$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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Tax Laws should be made simple, easy to understand across the board. Cut the red tape between party lines. Here is what I do, if I were elected to office:
Increase minimum wage from $ 8.50 (@18 Yrs) to $ 15.50 (@ 25 yrs. and up) pro-rate it in between. No one under 16 Yrs of age should be allowed to work. Between 16 to 18 Yrs of age, they should not pay any taxes, regardless. Taxes should be a flat rate of 10% at age 18 to 20 % when they reach 25 Yrs, provided their income is min. $30,000 ($ 65,000 family income).
Above $65,000 family income everyone should pay a flat rate of 25%. until it becomes $250,000 (single) and $ 300,000 (family) and cap it @ 30% flat rate, regardless how they make it.
This is the land of opportunity we should encourage americans to make money, get rich, invest in our infrastructure, create opportunity for our citizenry of all ages. Why do we want to penalize american people from making money? provided the rich pay there share of the taxes? The problem is our tax code is so complex, there are many loop holes, so the person making a 20 million dollars in capitol gains can get away with just 15% (Now 20%). Tax them with a flat tax, irrespective of how they make the money. More revenue for the Govt. Let the rich make money, give the new rich a break from 39,6% to 30%. Let them spend it in the economy instead of pulling out their investments to invest oversees. Win-win situation for all.
Congress can concentrate on more pressing issues. Get rid of the loop holes, keep it simple.
Don't believe in redistribution of wealth? Do a little research and discover there has been a redistribution of wealth going on for many years, except the distribution is going TO the rich, and FROM the 98%. Not much chance of rectifying the problem as long as voters prop up this charade.
Class warfare sucks!
In fact, the only thing worse than class warfare, is class surrender.
Since warren Buffett only pays himself a salary of $100,000.00 does that mean he only gets taxed on his billions in dividends at the 15% rate.
We concentrate so much on taxing the working stiff that even at $500,000 a year make chump change compared to the con men who make billions and pay less taxes because their accountant knows how to game the system.
The real rich pay themselves in dividends and get taxed at 15% while I am putting 2 kids through college at a price of over $70,000 a year and being told I am rich because my wife and I have combined income of over $250.00
People have irrational views of money and these discussions are ridiculous. 100k income makes you greedy and rich? 100k in some areas of the country is barely enough to scrape by and that doesn't take into account kids or outrageous educational costs. I live in the midwest and 100k here is way more than I need to live comfortably as a single man, but add a couple kids into the mix and how much education will cost in 20 years and it doesn't measure up anymore.
The fact of the matter is that people without money envy those with it, across the board. It doesn't matter if you talk about 50k, 100k, 500k or several million a year. The people who don't make that much will always think those above them don't deserve it but they do. Life is hard for EVERYONE. Even the very rich have problems they have to deal with, it isn't all cocktail parties and sandy beaches. If you think you deserve more money, do something about it. This country wasn't built on handouts and entitlement, it is the land of the free and the home of opportunity. New flash: you create your own opportunity, it won't ever find you.
If I can get myself into a 250k a year job you can be damn sure I will. I will have worked incredibly hard and dealt with a tremendous amount of adversity regardless of whether I can ever get to that income level...
Personally, I do not sympathize with any one the list. Sorry, not being bias. For one, I am unemployed and have been unemployed for 7 years. I am Iraq war veteran (two tours) and former Marine and soon to be former National Guard solider. I cannot enlist in active duty due to service injury and who knows when VA payments will kick in(only $300). I am told just come back later. Furthermore, I was laid off from my job in 2007 and I have not found any more work since. Furthermore, my wife left me, I lost my home, my credit is destroyed due to home and I just exhausted all of my only income.(GI Bill) I know that married couples seem like they are getting mess with by the government .However, you know kids are a choice, a house is choice, extras things outside of food is choice. I will soon be living on the streets once this month ends. So I am sorry if I do not feel sorry for everyone. Yes, I am attending college but college is not a job. I think the best thing for me to do is leave the US and try finding new life in another country. I do not want to be living on the streets and eating at soup kitchens. I feel bad to make this choice because I born and raised in the US. Plus, I risked my life for this country. Then, I get look down among as second-class citizen due to the need to live on assistance. Well, in my case, I refuse to stay around to be labeled as burden. I think everyone should be happy if food is available and a place to call home and quit complaining. In reality, there are those who have it worst.
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