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

Great Debates
41

If we were trying to ding “as many people as possible,” wouldn’t we set our aims a bit higher than 3% of the country?

I think people lose track of what “average” really means. 28% of households in this country lives on less than $25,000. Another 26.65% live between $25,000 and $50,000. These are incomes where you may or may not have health insurance, where you think twice before buying coffee at a gas station, where your kids go to Jr. College because they have to, where you spend most of your life renting, where you work as a WalMart greeter instead of retiring, and where a “vacation” means a camping trip at best.

People who do not have to worry about these things- who automatically assume they will have health insurance, who buy snacks at the gas station without figuring how it’s going to affect their budget, who work hard to save but know they can save for their kid’s college and their retirement, and who manage to get to actual vacation spots- even overseas once in a while. Well, those people are pretty well off. They are fortunate. They are, in fact, wealthy. If they have never lived the other way, they may not know that their lifestyle is not the norm. But that doesn’t change the fact that they are in the top echelons of wealth that has ever existed on this planet anywhere in space and time.

And far, far, far above that are the people making more than $200,000k. If they are living paycheck to paycheck, it’s because they are choosing to. There is no city in the world where $200,000k a year doesn’t mean you can do stuff like get your clothes dry cleaned, shop at Whole Foods without worrying too much about the bill, send your kid to a private school, travel internationally, and hire a maid service. It’s a good life. It’s a rich life. 99.99% of the world as a whole, and nearly everyone in the entirety of history on this plant, cannot live like that. It’s freaking rich.

42

Well shit. My neighbor makes $10M a year*, but if he lost his job he wouldn’t even be able to afford his private jet and current lifestyle of eating caviar and cocaine off the chests of virgins for another month, so clearly he’s not rich.

*not really

43

We seem to have 2 definitions going here as to “rich”.

We have one group who says that an income of 200k is essentially upper middle class, as defined in terms of incomes in the United States.

The other group is claiming that even by US standards, 200k is awfully high on the income scale, and therefore rich.

I fall in the first camp; in terms of what 200k per year buys you (knowing a few people who have that kind of income), it’s not “rich” unless you’re comparing with people picking batteries out of a Manila landfill to recycle.

200k per year doesn’t buy you a Rolls-Royce, a 4500 sq. ft home in a gated community, a private jet, a 2000 sq ft apartment in Manhattan, Mavericks season tickets in your own box at the AA center, or anything like that. People making 200k per year can do things with a little more ease than the rest of us; they can put larger down payments toward things, they have more spending cash, and they can buy some things outright that others may have to finance, but they still have to work for a living, and even if they saved 50k per year, it would take them a long time to make significant inroads toward being “rich”. Like 20-25 years.

What it might buy you, depending on how you save vs. spend, is really just a matter of degree vs. a household that makes 100k per year. That’s the point (as far as I can tell) in most middle class households where you go from making all your bills, but not having much spare cash, to making all your bills, and having significant spare cash to do what you want with.

That’s still not “rich”, except by the most insanely populist metrics.

44

Starving Artist, I know you’ve made this argument in other threads, and you’re right, there is a difference between those with high net worth, and those with high cash flow and low net worth, but the argument that the former are rich and the latter aren’t is impractical.

As a person with access to wealth (either income or in my savings/belongings), I have choices available to me that a person without that access does not have. The person making $200,000 a year (admittedly an arbitrary line in the sand) who is underwater on his/her house and has bills that threaten to outstrip his/her income, can still unload, that house, liquidate the college fund for the kids, declare bankruptcy, lose all net worth completely, and still earn in the next five weeks just about what I earned in one year, and in the next two months earn enough to more than cover my entire net worth.

Admittedly I am on the bottom end of the spectrum of the income ladder, but the massive gulf between $18,000 and $200,000 a year is not adequately described as ‘middle class.’

The $200,000/yr income earner is able to choose luxuries/“necessities” that the poor can only dream about and middle-class earners must plan carefully and strategically over the long term for.

That’s what makes a person rich.

45

Without answering OP, and without entering the debate over whether $200K/year is “rich”, it is worth pointing out, yet again, a big misconception.

Proposals to increase the highest tax rate would have no effect on households earning only $200k/year, indeed would have little or no effect on most households with gross income of “only” $400k. The top joint-married rate for 2011 applies only to “taxable income over $379,150.” Even the #2 rate kicks in only at $212,300. Google “marginal tax rate” if you don’t understand this.

This has been explained over and over and over in threads in this forum. All I can conclude is that in the Ignorance-fighting contest, the Opposition is winning.

