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View Diary: Addicted to Wealth: Why More Is Never Enough (150 comments)

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  •  Pretty much demonstrated to not work (2+ / 0-)
    Recommended by:
    Happy Days, SuWho

    People often refer to the very high rates in the "good old days", but the elephant in the room is that nobody actually paid that rate. They came up with very clever ways to avoid it (as some people do now with our more modest rates). I'll try to find links, but there are various studies that show how compliance drops as rates increase. There is a sweet spot where rate and compliance curves intersect and you get a reasonable rate with good compliance.

    •  That may be true, but it applied to 80-90% rates (8+ / 0-)

      I think we could very safely put in place a 50% tax rate on incomes in the millions per year.  Maybe start at $5million rather than $1million.

      But the key for me is that $250k should not be where the top marginal rate hits. In most large cities, especially where you have two earner households, that is still very middle class.

      It's the super high income levels that should be hit taxed higher, in part to discourage escalating pay rates and bonuses.

      Some people fight fire with fire. Professionals use water.

      by Happy Days on Mon Jan 20, 2014 at 09:31:23 AM PST

      [ Parent ]

      •  How the hell is $250k middle class? (4+ / 0-)
        Recommended by:
        eyeswideopen, ladybug53, akmk, Happy Days

        You can support a reasonable-sized family in a middle-class lifestyle on 20% of that. People do so in every major city.

        If you alone makefive times more than your whole family needs for basic housing, food, clothing, and the occasional indulgence, you are not middle class. (note: 'basic housing' is a structurally-sound rental property with one room for every two kids, not a McMansion with a ridiculous mortgage.) If you can save or invest half of your paycheck every month without any noticeable impact on your quality of life, you are not middle-class. If when your spouse stays home to take care of the kids, your household income is still 3-5 times the median for your area, you are not middle-class.

        If you want to define "middle-class" up to $250k, then you have to define "poor" up to about $75k. People making $50-75k (what I would call representative of the actual middle class) have virtually nothing in common with people making $250k.

        "Let’s just move on, treat everybody with firmness, fairness, dignity, compassion and respect. Let’s be Marines." - Sgt. Maj Michael Barrett on DADT repeal

        by kyril on Mon Jan 20, 2014 at 10:16:35 AM PST

        [ Parent ]

        •  nobody has a middle class lifestyle in SF on 50k (7+ / 0-)
          San Francisco's bigger apartment complexes saw average asking rents break the $3,000 mark in the third quarter, hitting a record $3,096 across all size units, according to data service RealFacts. That's an 11.9 percent bump from the same time last year.

          Median asking rents for San Francisco apartments listed on www.livelovely.com clocked in at a record $3,398 in the third quarter, up 21 percent from 2012, said apartment-finding company Lovely.

          the average for a 2 bedroom home is 900k
          Regional housing differences makes a big difference.

          Now, it's possible that someone with a 20 year old rent controlled apartment could be living a middle class lifestyle
          but they'd better hope they don't get evicted, as they're moving if they do...

          •  Funny thing about averages... (1+ / 0-)
            Recommended by:
            Happy Days

            ...roughly half of the things being averaged are below average. A quick Craigslist search turns up lots of 2-bedroom apartments in SF proper going for under $2500, and a fair number under $2000.

            Sample for $1900

            Sample for $2495

            $2500 is a stretch at $50k, but it's doable considering you're in a city with good transit. $2000 is quite comfortable.

            But if you want to define "poor" as incomes up to $75k or so, I can get on board with that. Just know that roughly 70% of Americans are poor by that definition. Actually more than that, since a lot of the $75k and ups are joint filers in dual income households.

            "Let’s just move on, treat everybody with firmness, fairness, dignity, compassion and respect. Let’s be Marines." - Sgt. Maj Michael Barrett on DADT repeal

            by kyril on Mon Jan 20, 2014 at 10:55:49 AM PST

            [ Parent ]

            •  so, 2500 a month for housing leaves (2+ / 0-)
              Recommended by:
              greengemini, Happy Days

              20k before taxes for that wonderful middle class lifestyle

              •  Exactly (2+ / 0-)
                Recommended by:
                Sparhawk, Happy Days

                That's around $8500 after taxes, or $708/month, or easily enough to feed two adults (or one adult and two children) a quite rich Western diet with $300/month left over for discretionary spending.

