$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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I'm not writing to get a thumbs up or down either way here, I'm simply posting my opinion and thoughts.. First, I feel blessed to live in one of the best countries in the World where I am able to openly epress my perspective on whatever topic I am moved to write about. Second, I feel equally blessed to be able to participate in public debate and even argument about matters that are important to me and my family. I am a guy who grew up poor. My family and I, four sisters, my mom and dad, lived in about 550 square feet of living space and got by on around $380 a month when both my mom and dad were able to work. For fun, we played outside and swam in a pond covered in seaweed and runoff from the factories of the small town I grew up in. At 18, I opted to join the Air Force out of a sense of wanting to help protect my country and fight for freedom and democracy. I know right? It even looks corny as I write it! I made about $14,000 a year. I saved more than half of that to be able to one day go to college. When I did go to college, I worked two part time jobs and served in the reserves on weekends. I graduated with a small family and a respectable 3.4 GPA and got a job making $19,780. I was happy to pay more because I earned more and I lived in one of the greatest places on Earth. 22 years later, I may be considered in the 28th percentile in terms of my and my wife's combined earnings. We pay annual taxes that amount to what is considered entry-level middle class. We support my sister and my orphaned nephew and our own two kids. We do not consider ourselves rich. We live below our means, try to pay most of our bills on time and are even stronger and more faithful in our belief that although our country isn't what it used to be, it's still moving to promote freedom and democracy and still represents what nearly 7 billion people dream of. If you live in the US, make approximately $50,000 in combined family income per year, you are in the two (2) percent in terms of global wealth. If you do not fall into this category, my friend, you have more hard work to do. Anyone is capable of achieving their dream here- anyone who isn't hampered by a disability or mental illness that prohibits them from contributing. I flipped hamburgers, I cleaned toilets, I sloshed in a toxic paint factory, I picked tobacco. I had no shame in whaterver work I did. I simply took the approach that I wanted to have a different life than my parents. I wanted to be able to have some options. I didn't care how big or small those options may be, I just didn't want to have the feeling of hopelessness, or hunger. God bless Amerca!
Interesting idea .... if the democrats are the poor persons party, and the republicans are the rich persons party ... who has incentive to put policies in place to make more americans wealthier?
the democrats who get votes from the poor? or the republicans who get votes from the poor ... i mean the rich.
Life is a game. everybody rich or poor works the system.
Does everyone remember the Housing Bubble - and how it was caused? GSE's ( fannie and freddie ) where mandated by the US gov to buy subprime loans - creating demand for banks to loan out subprime ( because Fannie and Freddie had to buy it by Gov mandate ) and so on...... I propose we are creating a new bubble - A far worse bubble - I have coined it the Poverty Bubble.
In a free market food and resources are not given to people - they are earned by people. In this system children only eat if their parents can provide for them. Sounds cruel right? But really it is a balance. No one wants to watch their family members starve - so they make smart decisions like choosing not to expand their family with mouths they cannot feed - or getting abortions.
Over the last 5ish decades the US government has swayed away from this market result; flooding resources and feeding families and children who would previously not survived. In essence giving them ability to create more children who they cannot support. Do you see the vicious cycle? We are making a new bubble here in America - A Poverty Bubble. Where we feed and encourage individuals to have children they cannot afford. creating even more poverty afflicted homes.
The majority of people who are "poor" in this country are lazy. Case and point? FASFA has been running since the 1970's.... How many of these so called "helpless poor people" have bettered themselves using the FASFA program? Once again case and point - Did you know that only 27.2% of Americans have a bachelors degree? of that 27.2% the large majority had parents who also obtained atleast a bachelors degree.
The realization is this - Rich people tend to stay rich for generations, because they prepare their children for success. Poor people also tend to stay poor for generations - because they do not prepare their children .... Problem is we are making more poor children than ever due to welfare.
And here I am scraping by on $8k a year and going to school full-time in hopes of becoming a surgeon someday.
the comperative between two famillies it's because they are both does not have the same job but I thing maybe they work different hours one make $450 and the other make $800 dollars because their work .
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