$400K a year is the new 'rich'
The budget deal for tax hikes on America's upper crust sets the bar far higher than the previous $250,000.
The fiscal cliff deal didn't solve all the nation's economic problems, but it did answer one pressing question from the debates that preceded it: Who, exactly, are "the rich"?
The answer, apparently, is an individual earning at least $400,000 a year or couples making at least $450,000. They're the only folks who qualify for the deal's new 39.6% tax bracket, and they easily clear the $325,000 bar the government uses to separate the top 1% of income owners from the unwashed plebes below.
They're also somewhat wealthier than the demographic President Barack Obama had in mind when he suggested Monday that raising taxes on "the wealthiest 2% of Americans" could help reduce the deficit. Back then, policymakers still seemed to agree that $250,000 in income was the dividing line between rich and poor. By raising the bar, Congress just cut off 28% of the income that could have been taxed at higher rates.
Sure, people making more $250,000 still account for just under 2% of all tax filers, or about 2.85 million households, according to the Tax Policy Center. But what's the use of being "elite" if 2.85 million others are being elite right alongside you?
Clearly something needed to separate the deep-pocketed swells tacking their sloops toward Newport from the nouveau riche bombing across Lake Washington on their cigarette boats. After all, there are fewer than 1 million households with annual incomes of $500,000 or more nationwide. They're 0.6% of all taxpayers and, by jove, should get some sort of special recognition for it.
The folks below that bar don't seem to disagree. Ipsos Mendelsohn earlier this year asked affluent Americans earning $100,000 or more annually to define who they felt was in the "1%" targeted by Occupy Wall Street. On average, they cited people making at least $1.4 million a year.
According to Ipsos, those $100,000-plus households are in the top 20% to 25% of earners, but think they're in the 38th percentile. Meanwhile, super-affluent households making $250,000 a year or more in the top 2% of earners think they're in the 16th percentile.
"That's a big difference from 2006 or 2007, when everyone kind of overestimated how wealthy they were, or at least they felt like they were going to get rich, so started spending according to their perceptions," Steve Kraus, chief insights officer in the Audience Measurement Group at IpsosCT, told Ad Age. "Today, I think it's more the opposite pattern."
They may not feel 1% rich, but the $250,000-and-above earners who just dodged a tax hike are still fairly confident that they're doing better than most. According to a Gallup poll released in late 2011, it would take a median of just $150,000 a year in income for most Americans to consider themselves rich. While those making less than $50,000 a year would make do with $100,000 a year, college graduates, city dwellers, inner suburbanites and those already making $100,000 would feel flush with between $200,000 and $250,000 a year.
That's some cute schoolyard daydreaming compared to how government's newly defined "rich" view personal finance. Back in June, Fidelity surveyed 1,000 millionaires with an average of $3 million in worth and asked what it would take to make them wealthy. The answer? About $5 million in investable assets, which is down roughly a third from the $7.5 million they felt they needed a few years back.
Increased income taxes for the $450,000-plus crowd left a lot of expendable income on the table and did little to address inheritance, capital gains and other income streams that keep the top bracket on top. But wringing some more cash out of the American elite gets a bit easier when both sides are comfortable with that club's admission price.
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Why can two singles make $800k but a married couple only $450k. Are they against marriage?
Rich isn't a figure! If you have a roof over your head, food on the table and are surrounded daily by friends and loved ones who are glad to see you, then you are rich.
damn, I'm poor...
This is some of the worst yellow journalism I have ever read.
“”the government uses to separate the top 1% of income owners from the unwashed plebes below.””
Class warfare is not good for our country. Don’t worry what others have, work hard to improve yourself. We all make sacrifices in life suck it up and stop whining!
When did it become a bad thing to earn great money? It seems like those complaining should be using those that are doing very well as an example. Find a mentor, put yourself in good situations......or quit complaining and make do with what you have.
here's the my plan min wage should be 10.00
and nobody pays taxes on the first 20k a yr 40k per couple
and then EVERYBODY pays 25% tax on everthing and
you pay nothing = you vote nothing
One more thing that they don't disclose is the age of the people in these demographics. My wife and I both are 55 years old. Neither of us have college educations, but as of last year reached a combined income of $200k. We both have worked our butts off since we were 18 years old and have "earned" every penny of it. Neither of us have ever been members of a union. We have continually donated our time and money to multiple causes and charities.....even when we had very little of each. Neither of us have ever been in any trouble with the law outside of a traffic violation. Simply put, our success is the result of "YEARS" of hard work and doing the right thing. Please tell me what is fair about being taxed more due to a persons income? For that matter, what is fair about being taxed less due to a person's income. Who is in charge of what is fair? Who makes that call? Our government? The same group that has gotten us into this mess to begin with? Should I mention all of the years that my family did without....due to our income? I guarantee you that what goes around, comes around, eventually.
It's time, now more than ever, for real tax reform. Flat tax. Everybody pays the same percentage of their income. Screw all of these brackets and the "what's fair" regulators that control them. People, wake up. Demand that the people that we hired to run this country do the same. Talk about fair? They have pushed BS on us for the last 100 years. Walk away from your political affiliations and dedications. Forget about the Democrats and Republicans and focus on remembering "American"!
If they can't responsibly spend the money they collect now, why should they get anymore?
My god we defiantly need to better educate our people, you people are fighting over
400,000.00 dollars when our Government is spending (Trillions) wake up people you are getting hosed
this Government don't care about you all they want is your money , and to keep you fighting over who should pay there fair share, this is exactly what all the Dictators tell the people , how about the Government spend less and lower all our taxes . why does our Government need to spends Trillions of dollars ? for there supporters ,for there next election
That is what we should be fighting for ????
You know who's really rich? The elistists in washington...
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A basic income policy can actually ensure a decent standard of living for everyone.
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