                If you have to support two adults and a kid, you might want to look into one of those cheaper apartments, or perhaps ask your spouse/partner to work part-time.

                "Let’s just move on, treat everybody with firmness, fairness, dignity, compassion and respect. Let’s be Marines." - Sgt. Maj Michael Barrett on DADT repeal

                by kyril on Mon Jan 20, 2014 at 11:18:29 AM PST

                [ Parent ]

                •  Ok, that's food and shelter. (1+ / 0-)
                  Recommended by:
                  EastcoastChick

                  Utilities? Insurance (health, renters, auto), transportation? Even if someone doesn't have a car and need to pay to park it, BART and muni aren't free.  State income tax?

                  Clothes? Medicine? Eyeglasses? OTC meds? Oh heck, toilet paper...? Sales tax on purchases? Fees for government services, like driver's licenses?  

                  I hope they don't have a cat.

                  Does the kid get a new toy now and then? What about school supplies?  A trip to the Museum of Children's Art for her birthday? All this stuff adds up fast.

                  I've been in some of those cheaper "quaint" inner Sunset apartments. They're tiny, and it's not a great place for kids to play on steep hilly streets.  Those aren't intended for families with kids.

                  Everyday life requires more than just a roof and food.

                  When you write here in various comments about what stuff cost, you don't pay any attention to everything else that has to be considered. You talk about comfortable homes, cars and lifestyles without seeming to realize that houses and cars require taxes, insurance, maintenance and unexpected repairs.

                  You talk about a "middle class" family earning $50K but only allow for food and shelter.

                  Well, that's not middle class.  That's working poor. Those folks can provide hardly any of the basic things their child needs, much less themselves.

                  If you do the math, it does not even begin to add up, not by a long shot.  Even the most rudimentary household budget would prove that.

                  © grover


                  So if you get hit by a bus tonight, would you be satisfied with how you spent today, your last day on earth? Live like tomorrow is never guaranteed, because it's not. -- Me.

                  by grover on Tue Jan 21, 2014 at 01:30:31 AM PST

                  [ Parent ]

                  •  $300/month (0+ / 0-)
                    Utilities? Insurance (health, renters, auto), transportation? Even if someone doesn't have a car and need to pay to park it, BART and muni aren't free.  State income tax?

                    Clothes? Medicine? Eyeglasses? OTC meds? Oh heck, toilet paper...? Sales tax on purchases? Fees for government services, like driver's licenses?

                    is a lot of money.

                    I take home about $500/month. My dad has been sending me an additional $500. My rent (which includes utilities) is $760. So on $240/month I'm managing to pay for food, transportation, and all the assorted other necessities of life. I'm poor, but I'm comfortable.

                    Our hypothetical family has more than that left over after spending $400 on food. I suppose if they want massive quantities of fancy toilet paper, they can spend $5 less on food.

                    "Let’s just move on, treat everybody with firmness, fairness, dignity, compassion and respect. Let’s be Marines." - Sgt. Maj Michael Barrett on DADT repeal

                    by kyril on Tue Jan 21, 2014 at 11:32:14 AM PST

                    [ Parent ]

            •  Tough for anyone whose SS is less than $600/month. (1+ / 0-)
              Recommended by:
              Happy Days
        •  A 2 BR apartment in DC is 2k/month minimum. (1+ / 0-)
          Recommended by:
          Happy Days

          And that's going to be a pretty cruddy place.  Probably closer to 3k/month.  

          •  And yet somehow, (1+ / 0-)
            Recommended by:
            Happy Days

            DC has a per capita income of $45k and a median household income of $64k (which means the median individual income is quite a bit lower than that).

