Just How Rich Is $250K?
Basically, taxes are a bitch. Below are some selected quotes from the article (which I urge all of you to read).
In the ongoing debate over whether to use tax policy to help resolve the nation's massive deficit, a single number has emerged from the crossfire: $250,000.
By most measures, a $250,000 household income is substantial. It is six times the national average, and just 2.9% of couples earn that much or more. "For the average person in this country, a $250,000 household income is an unattainably high annual sum -- they'll never see it," says Roberton Williams, an analyst at the Tax Policy Center, a nonpartisan think tank in Washington, D.C.
But just how flush is a family of four with a $250,000 income? Are they really "rich"?
The bottom line: It's not exactly Easy Street for our $250,000-a-year family, especially when they live in high-tax areas on either coast. 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 out of the eight communities in the analysis.
Taxes take a hefty toll. Everything from property taxes and the alternative minimum tax to the taxes added to cell phone bills and the cost of gasoline, when combined, takes a massive bite out of earnings -- in some cases even more than the federal income tax. And it's not likely to get better soon. States and municipalities have been steadily raising income tax rates to help close gaping holes in their budgets. Property taxes are also increasing, even though real estate values have cratered. And sales taxes are hitting record levels, in some areas nearing 10%. Gas taxes, alcohol taxes and hidden surcharges on everything from airline flights and ferry rides to vehicle registrations, rental cars and even sodas have also been stealthily rising.
On top of that, additional tax increases for couples with salaries of $250,000 or more (and single people earning $200,000 or more) are scheduled to go into effect in 2013 under the health care bill passed a year ago.
As educated professionals, the Joneses buy books, newspapers and magazines; they own computers and pay for Internet access. But they don't take lavish vacations, don't belong to a country club, don't play golf, don't drive luxury cars, don't have a swimming pool, don't buy designer clothes, don't own or rent a second home and don't send their kids to private schools. They don't even shop at high-end grocery markets. (They spend what the U.S. Department of Agriculture defines as a "moderate" amount on food for the average family of four.) In short, they're not "wealthy," even if they're in the top 5% of earners.
Consider the tax profile of the Joneses when they're based in Huntington, a suburb of New York City. Thanks to all their smart pretax contributions and a fat deduction for mortgage interest and state and local taxes, the couple's federal income tax is only $29,344. But what often goes overlooked is the toll taken by state and local taxes. In this case, it exceeds that of the federal income tax bill: $31,066. State income taxes, taken alone, are just $10,557. But factor in the gas tax ($2,679), property tax ($15,222), phone service taxes and surcharges ($350), and sales tax ($2,258), and the picture looks far different. Their total tax bill, including the AMT and payroll taxes: $78,276.
And costs assumed by the Joneses could be significantly higher if their circumstances changed. For example, if they worked for themselves, they would have to foot the bill for all their medical insurance premiums, which average $14,043. As it is, they pay 30% of the premiums, and their employers pay the rest.
The bottom line: For folks like the Joneses -- who live in high-tax, high-cost areas, who save for retirement and college, who pay for child care to enable them to earn two incomes and who pay higher prices for housing in top school districts -- $250,000 does not a rich family make.





Comments
That's why you have to be
That's why you have to be batshit nuts to live in NYC unless you are making $500+K a year...
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Hahaha, agreed. NYC is a
Hahaha, agreed. NYC is a great city if you make $500K+ or >5K. Anything in between, it's not fun.
One interesting thing to note, however, is that the family seems to be doing well financially despite this. The article notes their "smart pretax contributions". AKA, 401k savings. If my federal taxes went up 5%, It would not impact my lifestyle immediately or even my savins too severely because I live well below my means.
Bottom line is that $150K/year of spending just about anywhere is a very comfortable life.
Work hard, play hard.