46

Ah! This I can understand. I am definitely not an economist- I don’t really understand why Higher Pay For All! doesn’t work… Don’t need an answer- not trying to highjack further…

I expected my highest salary ever to be $18K for years… Then I slipped into a couple of much better jobs, and am surprised to be half of a couple that is making more than 100K for the first time in my life… And what I expected to be living well is barely making it. Mostly cause I never learned to plan my money- luckily, the wife does that well. I understand your argument, but I understand being able to blow that kind of money EASILY. And not on hookers and blow, but just not paying attention. Eating sushi three times a week, etc…

I am suprised at many things. I seem to be becoming more conserative, but am still mostly a liberal…

It is difficult for me to agree or disagree with the line for ‘wealth’- as I stated earlier, I can see being poor and earning $250K- but I certainly always put the ‘rich’ figure much lower than that number when I was poorer, and I can’t say even where I am now isn’t affluent… But I don’t live in a way that is affluent. I just eat a lot of gas station snacks, to borrow from another post I didn’t quote, which I couldn’t do unless I planned for it when I was younger.

Okay- Stopping the hijack! Corporations will pass their upped taxes along to the consumer and/or move if we don’t give them the breaks- that’s where it stands, right? Arguments against?

47

Only in the same pedantic sense that mass does not define weight. And, of course, it’s an irrelevant distinction unless you can show that “rich” can only apply to non-income forms of wealth.

48

Talk about out of touch.

I don’t believe there’s a waiter or bartender out there making $200K (US dollars) a year. Apparently the high average hourly rates reach $14 in Florida and even perhaps the most optimistic assessments (at websites encouraging people to go to bartending school) put earning potential at $75,000 per year.

$200,000/year is an absurd amount for a bartender or waiter to be making. And if someone’s making $200,000/year, why can’t they afford to live without roommates and their own car (let’s assume rent of $2000/month for an apartment and car expenses of $400/month… that’s still less than $29,000/year, leaving $171,000/year for everything else.)

49

Hmmm. I have known waitstaff and bartenders at medium high-end establishments who would screw off and be bad at their jobs or not take shifts until they needed money, and who would then come up with 2K in a few days over a weekend to make rent, etc. I would say 50K at a medium-scale place would be average. Better than denny’s but not the Ritz. Upscale place, $100+ a plate, plus alcohol? Easily $1k + a night. Depends how many nights you can draw, or want to. I knew one waitress who was at Ruth’s Chris, when the bearded ones (ZZ Top) were having a party, and she worked hard but went home with more than $1500 for the night.

No cite though.

50

Part of the problem is the equivocation of the term “rich.” When people argue that tax rates for the “rich” should be higher, they are using the term “rich” to mean the very highest income earners in the country, and “tax” to mean the Federal income tax, generally speaking.

When conservatives argue that high income earners aren’t really “rich,” they seem to argue that “rich” means having a lot of net worth. This, however, is a strawman and an equivocation on the term “rich” as used by the first group. The first group is almost always talking about income and income taxes, while the latter group seems to be addressing the matter of assets and worth, the holding of which isn’t subject to taxation.

As far as why some people want to tax the rich, it is as obvious as it can possibly be: to balance the budget while still continuing to provide important services like roads, defense, space exploration, and so forth, at an appropriate level. It ain’t a big mystery.

51

250-500,000, depending on the model.

Here’s one for a million bucks, which seems to be the general price for 4,500sq. ft homes in gated communities, give or take $100,000 or so.

It’s hard to find prices for private jets online, but it looks like the cost is so much (one site lists a company that “sells fractional ownership shares starting at $406,250 for 1/16th interest in a small jet” [$6,500,000 is the whole plane]).

Here’s one in a sweet location for $3,650,000. (places with less sq. footage go for significantly less).

Can’t find info on this, but my guess is that it’s significantly less than the Manhattan apartment option or private jet.

So, Rolls-Royce? No problem. 4,500 sq. ft home in gated community? No problem. Private jet? Probably not. 2,000 sq. ft Manhattan apartment in swanky location? Probably not.

That point is not 100k, it’s much much lower. In 2006 (according the the US Census), median household income in this country was just about $50,000. If a $100k/yr household is just paying its bills, are $50,000/yr households going $50,000 in debt every year? No. The cost of “necessities” are significantly lower than you make them out to be. Many of the necessities for a $100k/yr household are luxuries for the $50k/yr household, and onward in both directions. There’s certainly bottom thresholds where it becomes impractical for people to make certain choices (buy a property, for example), but a $100,000/yr household already has at least $50k of financial freedom and choice over half of the households in America. All bills over a certain, fairly low minimum, are optional.

Calling the top 3% of income-earners in the country rich is “insanely populist”? I get that there’s a debate about what counts as rich, but you (and others) seem to be basing your definition on what you imagine rich people ought to be able to do (and in fact, $200,000/yr earners can in fact do some of those things after all), as opposed to practical differences between huge swaths of people in this country and those who are statistically among the highest income-earners.

In other words, “being able to buy a private jet,” of “never having to work,” is a much more ridiculous metric to define rich than “earning in the top income bracket,” even if you disagree with the exact value of .

52

Acknowleging that it’s not the actual number, I’ll use $200k for the sake of comparison.

Rich is not, IMHO relative to how you choose to spend your money - but it is relative to Cost of living (COL) in your area. This is where I get into the quandary. $200k in San Francisco does not get you a home of your own. In my hometown it would just get you a single family home as opposed to a townhouse/condo.