            If you ask a DC resident with a $64k household income, I bet they'd tell you they're middle-class. After all, they have decent jobs, good educations (51% of DC residents over age 25 have a bachelor's degree), stable housing, and they eat well. They have acceptable (if used) furniture, decent clothes, and the means to keep themselves and their home clean and safe. They expect their kids to go to college, albeit with the help of some financial aid.

            That is what most Americans consider middle-class. That is normal, average, ordinary life for most adults. In fact, it's what most under-35s aspire to.

            $250k is almost half an order of magnitude away from that. It's almost a full order of magnitude away from the individual incomes that make up that household income. It's absurd to suggest that an individual making $250k is not rich. Even in DC. Or SF. Or NY.

            "Let’s just move on, treat everybody with firmness, fairness, dignity, compassion and respect. Let’s be Marines." - Sgt. Maj Michael Barrett on DADT repeal

            by kyril on Mon Jan 20, 2014 at 11:59:22 AM PST

            [ Parent ]

            •  I mean, two federal employees can easily make (4+ / 0-)

              close to $250k/year, and I hardly think of them as rich.  YMMV.  

              •  Two people making $250k (1+ / 0-)
                Recommended by:
                Happy Days

                is different from an individual making $250k.

                I'm still not entirely sure that's not rich (my dad is a federal employee in suburban DC who makes $120k, his wife has no current income because she's just getting started as a writer, and they're easily upper-middle-class, so I have trouble imagining how you could double that and not end up with 'rich') but it's not quite as absurd as the suggestion that an individual income of $250k is middle-class.

                "Let’s just move on, treat everybody with firmness, fairness, dignity, compassion and respect. Let’s be Marines." - Sgt. Maj Michael Barrett on DADT repeal

                by kyril on Mon Jan 20, 2014 at 12:24:30 PM PST

                [ Parent ]

                •  What difference does it make if it is two people (3+ / 0-)
                  Recommended by:
                  greengemini, Happy Days, grover

                  earning it or one?  I mean, if we have one spouse who works at a law firm and pulls down $250k/year and his wife stays home, is that different from a dual-earner household where each earns $125k?  Should they be taxed differently?  What if in the first example the wife gave up her own educational/career opportunities so her husband could make $250k?  

                  •  Tax brackets for married couples (1+ / 0-)
                    Recommended by:
                    Happy Days

                    have roughly double the cutoffs of the equivalent tax brackets for single people. If we raised the marginal tax on individual earners over $250k, that would only affect couples making over $500k in combined income.

                    I do think that a couple with one person earning $250k is advantaged compared to a couple with two full-time workers earning $125k (the reasons should be obvious: the second couple is working twice as many hours at twice as many jobs for the same income) but I don't necessarily think that difference should be reflected in the tax code.

                    I do, however, think a single person making $250k is rich, and so is a couple in which both partners earn $250k, and that should be reflected in the tax code.

                    "Let’s just move on, treat everybody with firmness, fairness, dignity, compassion and respect. Let’s be Marines." - Sgt. Maj Michael Barrett on DADT repeal

                    by kyril on Mon Jan 20, 2014 at 01:12:02 PM PST

                    [ Parent ]

                    •  You can't just look at salary. (0+ / 0-)

                      Oracle CEO Larry Ellison and Michael Bloomberg have worked for $1 for the last few years.

                      Neither of them are anything but very, very rich.

                      You have to look at assets.

                      Your parents sound like they have assets, like they've done a good job managing their finances and converting them into financial security over time. Some of this is due to being smart and making prudent decisions. Some of this is due to luck. And, time is an important element as well.

                      A family with the same salary but no assets isn't even in the same ballpark. It's possible to make the same salary and not be upper middle class, much less rich.

                      © grover


                      So if you get hit by a bus tonight, would you be satisfied with how you spent today, your last day on earth? Live like tomorrow is never guaranteed, because it's not. -- Me.

                      by grover on Tue Jan 21, 2014 at 01:52:11 AM PST

                      [ Parent ]

                  •  It makes a BIG difference if takes two people (2+ / 0-)
                    Recommended by:
                    kyril, greengemini

                    If you have one earner and one person staying at home to care for home and children, you will have a higher standard of living than you will if it takes two people to earn the same amount.

