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Basically, taxes are a bitch. Below are some selected quotes from the article (which I urge all of you to read).

Quote:
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.

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Comments (107)

  • alexpasch's picture

    That's why you have to be batshit nuts to live in NYC unless you are making $500+K a year...

    Consultant to a Fortune 50 Company

  • IlliniProgrammer's picture

    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.

  • Argonaut's picture

    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

  • BankMonkey21's picture

    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...

  • In reply to Argonaut
    heister's picture

    Argonaut wrote:
    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.

    Follow the shit your fellow monkeys say @shitWSOsays

    Life is hard, it's even harder when you're stupid - John Wayne

  • twobitmanchild's picture

    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.

  • MCBB687's picture

    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.

  • In reply to heister
    Argonaut's picture

    heister wrote:

    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

  • In reply to Argonaut
    IlliniProgrammer's picture

    Argonaut wrote:
    heister wrote:

    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.

  • absinthe's picture

    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.

  • In reply to absinthe
    IlliniProgrammer's picture

    absinthe wrote:
    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.

  • In reply to twobitmanchild
    cphbravo96's picture

    twobitmanchild wrote:
    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

  • Argonaut's picture

    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

  • In reply to Argonaut
    heister's picture

    Argonaut wrote:
    heister wrote:

    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 ?

    Do you know how the federal gross income tax rate is figured? Let me give you a little insight. In places where there is a state/city income tax you can write that off your tax bill. So with the Jones' example they paid about 40k in state and city income taxes. This would make their federally taxable 210k in a 250 plus bracket. This alone changes the percentage significantly with out including other taxes paid its almost a 5% jump in the percentage of federal income taxes with no change in income.

    Follow the shit your fellow monkeys say @shitWSOsays

    Life is hard, it's even harder when you're stupid - John Wayne

  • In reply to cphbravo96
    Nobama88's picture

    cphbravo96 wrote:
    twobitmanchild wrote:
    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

    Haha. This.

  • In reply to Argonaut
    heister's picture

    Argonaut wrote:
    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

    Actually they can not contribute to a ROTH, they exceed the maxium allowable income levels.

    Follow the shit your fellow monkeys say @shitWSOsays

    Life is hard, it's even harder when you're stupid - John Wayne

  • In reply to cphbravo96
    heister's picture

    cphbravo96 wrote:
    twobitmanchild wrote:
    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

    This is totally necessary, I read an article about this lady from mexico who has like 8 american kids and collects over 12k a month from the feds and state, drives an escalade. Yet has not worked a day in the past 7 years.

    Follow the shit your fellow monkeys say @shitWSOsays

    Life is hard, it's even harder when you're stupid - John Wayne

  • In reply to heister
    absinthe's picture

    heister wrote:
    cphbravo96 wrote:
    twobitmanchild wrote:
    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

    This is totally necessary, I read an article about this lady from mexico who has like 8 american kids and collects over 12k a month from the feds and state, drives an escalade. Yet has not worked a day in the past 7 years.

    +1. Our entitlement system is ridiculous.

  • In reply to IlliniProgrammer
    econ's picture

    IlliniProgrammer wrote:
    absinthe wrote:
    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.

    Some cities without income taxes have high sales taxes and whatnot to make up for it. Not sure if that's the case in those specific cities...

  • In reply to Argonaut
    econ's picture

    Argonaut wrote:
    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.

    I feel you, I honestly do. The taxes middle income people pay is ridiculous, as well. So, why not be in favor of tax cuts across the board?

  • In reply to heister
    Argonaut's picture

    heister wrote:

    Do you know how the federal gross income tax rate is figured? Let me give you a little insight. In places where there is a state/city income tax you can write that off your tax bill. So with the Jones' example they paid about 40k in state and city income taxes. This would make their federally taxable 210k in a 250 plus bracket. This alone changes the percentage significantly with out including other taxes paid its almost a 5% jump in the percentage of federal income taxes with no change in income.

    did you read the article?
    They paid 29k for state tax and 10k for federal tax. WHAT in the world are you talking about?

    More is good, all is better

  • In reply to heister
    econ's picture

    heister wrote:
    Do you know how the federal gross income tax rate is figured? Let me give you a little insight. In places where there is a state/city income tax you can write that off your tax bill. So with the Jones' example they paid about 40k in state and city income taxes. This would make their federally taxable 210k in a 250 plus bracket. This alone changes the percentage significantly with out including other taxes paid its almost a 5% jump in the percentage of federal income taxes with no change in income.

    Let's not forget other taxes, as well. When people only look at income taxes, they don't get the whole effect. What about sales taxes, capital gains taxes, etc? They get in your pocket every which way. I saw a study a few years ago (I might try to dig it up later) that showed how some lady making $50K/year paid nearly 50% in taxes, when all taxes were considered. I've also seen statistics of tax revenues as a percentage of GDP and government spending as a percentage of GDP, and it ain't pretty.

