$200K/year isn't rich. Why aren't we taxing corporations?

Great Debates
461

I have a family of 4, one of which is a 2-year-old. We easily spend $1.2K a month. No, we don’t skimp on food.

My cable/phone/internet bill, from FIOS, is $360/month. Add other utilities in. Sometimes in the summer just the electricity bill can get to $500.

My house is worth, on the market, quite a bit less than $1M. The RE tax is $12K/year. And that’s in MD. In Texas, where I lived before, a house worth the same as my house would pay $20K.

So yes, the figures I gave are realistic. True, if I wanted to skimp and eat ground beef instead of steak, I could lower it a bit. But I don’t want to.

462

I think on read on this board, and I agree with it, that a definition of rich is eating what you want without worrying about price. Therefore, anyone eating steak just because they want to is rich by definition. Furthermore, anyone spending 1200 a month on food for three people is also spending money like a rich person.

463

Man. $1200 in groceries per month for a family of four — surely that’s not just food? If you buy only name-brand stuff and go through one heck of a lot of paper towels, toilet paper, cleaning supplies, laundry detergent, etc., I suppose that could add up to a few hundred dollars. But you have to admit that “I don’t have a lot of money left because I’m buying nearly everything I want” won’t be terribly persuasive …

464

Note to self: Don’t ask Terr budgetary questions. :wink:

I also notice there’s not a dime spent on investments…

465

Do you mean that rich people have the ability to not worry about price if they want to?
Because I know Warren Buffett is notoriously frugal, relative to his wealth (no idea what his meals are like but he has a cheap house). The clause means that the person doesn’t have to spend the money, and not all millionaires spend like drunken sailors and immediately buy a Maybach.

466

You really have to stop feeding your kid caviar.
Mind giving a breakdown of your grocery bill? We buy steak also, and crab, and even lamb chops, but don’t spend nearly that much. We do use sales, but even if we didn’t we’d be nowhere close. I guess we could be if we shopped at the high end grocery, but that kind of place is near Palo Alto and caters to the rich.

Do you have every pay channel there is?

Rick Perry is a tax and spender! I live in California, clearly a low tax state based on this.

No question that anyone can spend almost any amount of money if they want to. But this reminds me of the finance execs who said they needed their bonuses after the meltdown to pay for the nannies, and so were struggling even with incomes that dwarf $200K.

467

That’s not as much as it sounds. It’s a little less than $10 a day per person - or the equivalent of two meals a day at McDonald’s.

468

Texas doesn’t have a personal income tax. That’s one of the reasons why the property tax rates are higher than in some other states.

OTOH, like I said earlier in this thread, I have a 1,500sf home with a pool, hardwood floors, tiled counter tops that I bought for $130k.

469

My definition of rich is having enough of an income buffer so that if an emergency arises you can pay to have it resolved without having to sacrifice. If it doesn’t, you invest the money. That is why tax increases for people in this situation are reasonable - they are unlikely to affect their lives significantly if at all.
Here is one way we can look at it - if the issue is a tax increase of say $1,000 a year, what would the person do if they got a windfall of $1,000. If the answer is to pay off debt or do needed but postponed maintenance on themselves or their cars, then there is a big impact. If the answer is stuff it in the bank and maybe go out to dinner, there isn’t much of an impact - and tax away.

470

I can’t speak for Warren Buffet (or even the original idea about money and food), but that is the general idea, yes. Choosing frugal is still a “worry-free” choice. I read that somewhere (I’m pretty sure it was on this board) and I thought it made a lot of sense.

471

You don’t know how much I earn.

472

Apropos of this thread, he does have a favorite steakhouse. But it’s just the “average” local $25 and up steakhouse, not some fancy - Hand-massaged-Wagyu-sushi $500 a plate steakhouse.

473

Not even HBO.

474

It’s actually a three-person family that Terr uses in his example, so we’re now up to $15.34/per person/per day.

475

Texas has no personal income tax, so the money to fund government comes in part from higher property taxes.

And California would have either a much higher tax rate or a much lower spending rate if its Constitution didn’t allow its citizens to keep voting for spending increases while making it virtually impossible to raise taxes.