                    Think about it. That person at home isn't a bump on a log. They're creating economic value, too, that the other couple either doesn't have or has to pay out of pocket for.

                    Two earners:
                         -Heavy childcare expenses

                         -Double commuting expenses

                         -Chores and "to dos" leave less free time

                    Stay at home person does a lot to add to quality of life. Don't have time to list everything.

                    Some people fight fire with fire. Professionals use water.

                    by Happy Days on Mon Jan 20, 2014 at 01:13:12 PM PST

                    [ Parent ]

                •  So they both drive new cars (2+ / 0-)
                  Recommended by:
                  Happy Days, akmk

                  Have a small weekend place, maybe at the beach or in the mountains, take a yearly vacation, every couple of years that vacation is abroad to Europe or maybe the Caribbean, are investing the excess income above that for a very comfortable retirement probably before the age of 65? Maybe have a maid that comes in one or two days a week.

                  I ask because those are the trappings of "upper middle class".

                  •  Yes, actually, (1+ / 0-)
                    Recommended by:
                    Happy Days

                    that's a good description. The summer home is a cottage in Indiana so it's not really an easy weekend trip, and the vacations lately have been to more and more interesting/distant places (last year was Japan, before that was China, and before that was Peru...I think the last time they went to Europe was Greece in 2007). But overall, you paint a pretty good picture.

                    "Let’s just move on, treat everybody with firmness, fairness, dignity, compassion and respect. Let’s be Marines." - Sgt. Maj Michael Barrett on DADT repeal

                    by kyril on Mon Jan 20, 2014 at 12:59:53 PM PST

                    [ Parent ]

                    •  Then (2+ / 0-)
                      Recommended by:
                      Happy Days, grover

                      I would venture they inherited some wealth at some point, perhaps a home, perhaps a fairly significant sum of cash or other assets. Because it would be virtually impossible to work yourself into that position on just that income.

                      •  Nope (2+ / 0-)
                        Recommended by:
                        Happy Days, TiaRachel

                        Both of them come from working-class families. The only thing my dad inherited was the summer cottage. My stepmom got some cash and a home in her divorce from her ex-husband, but my dad lost his home and a similar amount of cash in his divorce from my mom, so that all pretty much cancels out.

                        Being debt-free probably helps a lot. They both went to college/grad school at a time when it was possible to work your way through, and they both bought homes with their ex-spouses in the '90s before the bubble so they only paid about $100k for houses that would go for $700k today.

                        Someone just starting out today would probably never get to the level of comfort that they enjoy without a much higher income. But people just starting out today are even less likely than my parents' generation to ever attain that income. Taxing high earners isn't exactly going to hit under-35s very hard.

                        "Let’s just move on, treat everybody with firmness, fairness, dignity, compassion and respect. Let’s be Marines." - Sgt. Maj Michael Barrett on DADT repeal

                        by kyril on Mon Jan 20, 2014 at 01:29:51 PM PST

                        [ Parent ]

              •  Many folks would be happy to $250,000 in lifetime (2+ / 0-)
                Recommended by:
                kyril, Happy Days

                savings/net worth.

            •  Middle class has always been very broad (4+ / 0-)

              Thus why we talk about lower middle class, middle middle, upper middle, etc...

              The $64K in DC you describe is lower middle class. Nobody is going to bed hungry, every minor unexpected expense isn't a disaster, with some help their kids can go to college (if they should, a whole nother topic). It's where the lower skilled blue collar worker was a generation or two ago.

              I am middle/middle (around $100K in a fairly low cost location). I have some discretionary income, I can probably actually retire at some point in reasonable comfort, I'm footing the whole bill for my kid's college. It's where the skilled tradesman was a couple generations ago, or middle management in a moderately sized company.

              Upper Middle is that $250K. They'll probably have a comfortable retirement, they might even have a vacation home. They aren't buying any Ferraris or going on a cruise on their personal yacht or anything.