  • In reply to heister
    Argonaut's picture

    heister wrote:
    Argonaut wrote:
    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

    Actually they can not contribute to a ROTH, they exceed the maxium allowable income levels.

    Traditional IRA limits are even lower, so if they qualify for traditional IRA thru would have qualified for ROTH

    More is good, all is better

  • In reply to Argonaut
    heister's picture

    Argonaut wrote:
    heister wrote:
    Argonaut wrote:
    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

    Actually they can not contribute to a ROTH, they exceed the maxium allowable income levels.

    Traditional IRA limits are even lower, so if they qualify for traditional IRA thru would have qualified for ROTH

    Roth limits are 167,000 for a married couple. Traditional IRAs no one uses those anymore for the most part the tax advantages suck. The statement of a traditional IRA is a misprint.

    Also it works differently for ROTH and T-IRA, a T-IRA has what is known as a phase out period where you loose your tax deduction status on the account, meaning you can still contribute if your income exceeds the set limits of ~110,000. A ROTH on the other hand if you exceed the 167,000 in GAI in the previous year you are not allowed to put money into the account at all.

    Follow the shit your fellow monkeys say @shitWSOsays

    Life is hard, it's even harder when you're stupid - John Wayne

  • In reply to Argonaut
    heister's picture

    Argonaut wrote:
    heister wrote:

    Do you know how the federal gross income tax rate is figured? Let me give you a little insight. In places where there is a state/city income tax you can write that off your tax bill. So with the Jones' example they paid about 40k in state and city income taxes. This would make their federally taxable 210k in a 250 plus bracket. This alone changes the percentage significantly with out including other taxes paid its almost a 5% jump in the percentage of federal income taxes with no change in income.

    did you read the article?
    They paid 29k for state tax and 10k for federal tax. WHAT in the world are you talking about?

    30K for federal taxes, and 31K when counting city/state/real estate ect.ect. I counted all taxes paid in the city/state catageory because you get to write these off your federal income taxes. Its funny you asked me if I read the article when you throw out an amount of 10k for federal income taxes.

    Follow the shit your fellow monkeys say @shitWSOsays

    Life is hard, it's even harder when you're stupid - John Wayne

  • In reply to econ
    Argonaut's picture

    econ wrote:
    heister wrote:
    Do you know how the federal gross income tax rate is figured? Let me give you a little insight. In places where there is a state/city income tax you can write that off your tax bill. So with the Jones' example they paid about 40k in state and city income taxes. This would make their federally taxable 210k in a 250 plus bracket. This alone changes the percentage significantly with out including other taxes paid its almost a 5% jump in the percentage of federal income taxes with no change in income.

    Let's not forget other taxes, as well. When people only look at income taxes, they don't get the whole effect. What about sales taxes, capital gains taxes, etc? They get in your pocket every which way. I saw a study a few years ago (I might try to dig it up later) that showed how some lady making $50K/year paid nearly 50% in taxes, when all taxes were considered. I've also seen statistics of tax revenues as a percentage of GDP and government spending as a percentage of GDP, and it ain't pretty.

    OTHER people pay those taxes too. I am pretty sure that I paid more than they did in sales tax, and I'm gonna have to pay regular income tax rate instead of capital gains because I haven't held any positions long enough to qualify for the capitalization criteria.

    More is good, all is better

  • In reply to Argonaut
    econ's picture

    Argonaut wrote:
    econ wrote:
    heister wrote:
    Do you know how the federal gross income tax rate is figured? Let me give you a little insight. In places where there is a state/city income tax you can write that off your tax bill. So with the Jones' example they paid about 40k in state and city income taxes. This would make their federally taxable 210k in a 250 plus bracket. This alone changes the percentage significantly with out including other taxes paid its almost a 5% jump in the percentage of federal income taxes with no change in income.

    Let's not forget other taxes, as well. When people only look at income taxes, they don't get the whole effect. What about sales taxes, capital gains taxes, etc? They get in your pocket every which way. I saw a study a few years ago (I might try to dig it up later) that showed how some lady making $50K/year paid nearly 50% in taxes, when all taxes were considered. I've also seen statistics of tax revenues as a percentage of GDP and government spending as a percentage of GDP, and it ain't pretty.

    OTHER people pay those taxes too. I am pretty sure that I paid more than they did in sales tax, and I'm gonna have to pay regular income tax rate instead of capital gains because I haven't held any positions long enough to qualify for the capitalization criteria.

