in vast portions of the country. Maybe there are lot of places where 250K is rich, but not where I live. Family of two police officers is rich? Where in this country?
– Fed taxes are not progressive above the top 20% of income. State taxes are even more regressive.
– The following will not make taxes more progressive
— raising taxes on top brackets
— lifting FICA tax cap.
The following will make taxes progressive
— Adding higher income brackets and tax rates above the current ones.
— Instituting FICA taxes on unearned income
— removing or restricting Mortgage Interest deduction
But I don’t see anything other than knee-jerk “raise taxes on the rich” advocacy, from people who should know better.
Here are the local govt salaries close to where I live
http://www.ibabuzz.com/tricitybeat/2010/04/16/fremont-2009-salaries/
A couple in their 40’s can easily hit the top tax bracket in similar jobs. These people are by no means rich – by any definition of rich – income or assets.
I posted the IRS stats from 2007. Here is it again. real nos. Not theoritcal studies, or tax rate based projections.
income %ile 0.1 1 5 10 25 50
—————————————————————————————
tax rate 21.46 22.45 20.53 18.79 15.98 14.03
income floor 2,155,365 410,096 160,041 113,018 66,532 32,879
no. of returns 141,071 1,410,710 7,053,549 14,107,097 35,267,743 70,535,486
By what means is this progressive? Maybe upto the top 25%. That is upto an income of 160K (family). After that, it is a flat tax. About 18.5% to 22.5%.
Now add the payroll tax to this, and it is much more regressive. Upto about 212K income (dual income, fica cap).
Hence why you see the table showing that the top 1% pays tax at 22.5% rate, but top 0.1% pays tax at 21.5% rate. That is the tax rate starts falling inside that top 1% group, as your income goes higher.
Taxpayers at the very top of the income are not paying their fair share, and spreading that pain on to the top 25% earners. And it disproportionatley falls on those in the bottom of the top 1% .
All I get back is responses like this.
— Your family makes 250K, you make a lot , you are rich. ( Huh, wasn’t rich a state of mind?)
— We don’t care, you are richer off than 99% (Or 98%) Americans
— You are greedy, and don’t want to pay your fair share (this after paying 22% + 9% state +8% FICA)
And the answer to all taxation issues is raise taxes on the rich.
I am trying to make a few points
– I am not that different from a family making about half what we make in vast portions of the country. Maybe there are lot of places where 250K is rich, but not where I live. Family of two police officers is rich? Where in this country?
– Fed taxes are not progressive above the top 20% of income. State taxes are even more regressive.
– The following will not make taxes more progressive
— raising taxes on top brackets
— lifting FICA tax cap.
The following will make taxes progressive
— Adding higher income brackets and tax rates above the current ones.
— Instituting FICA taxes on unearned income
— removing or restricting Mortgage Interest deduction
But I don’t see anything other than knee-jerk “raise taxes on the rich” advocacy, from people who should know better.
Here are the local govt salaries close to where I live
http://www.ibabuzz.com/tricitybeat/2010/04/16/fremont-2009-salaries/
A couple in their 40’s can easily hit the top tax bracket in similar jobs. These people are by no means rich – by any definition of rich – income or assets.
I posted the IRS stats from 2007. Here is it again. real nos. Not theoritcal studies, or tax rate based projections.
income %ile 0.1 1 5 10 25 50
—————————————————————————————
tax rate 21.46 22.45 20.53 18.79 15.98 14.03
income floor 2,155,365 410,096 160,041 113,018 66,532 32,879
no. of returns 141,071 1,410,710 7,053,549 14,107,097 35,267,743 70,535,486
By what means is this progressive? Maybe upto the top 25%. That is upto an income of 160K (family). After that, it is a flat tax. About 18.5% to 22.5%.
Now add the payroll tax to this, and it is much more regressive. Upto about 212K income (dual income, fica cap).
Hence why you see the table showing that the top 1% pays tax at 22.5% rate, but top 0.1% pays tax at 21.5% rate. That is the tax rate starts falling inside that top 1% group, as your income goes higher.
Taxpayers at the very top of the income are not paying their fair share, and spreading that pain on to the top 25% earners. And it disproportionatley falls on those in the bottom of the top 1% .
All I get back is responses like this.
— Your family makes 250K, you make a lot , you are rich. ( Huh, wasn’t rich a state of mind?)
— We don’t care, you are richer off than 99% (Or 98%) Americans
— You are greedy, and don’t want to pay your fair share (this after paying 22% + 9% state +8% FICA)
And the answer to all taxation issues is raise taxes on the rich.
I am trying to make a few points
– I am not that different from a family making about half what we make in vast portions of the country. Maybe there are lot of places where 250K is rich, but not where I live. Family of two police officers is rich? Where in this country?