              •  But if you can live as comfortably as you describe (1+ / 0-)
                Recommended by:
                Happy Days

                on $100k, then someone making $250k can live the same way you do (or maybe a little better) and buy a new Ferrari every ~3 years. Or they might be able to maintain a small yacht. Probably not both, but they easily could do both plus some other luxuries if their spouse also made $250k.

                I'm not saying $250k is wealthy. If you have to work for the majority of your income, you're not wealthy. But it is rich. Rich-people toys and activities are within reach. So is becoming wealthy, although you might have to eschew the toys to get there. (Or marry another high-earner.)

                "Let’s just move on, treat everybody with firmness, fairness, dignity, compassion and respect. Let’s be Marines." - Sgt. Maj Michael Barrett on DADT repeal

                by kyril on Mon Jan 20, 2014 at 12:48:28 PM PST

                [ Parent ]

                •  A new $250,000 -400,000 car every 3 year? (0+ / 0-)

                  If a person earning $250K (which is not $250 take home, I suppose I need to point out) is spending his gross salary in a new car every few years, plus his house, its upkeep, and all the other fancy things you think he has, that dude is never going to retire.

                  © grover


                  So if you get hit by a bus tonight, would you be satisfied with how you spent today, your last day on earth? Live like tomorrow is never guaranteed, because it's not. -- Me.

                  by grover on Mon Jan 20, 2014 at 09:07:07 PM PST

                  [ Parent ]

                  •  If you're making $250k (0+ / 0-)

                    then you can have everything someone making $100k has, including the house and the comfortable lifestyle and the college fund and the retirement, plus $150k/year before taxes (this is really very simple math).

                    If that additional $150k is taxed at 33% (which I think is roughly accurate), that leaves you with $100k/year after tax to spend on your new Ferrari habit. That buys you one every 3 years or so.

                    I'll grant that's probably not the smartest way to spend your money, but it is an option.

                    "Let’s just move on, treat everybody with firmness, fairness, dignity, compassion and respect. Let’s be Marines." - Sgt. Maj Michael Barrett on DADT repeal

                    by kyril on Mon Jan 20, 2014 at 10:34:43 PM PST

                    [ Parent ]

              •  Sorry (4+ / 0-)
                Recommended by:
                kyril, akmk, greengemini, Happy Days

                The concept of wealth in the U.S. is so distorted.

                If one is paying the entire college bill without financial aid, and it is not severely impacting lifestyle, one is more than middle class.

                •  I'm footing the entire bill (2+ / 0-)
                  Recommended by:
                  Happy Days, grover

                  For in state tuition at a very inexpensive public university in our home town so he can live at home while he attends. Costs about $3600 a semester for full time with no expenses for dorm, meal plan, etc...

                  It DOES effect my lifestyle. I drive a beat up Ford Ranger with 200K miles on it. My wife got the "nice" car, a 3 year old Nissan Altima. I'm a consultant, so no paid time off, no work, no pay. I haven't taken a vacation in 3 years. For my honeymoon (I married my second wife about a year ago) I took off Thursday, Friday, and Monday for a total of 5 days off and worked a few hours from the hotel while we were there.

        •  Old rule of thumb- People making about what I do (3+ / 0-)
          Recommended by:
          Happy Days, TiaRachel, joegoldstein

          are middle class, people making more are rich, people making less are poor.

          Remarkably consistant over a wide range of incomes.

          •  I make about $6k (2+ / 0-)
            Recommended by:
            akmk, Happy Days

            I know I'm poor (and would never have been able to survive the last couple years without help from my dad).

            But the average American household makes $50k total. If an individual income of $50k (the average total household income, clearly enough to support a family in the style to which the average American is accustomed) isn't middle-class, I don't know what is.

            And you think if an income five times that is middle-class, you're crazy.

            "Let’s just move on, treat everybody with firmness, fairness, dignity, compassion and respect. Let’s be Marines." - Sgt. Maj Michael Barrett on DADT repeal

            by kyril on Mon Jan 20, 2014 at 02:29:38 PM PST

            [ Parent ]

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