Okay, they all get to eat at McDonald’s three time a day then. :wink:

476

I know what you consider “reasonable”.

Using your example of a $5k mortgage ($4k mortage, $1k taxes) and assuming:

  1. That’s all your debt
  2. Your debt-to-income ratio is 20%

You’re looking at $300k/year in earnings.

In your example, your family has a 50% after-tax DTI, which is shockingly high. Which is why I wouldn’t ask you for budgetary advice. :wink:

477

I have no mortgage. Wife insisted I pay off the house. It was not the most prudent decision when money is so cheap, but what she wants she gets.

478

Yes, but I’m not going by what you’ve done but by the example you set up (almost 2 years ago - how come nobody has said “$200k brainz” yet?) In your example, you said it was reasonable to spend:

50% of after-tax income (ATI) on housing
12% on food
11.25% on education
4% on entertainment (which doesn’t account for cable/internet)
8% on utilities
Etc.

You then added it up, came to $111k (out of $120k) leaving you a cushion of 7.5% of ATI all while admitting there are other expenses you forgot (like car payments, health care expenses, house maintenance, life insurance, savings & investments, etc etc etc).

Nothing about the above %'s are reasonable for anybody. For example, my ATI % spent on housing is less than 15%, food is less than 8%. And so on…

479

Each line item doesn’t seem too terribly unreasonable, but then I look at what I actually spend. What I make isn’t terribly important, but as a single person, I only spend $25K a year and I don’t worry about trying to stick to a budget or anything. I live in a small apartment, but I could afford a decent sized house on the same payments if I got rid of my other condo which I can’t get rid of.

When you factor in savings to be had from multiple people in the same household, it seems pretty ridiculous that someone spending 1 1/2 times what I spend per capita, in a combined household, isn’t doing a lot better than myself. When you add in the fact that a 40% income tax rate is most likely inaccurate, I would even call that person rich, except in those very few places in America with a huge cost of living.

480

Interesting thread. I’m in the target income range, though (sadly!) I do not do exact budgeting (I know, I know, I should but I don’t :wink: ). I know roughly what I spend my income on though.

My income over the past while has been about 220K Canadian. I live in Toronto. I am currently 45 years old. I have a wife who is at home with the kid (she lost her job as a financial editor during the crash and didn’t go back). After income taxes, I take home around $11,500 or so per month. My son goes to a public school, the one near here is very good. He also goes to a piano teacher, swimming lessons, and other such activities.

I purchased a house in 2005 and have since paid it off. When I was paying my mortgage, it amounted to around $2500 per month; property taxes another $500.

Every month, I automatically deducted $4000 for savings - I put this into various Canadian tax vehicles for my wife, my kid, and myself (RRSP, RESP for the kid, Tax-free savings accounts).

Each month, I give my wife $3000 on which she spends some on various expenses for the house and family, on herself, and puts some away for her own emergency savings.

So, when I was paying mortgage, my budget such as it was looked like this:

  • Savings: $4000 (When I was paying mortgage, I put most of this towards extra mortgage payments)
  • House and family Expenses, wife’s spending on stuff, plus wife’s emergency savings: $3000
  • Mortgage and property tax: $3000
  • I get to spend: $1500

My main luxuries that I spend that money on are:

  • I order lots of books and movies online;
  • I like on occasion to eat out at restaurants; and
  • I have a personal trainer at the gym.

Nowadays, I’m also saving that $2500 that used to go to mortgage - but sadly, property taxes have increased to $700, and my spending on stuff has increased too, so its really more like $2000.

On the “plus” side of the ledger I have a house that is now estimated (by the government, for tax purposes) to be worth around $1 million. Its actual worth depends on the real estate market, but similar houses in the area have sold for around that. In addition, I have savings worth around $300K. My wife has equities worth around $140K. We own a car worth $40k (somewhat less now with depreciation). We have a fractional share in a family cottage, which isn’t worth very much (say $30K or so). We have no debts.

I dunno whether any of this is reasonable or not. My savings to date are dominated by the house, as I concentrated on becomming debt free ASAP. If I was taxed more heavily, it would cut into my savings, but certainly would not impact my lifestyle. OTOH I have no pension other than the CPP; if and when I retire, both my wife and myself would have to survive on savings.