– Fed taxes are not progressive above the top 20% of income. State taxes are even more regressive.
– The following will not make taxes more progressive
— raising taxes on top brackets
— lifting FICA tax cap.
The following will make taxes progressive
— Adding higher income brackets and tax rates above the current ones.
— Instituting FICA taxes on unearned income
— removing or restricting Mortgage Interest deduction
But I don’t see anything other than knee-jerk “raise taxes on the rich” advocacy, from people who should know better.
Dohtax makes a very valid point. The term rich is insufficient to use as a basis for making decisions in regards to tax equity. Where is the bulk of the wealth and who earns the grossly outsized incomes which are resulting in a continuous soaking up of all available income. Income has to include all forms whether the result pof labor or investment. And taxation has to recognize the disproportionate distribution of that total income. Taxation also needs to take into recognize those sectors of income which are receiving the greatest benefit from our economic structure, and recignize their obligation to support that system in line with that greater benefit.
I don’t know the exact numbers, but I recall that a majority of Senators and a great many Representatives fit the category of very wealthy. That being the case how can we expect that they will look beyond their personal self interest. How do we expect that those very wealthy elected representatives will understand the issue of fairness? How can we expect that they will take steps to adjust the tax codes in a more progressive manner? Don’t hold your breath. From the NY Times just this AM, a story of what our representatives can accomplish when they put their minds to it,and party politics has nothing to do with the results.
“Legacy for One Billionaire: Death, but No Taxes”
http://www.nytimes.com/2010/06/09/business/09estate.html?ref=todayspaper
Now that’s rich.
Dohtax,
I will repeat from the last thread. Child-care is descretionary spending, savings $23K. State Income taxes, also descretionary (I know of at least 10 states with no income tax, 95% of the military legally lives there), so that saves another $20K. I bet you live in a nice neighborhood in an expensive California City. That’s probably good for another $6-7K. So all in all, YOU decided that how you live is worth $50K vs someone in Texas or Florida. Great for you. Now stop whining about YOUR choices.
Anyone making $250K is easily within the high-income bracket in the US. You are by definition rich.
I bet if you or your wife stooped working and stayed with the kids you would basically break even…ever thought of that? I know of two couples in DC that ran the math and had one part of the marraige quit (surprisingly how I met my first home-maker dad).
The fact your in debt over you head is your problem, same with your expenses. Come down here to Texas and my school distrct and you can get your kid in to the best High School in the area for free (with free after-care), BUY a good house for under $150K, and not pay a dime in state income taxes. So get a grip – you made your choices live with it!
And payroll (I assume your talking SS here) gets capped at around $110K for everyone. Best deal you will ever get. ((Yes, coberly & Bruce you have truely corrupted me totally over to the dark side on this))
Your gripe is you think you should have it all. Well your not Bill Gates yet!
Islam will change
rdan,
That would be nice to have words to show the difference between, wealthy and high-income. They are not the same.
Islam will change
Thanks Buff.
I can understand his saying he is “not rich” because he is thinking “Rockefeller rich.” What I can’t understand is that he seems to be feeling sorry for himself.
Unless he just wants a more progressive income tax. I’d be inclined to agree with him about that. But not to the point where the rich quit working. After all, we can’t afford that.
(oh, yes, the last line was supposed to be joke.)
pn,
Twice which professor’s salary? Seriously, we are talking about a range that is really, really wide. There are a good many high-end profs who earn above $250k (Krugman wrote a couple of funnies about it when he was at Slate). Others earn in the mid-5-figures. Funny how that works.
The real money, by the way, is in writing books. Ask Kimel.
Dothax
you may be seeing only knee jerk responses because you have not made your point very clear.
also, i don’t know how it would affect your feelings if you learned to see the payroll tax not as a tax but as an insurance payment. that’s really what it is, you know.
an awful lot of this discussion is about “feelings”. there always seems to be a way you can squint at the facts to make yourself feel bad… or good if you like feeling like a victim. you want to see the really rich pay their “fair” share? fine. convince them what is fair. a lot of them think they should pay a ‘flat rate”, “but exclude capital gains if you please, from all taxes, because after all, thats how “we” “create wealth.” moral is everybody has a special pleading for why you should tax the other guy. it’s really a little boring.
that said, i can’t see any reason not to raise taxes on those who got the benefit of the tax cuts that led to the current deficit.
Oh, well, back to a favorite theme of mine.
What’s all the fuss about a stinkin’ LABEL? I don’t care if $250k makes you rich or netroots or global or fashion-forward. Don’t care. I don’t care where the middle class begins and ends. At all. The tax tables do not carry footnotes which explain that certain tax brackets are what they are because “middle class” begins at $X and ends at $Y. Tax tables are just there so we can do a calculation.