It’s easy to say “They chose to live there” but the fact is the salary for the same position would not be as high someplace else. So these are not rich people, they are for the most part middle-middle class people living in high COL areas.

$200k in Detroit OTOH gets you a ballroom, an outdoor pool and an indoor pool. Not to mention a gardener and a live-in housekeeper. That’s rich.

So the bottom line becomes how do you set that number, given the disparity? and how many loopholes will that create?

53

I think a lot of people’s dissatisfaction with the current tax code could be assuaged by carefully applying regular income tax rates to capital gains to eliminate the lop-sided tax structure Warren Buffet talked about. I say carefully, because some capital gains tax breaks are good for smaller investors - perhaps a dollar cap on the capital gains, and anything over that amount is taxed at the regular income rate. Or if the capital gain makes up over 30% of the taxable income, then the income tax rates apply. I don’t want to screw over the middle class, but the capital gains loophole does seem to benefit certain people to a greater extent than I think it was originally intended.

Plus, I’d like to see corporations taxed on revenue, rather than net income. The current calculation allows them to game the system by dumping in a whole lot of costs to offset the revenue (including the non-cash expenses of depreciation and amortization). This does not get around the whole issue of “if you raise their taxes, they just raise their prices”, but if they keep raising their prices (assuming demand does not drop off a cliff - big assumption) then revenue goes up again, as does the tax burden.

Just some thoughts.

Plus, as I recall, when you cut their taxes they raise their prices anyway. The short FAA shutdown earlier this year meant that airlines were not being taxed on some transactional items, and rather than maintaining the prices, without the tax (which would have provided a savings to the consumer) they raised their prices so that the impact to the consumer netted to 0. To be fair, I have not gone back to check if they kept the higher prices when the tax kicked back in. And at this point I’d be hard pressed to find a cite, but can sure try.

54

My problem with this method (and I’d been thinking about starting a thread about it), is that the lowest-wage jobs don’t scale proportionately to the cost of living a more affluent lifestyle. Median household income in San Fransisco is about $55,000.

So, if it’s so much more expensive to live in SF (for example), how does the population manage to do it while earning only a few thousand more on average per year than the country as a whole?

55

Roommates, instead of being able to live alone.

I knew people earning well over 50K paying more than $1k a month to sleep on a sofa in the City (SF) in the internet bubble pre 2001.

56

I don’t mean to turn this into a GD, but there are obvious problems with this. First off, it’s very doubtful income derived via higher taxes will be used to pay off the debt; it will likely be spent. Secondly, raising taxes on the rich means the rich won’t be investing or spending those dollars, which will result in less income for other folks. These people (i.e. the people who *would *have received the rich person’s dollars) will pay fewer taxes due to having less income.

In other words, if the government raises taxes by $X, the government will probably receive a lot less than $X. (It may be a wash.) And any income to the government will just be spent instead of going toward the debt.

57

I don’t need a cite - this isn’t GQ. Would you say $1500/night was average or the highest takes out of unusual evenings in the year?

About how much would you guess this person made over the year judging by type of car driven, vacations, etc.?

58

I was being sarcastic.

My point is, if the median income is still $50,000, then half of the population living in SF makes it work somehow. I empathize with the $200,000 earner who feels that he or she isn’t realizing the full value of their income because of housing costs, but the fact of the matter is that they are still earning over $150,000 a year more than half the other people who live in that city! Saying that it doesn’t count because the way you want to live requires that extra $10,000+ a month, and that just barely, just shows a disconnect between what the well-off (rich, if you will) think is ‘normal’, and what is an actual reality for most Americans.

59

It was on the high end of somewhat normal- I haven’t known anyone else who worked for that type of place, but when I go to a Ruth’s Chris, I haven’t ever seen a tab under $250, so you are looking at tips per 2-top table starting at $50 if you go by the standard 20% that most folks I know in that spending price range will start with. How many tops do you need? But let’s not start the tipping conversation again- that has been covered many times before.

There are more posh eateries, but they are on the edges of the bell curve, like prixe fixe menus at $500 a person… I am mostly saying that there ARE, however, wait jobs that will pay that much.

She was a goofball, and didn’t work enough to make the money she could have- I would say she easily exceeded $50k, however, and blew it all drinking and drugging, then working a couple weekends to make enough to fund that and live.

Most people are at the high-end after-club diner that I worked at were at about the $50-75K range, with one or two who I think made closer to over $100K. It was more about what you were willing to work for, if you took 3 shifts or 7, if you got all nights or if you needed to work days for some reason (much less money), etc. than it was money being there to be made.

60

As we both know, this topic has been debated time and again. I, too, have no interest in rehashing the substance of any disagreement in this thread.

I posted that because you claimed that proponents of increasing taxes on the wealthy never state why they support higher taxes. Whether you agree with the arguments or not, it is fundamentally untrue that people do not explain why they think wealthy people should pay higher rates, or get fewer deductions. This may not be stated in every single post, statement, sound bite, or debate on the subject, but it should be completely obvious and clear what the reasoning is.

Not that you have to agree with it, of course.