Skip to comments.Analysis examines what it's like to be a 'rich' family in America
Posted on 12/10/2010 4:06:28 PM PST by KingofZion
In the heated battle over extending the expiring Bush-era tax cuts, a single number has emerged from the crossfire: $250,000. It's the annual income that President Obama and others have repeatedly used to define what it means to be "rich" in America today. And even though a tentative deal has been reached on the cuts, $250,000 is etched in the minds of policymakers and pundits as the number that separates the middle class from the wealthy.
By most measures, a $250,000 household income is substantial. It is six times the national average household income, and just 2.9 percent of couples earn that much or more. ***
But just how flush is a family of four with a $250,000 income? Are they really "rich"?
To find the answer, BDO USA, a national tax accounting firm, computed the total state, local and federal tax burden of a hypothetical two-career couple with two children, earning $250,000. ***
The bottom line: It's not exactly easy street for our $250,000-a-year family, especially living in high-tax areas on either coast. *** The worst: Huntington, N.Y., and Glendale, Calif., followed by the District, Bethesda, Alexandria, Naperville, Ill. and Pinecrest, Fla. In Plano, Tex., the couple's balance sheet would end up positive, but only by $6,114. ***
In short, even if they're in the top 5 percent of earners, they're not "wealthy."
In reality, to make ends meet, this couple would have to cut back on discretionary expenses - take a pass on a new suit, skip an annual vacation and drop some activities for the children. Unfortunately, the family would also probably save less, at the expense of their retirement or the college funds.
(Excerpt) Read more at washingtonpost.com ...
Big difference between making $250K before taxes and $250K net after taxes.
Which is all good and find (and correct) but won’t matter a whit to the twits who want your money. The way to rephrase the argument is to start reminding people that none of anyone’s money belongs to anyone except for the person who made it. We need to stop letting Washington talk about our money as if it’s first and foremost theirs. Strangely I put something to this effect on my FB page and guess what? Even my liberal friends LIKED it. Republicans have allowed the Democrats to phrase the argument in their favor for so long that people think of all money as belonging to the government. We have to start to change THAT.
It’s looking like the extension of the current rates will not happen yet this year. Not a totally bad thing, because on Jan 1, 2011 all tax paying Americans will discover the news that they are indeed “RICH”
Excellent points. Kinda weakens the case against federal government employees “getting rich.” Feds are in the same boat as everyone else in the middle class.
Never hurts for people to get slapped in the face by reality, I suppose.
No - just "richer" (than their private sector counterparts)
CNN a few years ago had a neat calculator. You entered your zip code, and another zip code. It evaluated what the difference in income needed for the same lifestyle was, between the two places. I live in Tacoma, and I compared Irvine CA. I had to make 2x as much to live there, for the same lifestyle, NOT including State Income Tax.
I’d bet, that households that make 250k by a degree of 90% plus, live in some of the most expensive zip codes in the USA. Bottom line, without those wages, they could not afford to live there.
I wonder if that study also included the monies spent on their daughter who went thru med school without any scholarships and is now an emergency room doctor here.
And I wonder if that study also includes all the charities they historically contribute to here in S.E. Michigan and the charities hosted by St. John Hospital which my bro-in-law is a member of, or the occasional weekends he devotes his time to at St. John's "hippie clinic" where he volunteers his time as an oncologist helping people with no incomes or insurance..........
Or the same loss of investments that all of us experienced back in 2008...............probably not.
Property taxes = Schools!
In our county nearly 70% of our property taxes go to fund atheist, collectivist, compulsory indoctrination camps (misnamed “public” schools) that are managed by an NEA anointed and Marxist supporting peoples collective ( mis-named “school board”).
One thing this article points out that is very true: most of the “rich” have huge mortgages and pay insane property taxes for houses that are not that great or, if the “rich” live in the city, are small condos. While not as uniform, most of the “rich” live in very high income tax jurisdictions. If this debate was about fairness (LOL), some type of purchasing power parity index would be used.
What this really points out is the value of devolving spending to the states. Moreso than the federal government, states can set progressive taxes that are more in tune with local purchasing power.
AND not to mention work clothes, gas, and lunches to name a few.
The left has succeeded in renaming the working class “Middle class”. The true middle class - entrepreneurs, land owners, doctor, lawyers, high level managers etc. earn from $250K to $1million or so. People who make $25 per hour ($50K per annum) are not middle class. They are working class. But in today’s America, anyone not on the dole is called “Middle class” and the true middle class are characterized as “The Rich”. The truly rich are the ones playing games with the rest of us; the Kerrys, Bushes, Pelosis, Kennedys, Soros et al.
But I thought the rich didn't pay any taxes? It was on the news, so it must be true. :)
I remember hearing about my father making over $300,000 one year and only having $38,000 to show for it after taxes and etc.
Agreed. Add to that, stop talking about how much a tax cut is going to "cost the government." That is just another way of saying that it is the government's money and not my money. I just want to slap somebody every time I hear that.
What's more, it's been shown over and over again that every time taxes are cut, the government actually collects more money!
If somebody is making $250K and they end up with only six grand and change after an ‘average’ lifestyle for a year, then something is terribly wrong with the average lifestyle.
If you want to be rich, lower your expectations and you’ll become rich overnight.
Exactly. And that’s what I’m preaching these days. Tax cuts do not cost the government anything since it’s not their money to begin with.
He framed that check and hung it in the kitchen.
Assuming the $250k is gross, dual income, family income it can go very quickly.
Buy all the insurance one is supposed to, put away some in 401k, pay taxes, put some towards kids college and braces, then what’s left over is still more than what most of us have but it isn’t rolls royce money.
$250k people don’t live where I live and don’t drive what I drive...so they are probably just as broke just at a higher standard of living.
And they certainly don’t feel rich.
It's even uglier when you have kids of college age. Forget about financial aid, you pay full ticket price unless the kid is brilliant enough to score some merit-based scholarships in a second-tier school.
We put 3 kids thru college. One did get a partial merit scholarship to a private school because he went out and hustled. The other two went to state schools which we paid for (I think both of them got a few very small (like 100 or 200$ scholarships) and some loans which we are paying off as well. We started out with nothing. My husband made 5000$ the first year we were married and we had a child, and I didn’t work. He later went back to college and got his degree, and then got a better job. When our kids started school I also went back to college and got my degree, so I could help pay for their college, altho I was essentially a stay at home Mom.
We made our choices, and we lived with them. We did what we needed to do to make our lives work for us and for our kids. I’m not sure why our money belongs to a politician so he can dole it out in return for votes. I really don’t.
An important point. If you sit in a cubical instead of an office with a door, then you are working class, per traditional ways of defining such.
I personally define "The Rich" by lifestyle rather than income. If you cannot afford to maintain at least one full-time household servant, then you are not rich.
A friend of my wife is somebody who I would consider being on the bottom end of "The Rich": she doesn't work a job, living on investment income inherited from her father. She has one full-time, live-in housekeeper plus two part time women who come in as needed. She lives in a mansion and goes on several vacations per year. And she's nowhere near Kennedy-style "rich"