If you want a justification, we can talk about quintiles, or income distribution or whatever. Those math-based categories start out wearing less emotional jewelry than “rich” or “middle class”, though I’m sure the denizens of dishonesty would set to work right quickly bejeweling any term that might become current in debate over economic issues.
The fact is, though, that we are running a structural deficit, that interest payments are, under current law and conventional economic projections, set to become the budget-bustingest category of outlays a few years down the road. Problem is, you don’t get to cut interest payments directly. You have to cut the deficit, which means lower spending, higher taxes or more growth. We have not been good at growth for some time. (Kimel finds that tax hikes are good for growth, but that’s just what is in the data. The truth is in the stories that partisans tell. ) That leaves tax hikes and spending cuts. That’s why Dohtax needs to pay higher taxes.
(also in jest)
Asset secure is one thing. I doubt ANYONE is income secure.
Meanwhile, the words you used, “wealthy” and “high income,” would do fine – if we remembered to use them as appropriate. The problem with “rich” is that it could mean either.
Agreed that the top of the tax rates federally need to rise with a 1 million and 10 million dollar bracket. As long as we do not uncap the fica tax rate we could add a rise of 6% at one million and preserve the same tax rate as on the last dollar before the FICA cap.
Actually at 250 k with 2 earners you still have about 40k of income above the FICA cap if incomes are equal more if less.
KH, finally said something with which I can whole heartedly agree. “…interest payments are, under current law and conventional economic projections, set to become the budget-bustingest category of outlays a few years down the road. Problem is, you don’t get to cut interest payments directly. You have to cut the deficit, which means lower spending, higher taxes or more growth.“
Good job!
It all comes down to your definition of rich. Most socio-economic class studies distinguish between upper middle class and “rich”. The biggest distinction between the two is unearned income. The upper middle class mostly make their money from current wages and salary and self-employment income. The rich are mostly people who are not of retirement age who make their money from investments. The rich are further divided between the neuveau rich who made their money, and the old rich who inherited it.
There is, of course fuzziness at the edges. But, there are a lot of high income professionals, senior executives of small enterprises, and middle managers in large enterprises who make more than $250,000 a year, but would not in the sociological sense of the word be considered “rich.” A $250,000 a year for a household cutoff is on the market for the divide between families that are definitively upper middle class and those who are arguably merely middle class.
If one wants an income cutoff that captures predominantly the rich as opposed to the mere middle class, it is that income where a majority of AGI starts to derive from unearned income (e.g. capital gains, interest, dividends, rents). Most common sense distinctions sociologically would also distinguish between tax preferenced pensions (views by most as deferred earned income) and investments, even though they are functionally similar.
That cutoff is far north of $250,000 a year.
I think you need to dig a little deeper into Dohtax’s numbers. Why are the incomes of the super-rich (whatever that means) taxed at lower rates. I suggest that it is because the tax code favors investment income. The solution is no to be found in increasing the number of brackets, but in taxing dividends, capital gains, and tax-free bonds.
However, one should first ask whether you consider this problem needs to be solved. Regardless of your answer there are a lot of people who disagree and even more who have never really thought about the implication of the opinion.
Dohtax,
In the other thread, I responded to you, including this: “All of that said, it *would* make sense if CA reinstated the “10%” and “11%” brackets we used to have, at some point above the current maximum. Of course, as these things go, it might bump you up another bracket.”
That was based on the size of the current brackets and how high you are in the current top one in CA.
I’ve seen a lot of good ideas about how to increase progessivity, and adding brackets at the top is one that makes sense. In fact, one thing to consider here is that for most of this nation’s history, the top 0.1% did not make such a huge % of the total income of the tax base.
Given this current situation, I’d be for making the brackets wider for the low rates and adding brackets and making them narrower as income rises. Seems to me that an individual who makes less than 33K should pay no income tax, for instance. Or, that someone making 500K should be in a lower bracket than someone making 7M…. but both those brackets should be paying a higher % than they are now.
One of the problems with statistics is that they can be used to generate clouds rather than light. I’m sure we’re all familiar with the argument that it’s “unfair” that those with the highest incomes pay such an “inordinate” share of the total $ collected in taxes, for instance. They’d rather every one of us pay in proportion to our “share” of the population rather than of the income. And they talk constantly of the per capita debt each and every child is now born with – as if the teacher’s child should pay the same % of the debt as the billionaire’s child. If we accept the latter idea, then it increases the likelihood that we’ll accept the former – and who benefits?
