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.
The taxes taken from those wealthy- as you describe them- the teachers, federal employees, Washington belt elitists, government workers- pay your bills. They pay your tax bill. And you complain.
Once again the Obama Administration’s tax policy puts the squeeze on the small business owner. $250,000 is not rich, it is barely enough to survive on when you are trying to run a business. Obama would know that if he had ever done anything productive. Instead he was a community organizer out to squeeze every dime from the taxpayers to support a social agenda of government waste and fraud while inciting class warfare.
Mark- try incorporating. A small enterprise run as an individual is going to set off many red flags. Change the same business to a corporation and see how many tax issues change for the better.
Posted by David S
“The taxes taken from those wealthy- as you describe them- the teachers, federal employees, Washington belt elitists, government workers- pay your bills. They pay your tax bill. And you complain.”
Yes, you should complain. It is Robin Hood Economics” and “Soak the rich”.
Why shouldn’t burglars be forgiven if their victims exceed a certain income level? Burglars need their bills paid too.
Warrington
How far back does the money in your family go?
The problem for small business, S corp, LLC or sole proprietorship alike, is that you pay tax on all the profit in the good years, but have to carry forward all but a token amount of losses in the bad. Its like betting against the house at a casino – sooner or later there is the probability of a bad year or two that can bust you. You want to grab off more tax then you need a more realistic set of rules. Changing the limit on writing off losses or even multiyear income averaging would help.
Posted by Phil
“Warrington
How far back does the money in your family go?”
1617, those Mayflower people were “new Americans” to us. If they hadn’t lost their course to Virginia, we would have been there to greet them.
Now, why shouldn’t a burglar be forgiven if his victims exceed a certain income? Is it just that the burglar doesn’t work for the government?
That seems to be the chief distinction between the “numbers racket” and “state lotteries”
Warrington-it’s funny how Phil the Hypocrite is trying to pry about how far back your money goes when he admires silver spoon elitists like Chafee and Whitehouse.
Warrington
I can’t argue with your equating the gambling that’s State allowed and the type that isn’t.
Virginia is it? A family of planters?
Warrington-does that last “question” indicate a subtle accusation of profits from slave labor?Ya think,hmmm?
This guy likes to be clever when dumps on people,but he ain’t that good.
Posted by joe bernstein
“Warrington-does that last “question” indicate a subtle accusation of profits from slave labor?Ya think,hmmm?
This guy likes to be clever when dumps on people,but he ain’t that good.”
Joe, not sure. In the old days there was a social distinction. “Farmers” actually worked the land, “Planters” did not, the work was usually done by “servants”. Scarlett O’Hara, and her friends were definitely “planters”. 1617 makes me a year too late for inclusion in the “Society for Descendants of Ancient Planters”. But, yes, my ancestors had a few slaves. The Civil War was not kind to them, the “silver spoon” is somewhat tarnished. It is not my impression that I would want to go head to head, financially speaking, with the Chafee family.
For all of that, I do not understand the “fairness” of graduated income tax. 50% of taxpayers pay less than 10% of the total taxes paid. The “upper” 10% pay 60% of the total tax paid. Basically, the “upper” 50% support the government. Except that they are not issued EBT cards, aren’t most taxpayers on “welfare”? That, in the sense that most of their “bill” is being paid by someone else.