Speaking of Being Rich…
Did you happen to see this profile of the $250,000 family, in the Washington Post, no less?
Just how flush is a family of four with a $250,000 income? …
The bottom line: Living in high-tax areas on either coast can leave our $250,000-a-year-family with little margin. Even with an additional $3,000 in investment income, they end up in the red – after taxes, saving for retirement and their children’s education and a middle-of-the-road cost of living – in seven of the eight communities in the analysis.
Taxes already take a huge chunk from such households (as from all households on the independent side of the line between beneficiaries and payers), and I’m naturally inclined to rail against that fact. Still, we should be clear about the import of these findings.
The first thing to note is that some percentage of the above-$250,000 group are actually small business owners who process their companies’ finances through their own tax filings. They aren’t actually living on that amount of money.
Beyond that group, though, rich families live relatively well. They’ve less stress about paying for education; they’ve larger homes; they’ve services to help maintain those homes; they’ll actually get to retire; and so on. In short, they’re “in the red” only in the sense that they aren’t amassing an unused sum of money.
The point, with respect to increased taxes in this income bracket, is that they won’t jar loose unproductive resources. Rather, they will require such families to transfer money away from other expenses. Investments in long-term projects (materials, employees, and equipment, for business owners) will be one of the first things to go. Charity will likely lead the list. Consumer goods — the purchase of which creates a long line of jobs — will likely take a larger hit than retirement investment and college saving. Perhaps they’ll downgrade their homes and cars, decreasing not only their spending, but also the amount of taxes that governments of various tiers are able to collect.
Nobody should pretend that the richest 2% are living lives of like toil to those of use closer to the median income, but in certain regions of the country, most of them aren’t sitting on untapped mounds of cash.