250k in san antonio texas is
250k in san antonio texas is rich
250k in new york city is poor
250 k in los angeles is middle class
IVY for Life
Poor joneses :( I guess
Poor joneses :( I guess people in other income brackets pay a lower tax rate on their property, gasoline, utilities, and purchases :(
More is good, all is better
Ill take 250k and make it
Ill take 250k and make it work. Fuck all this tax shit. Cant cry when only 3 percent of the population makes your salary and your living within your means. Idc what city its. Of course Id perfer some cities over others
I Got a dollar and a dream...
Argonaut wrote: Poor joneses
Poor joneses :( I guess people in other income brackets pay a lower tax rate on their property, gasoline, utilities, and purchases :(
Its not a comparison to tax rates on property, gasoline, utilities, ect ect. The post/article is a statement about the insanity that is obamas obsession that if a household makes more than 250k a year that they suddenly strut around in private jets, own exoctic sports cars, live in 10MM+ penthouse suiets. Could some of the people who make 250k plus afford to pay some more taxes sure, the problem you cant pick and choose people based on where they live to pay taxes or not on a national level. Is all this stupid discussion does is add fuel to the class warefare fire and give people who dont have alot a something to cling to, in the form of a flawed arguement, while they thrust their hands out for more.
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The 250k amount is AGI, yes?
The 250k amount is AGI, yes?
If you live in NY or CA yes, you most certainly feel the pinch more than anyone else. However, it's hard to feel compassion for people that have 2+ children. They made the CHOICE to have children, and guess what ? Raising children is expensive. Whether you make 60 or 250k we all have to anticipate taxes and I doubt that the additional 3% tax increase (that is the amount, yes?) will sink anyone.
The distrust of wit is the beginning of tyranny.
Any adult (30+) who works in
Any adult (30+) who works in NYC and is making $250K is obviously not in a FO role. Therefore, their hours probaby are not so bad and there is no reason to live in NYC. If you are making $250K/yr you can easily buy a fine house in a nice NJ suburb and make the commute. Thousands of people do it every single day. If your wife is working in addition to this, then you should be quite comfortable.
On the other hand, if you think you're the shit and try putting your kids through prep schools and buying them nice cars - you're trying to be someone you are not.
If you can't live on 250K, you're an idiot.
And btw, that was not to
And btw, that was not to attack the Jones'. I didn't say 250K is rich, because it isn't at all. But it's comfortable. You can live a "sitcom-family" lifestyle on it.
heister wrote: Its not a
Its not a comparison to tax rates on property, gasoline, utilities, ect ect. The post/article is a statement about the insanity that is obamas obsession that if a household makes more than 250k a year that they suddenly strut around in private jets, own exoctic sports cars, live in 10MM+ penthouse suiets. Could some of the people who make 250k plus afford to pay some more taxes sure, the problem you cant pick and choose people based on where they live to pay taxes or not on a national level. Is all this stupid discussion does is add fuel to the class warefare fire and give people who dont have alot a something to cling to, in the form of a flawed arguement, while they thrust their hands out for more.
If it's not a comparison to tax rates on property etc, then why are they mentioned in the article on INCOME tax?
Joneses paid a total 40 k of income tax on their 250 k income - that's SIXTEEN fucking percent. And I am supposed to feel sorry for them ?
More is good, all is better
Argonaut wrote: heister
Its not a comparison to tax rates on property, gasoline, utilities, ect ect. The post/article is a statement about the insanity that is obamas obsession that if a household makes more than 250k a year that they suddenly strut around in private jets, own exoctic sports cars, live in 10MM+ penthouse suiets. Could some of the people who make 250k plus afford to pay some more taxes sure, the problem you cant pick and choose people based on where they live to pay taxes or not on a national level. Is all this stupid discussion does is add fuel to the class warefare fire and give people who dont have alot a something to cling to, in the form of a flawed arguement, while they thrust their hands out for more.
If it's not a comparison to tax rates on property etc, then why are they mentioned in the article on INCOME tax?
Joneses paid a total 40 k of income tax on their 250 k income - that's SIXTEEN fucking percent. And I am supposed to feel sorry for them ?