Every child in public school should start learning early and often about statistics AND the ways in which they can be used improperly. Do we have the power to make that happen? As things stand now, voting is very unlikely to accomplish it. The least we can do is grab every opportunity to make the point with every child in our lives. (“So Bill Gates walks into a bar, suddenly on average everyone in the bar is a millionaire.”)
All of that said, while I understand your frustration, you seem to be ignoring the frustration of those a couple of brackets down who have benefitted even less from “tax cuts” and who have been hurt even more by the general looting that has been going on at the top for decades now. Even if everyone in your shoes agrees with you, just look at the numbers – there aren’t many of you. There’s a big group, more than 50% of the nation, who would welcome you to join in the cause if you saw it as something you had in common with them rather than as something that differentiates you among the top 5%.
Linda,
Totally agree. But lots of people use Rich in such a varied way as to be meaningless without spending some time on the context. I know people who have a poor income but high wealth and people with high income and low wealth. And then the people with high income and high debt (negative wealth). Lots of in betweens too.
Precision is needed but “soak the rich” feels good.
Islam will change
Kharris,
I also totally agree. i would just change one word of one sentance:
“You have to cut the deficit, which means lower spending, higher taxes AND more growth.”
We need it all….
KHarris, “You have to cut the deficit, which means lower spending, higher taxes or more growth.“
Sorry KH but that is a truism and as such has no additional meaning oand provides no additional insight. Which is it? Cut social spending? Cut the mililtary budget? Raise taxes on those incomes that have lots of room for a bigger tax bite? it is class warfare. The working classes are losing and the very wealthy are in control of the legislature. So what’s a concerned citizen to do? Robespierre, where are you when you are needed most?
Actually, the CBO projects that under current law Medicare will be higher than interest. Cutting health care expense growth will cut Medicare will cut the deficit will cut interest costs.
Arne said: “Cutting health care expense growth will cut Medicare (growth, maybe) will cut the deficit (maybe) will cut interest costs. (no relationship)
I certainly take your point about the silliness of looking at federal debt in per capita or per household terms. Does anybody know how it would look if we compared it to income tax revenues? Something like, for every $1,000 of income taxes your household paid last year, your share of the debt is $X. If we assume that the interest on the debt (because really, we’re never going to pay off principal) is paid proportionatly that gives us some sort of idea how much debt there is per person. Of course income taxes aren’t all federal revenue, but that’s still better than assuming debts are spread evenly among the population when the payments on it are not.
Jim A
and you can go a little further with that. supposedly the debt is like any other borrowing and should… if it is spent carefully… lead to a growth in income, which, nominally would lead to the increased taxes needed to pay at least the interest.
this is essentially the argument “they” used when they created the deficits, and it is, of itself, not invalid. where it seems to go wrong is that first, the money is not spent carefully, and second, whenever the economy grows, they cut taxes again so that the deficit continues to outrun the ability to pay for it.
but i think this is all deliberate. beyond the mindless greed of those who just want to not pay any taxes while they are asking their lobbyists to get favors from congress, there seems to be a faction that perfectly well understands that a high enough deficit will keep the government from spending money on those programs that they do not like… mostly social insurance and regulations that would interfere with the ways they make money.
kharris
i agree exactly about ‘labels” and the rest. maybe you said it better than i did.
jack
truisms bear repeating. there isn’t one person in a hundred today in America who can remember that raising taxes, or more growth, would cut the deficit. they have been told that only lower spending, and only lower spending on what the people need, will save them.
It’s not the income that makes you rich, it’s the rich who make the income.
😉
Coberly,
All the “kitchen table” talk, while probably an attempt to be folksy on the part of some, plays into the idea that government needs to run its budget like you or I would. The talk of per capita debt is scaring people who never considered the concept before. I imagine they think of it as something brand new and associate it with recent spending to try to save the economy. They are encouraged to think of it as the result of social spending – even though for years opponents of the Iraq war have tried to put the cost of that war into per capita terms.
It’s as if some portion of the population are sleeper cells of Pavlovian dogs, ready to jump into action whenever the Master rings the bell. And yes, I think it’s deliberate, too. There is more than one way to “starve the beast,” and I suppose it’s not surprising that the preferred method would be one where the select few get to gorge themselves in secret until it becomes apparent that only the bones are left and there’s a big bill to be paid by those who aren’t much more than skeletons themselves.
Jim A,
It’s socializing the debt. And it’s being done by those people who, as Coberly notes, hate social programs and are quick to accuse others of being “socialistic.”
My bet is that once their minions and accolytes are back in power, we’ll be hearing a lot less about cutting spending and a lot more about “individual responsibility” and making the victims pay.
You are right, I meant growth of each. Cutting the growth in the deficit will cut the growth in the interest costs.