You're ignoring about $12K/year of deferred taxes from their IRAs and the fact that mortgage interest is typically a line item countering income.
Work hard, play hard.
Someone making 250k would pay
Someone making 250k would pay 27% to Federal. Even in a low tax state/city like Philly, there's another 7% in combined state+local tax, so you are paying 34% in total.
To me, that's ridiculous. The way I look at it you are a slave to the government until May 1st - the portion of the year before that you earn nothing and the government takes everything from you (you just use temporal transfers to not feel so bad about it).
Does the government provide adequate services to warrant such a hefty price (more than your mortgage, more than food, more than any single expense)? In my mind, no.
absinthe wrote: Someone
Someone making 250k would pay 27% to Federal. Even in a low tax state/city like Philly, there's another 7% in combined state+local tax, so you are paying 34% in total.
To me, that's ridiculous. The way I look at it you are a slave to the government until May 1st - the portion of the year before that you earn nothing and the government takes everything from you (you just use temporal transfers to not feel so bad about it).
Does the government provide adequate services to warrant such a hefty price (more than your mortgage, more than food, more than any single expense)? In my mind, no.
Well, Philly is hardly low tax. Chicago is 5%- used to be 3% before a temporary tax hike. Dallas/Houston are 0%. Boston is 5-6% as well.
In most major cities in the country, local taxes average about 5% for high-income individuals.
Work hard, play hard.
twobitmanchild wrote: The
The 250k amount is AGI, yes?
If you live in NY or CA yes, you most certainly feel the pinch more than anyone else. However, it's hard to feel compassion for people that have 2+ children. They made the CHOICE to have children, and guess what ? Raising children is expensive. Whether you make 60 or 250k we all have to anticipate taxes and I doubt that the additional 3% tax increase (that is the amount, yes?) will sink anyone.
How about a 3% decrease...to the welfare and SSI checks that the bottom feeders collect twice a month? It's only 3%, which shouldn't sink anybody...besides, it was their choice to have 5 kids.
Regards
"The trouble with our liberal friends is not that they're ignorant, it's just that they know so much that isn't so."
- Ronald Reagan
Illini, I am digging in my
Illini, I am digging in my heart for compassion, I really am - but I can't find any as I am about to go get raped by the IRS for a higher percentage than that, and I'm not even making half of 250. Oh and now that you put it in perspective, I'm still getting raped despite maxing out the 401 k contributions (yearly limit, not just company match)
They COULD contribute to ROTH instead of traditional IRA and not worry about future taxes, I still don't feel sorry for them.
AND with the mortgage tax break they are getting their house financed at 2/3 the mortgage rates - so if they got a 4.5% mortgage, it's really coming out to be 3% - avg. rate of inflation
More is good, all is better
Argonaut wrote: heister
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Argonaut wrote: Illini, I am
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cphbravo96
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heister wrote: cphbravo96
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heister wrote: Do you know
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heister wrote: Do you know
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heister wrote: Argonaut
More is good, all is better
Argonaut wrote: heister
Follow the shit your fellow monkeys say @shitWSOsays
Argonaut wrote: heister
Follow the shit your fellow monkeys say @shitWSOsays
econ wrote: heister
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Argonaut wrote: econ
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heister wrote: Argonaut
More is good, all is better
heister wrote: Argonaut
More is good, all is better
econ wrote: Argonaut
More is good, all is better
Argonaut wrote: econ
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heister wrote: So your
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Argonaut wrote: econ
"The trouble with our liberal friends is not that they're ignorant, it's just that they know so much that isn't so."
- Ronald Reagan
MCBB687 wrote: Any adult
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cphbravo96 wrote: Argonaut
ok, i guess we can remove all
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Don't get used to the
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Ok, Ant, what IS being
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On the government level yes,
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ANT wrote: I'm in a good mood
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LeveragedFiend wrote: This
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I don't necessarily support a
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ANT wrote: I don't
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Fine, if we are going to
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regardless of increasing
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