    The issue is not whether other people pay those, as well. The issue is how much of a burden taxes are. Taxes are a huge burden for a lot of people who make less than $250K, but they're also a huge burden for the Joneses. In other words, tons of people are getting taxed way too much as it is...

  • In reply to heister
    Argonaut's picture

    heister wrote:
    Argonaut wrote:

    did you read the article?
    They paid 29k for state tax and 10k for federal tax. WHAT in the world are you talking about?

    30K for federal taxes, and 31K when counting city/state/real estate ect.ect. I counted all taxes paid in the city/state catageory because you get to write these off your federal income taxes. Its funny you asked me if I read the article when you throw out an amount of 10k for federal income taxes.

    Correction - 29k for federal and 10 k for state

    More is good, all is better

  • In reply to heister
    Argonaut's picture

    heister wrote:
    Argonaut wrote:
    heister wrote:
    Argonaut wrote:
    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

    Actually they can not contribute to a ROTH, they exceed the maxium allowable income levels.

    Traditional IRA limits are even lower, so if they qualify for traditional IRA thru would have qualified for ROTH

    Roth limits are 167,000 for a married couple. Traditional IRAs no one uses those anymore for the most part the tax advantages suck. The statement of a traditional IRA is a misprint.

    Also it works differently for ROTH and T-IRA, a T-IRA has what is known as a phase out period where you loose your tax deduction status on the account, meaning you can still contribute if your income exceeds the set limits of ~110,000. A ROTH on the other hand if you exceed the 167,000 in GAI in the previous year you are not allowed to put money into the account at all.

    Do you know them personally or something?
    how do you know what is a misprint and what is not?

    More is good, all is better

  • In reply to econ
    Argonaut's picture

    econ wrote:
    Argonaut wrote:
    econ wrote:
    heister wrote:
    Do you know how the federal gross income tax rate is figured? Let me give you a little insight. In places where there is a state/city income tax you can write that off your tax bill. So with the Jones' example they paid about 40k in state and city income taxes. This would make their federally taxable 210k in a 250 plus bracket. This alone changes the percentage significantly with out including other taxes paid its almost a 5% jump in the percentage of federal income taxes with no change in income.

    Let's not forget other taxes, as well. When people only look at income taxes, they don't get the whole effect. What about sales taxes, capital gains taxes, etc? They get in your pocket every which way. I saw a study a few years ago (I might try to dig it up later) that showed how some lady making $50K/year paid nearly 50% in taxes, when all taxes were considered. I've also seen statistics of tax revenues as a percentage of GDP and government spending as a percentage of GDP, and it ain't pretty.

    OTHER people pay those taxes too. I am pretty sure that I paid more than they did in sales tax, and I'm gonna have to pay regular income tax rate instead of capital gains because I haven't held any positions long enough to qualify for the capitalization criteria.

    The issue is not whether other people pay those, as well. The issue is how much of a burden taxes are. Taxes are a huge burden for a lot of people who make less than $250K, but they're also a huge burden for the Joneses. In other words, tons of people are getting taxed way too much as it is...

    Taxes are a MUCH bigger burden for those making less than 250K, both percentage wise and how little is left after tax, so let's not make Joneses seem like some fucking martyrs when middle class is getting DPd on taxes.
    I'm not saying rich/wealthy should be DPd as well, but i think it is at least fair if tax burden is distributed a little more evenly across income groups. AND I am only talking about percentage of income, and not the full burden because even as much as I bitch about taxes it's is still not as much of a burden on me as it is on someone making 20-30 k less, even if we pay the same percentage of income.

    More is good, all is better

  • In reply to Argonaut
    heister's picture

    Argonaut wrote:
    econ wrote:
    Argonaut wrote:
    econ wrote:
    heister wrote:
    Do you know how the federal gross income tax rate is figured? Let me give you a little insight. In places where there is a state/city income tax you can write that off your tax bill. So with the Jones' example they paid about 40k in state and city income taxes. This would make their federally taxable 210k in a 250 plus bracket. This alone changes the percentage significantly with out including other taxes paid its almost a 5% jump in the percentage of federal income taxes with no change in income.

    Let's not forget other taxes, as well. When people only look at income taxes, they don't get the whole effect. What about sales taxes, capital gains taxes, etc? They get in your pocket every which way. I saw a study a few years ago (I might try to dig it up later) that showed how some lady making $50K/year paid nearly 50% in taxes, when all taxes were considered. I've also seen statistics of tax revenues as a percentage of GDP and government spending as a percentage of GDP, and it ain't pretty.

    OTHER people pay those taxes too. I am pretty sure that I paid more than they did in sales tax, and I'm gonna have to pay regular income tax rate instead of capital gains because I haven't held any positions long enough to qualify for the capitalization criteria.

    The issue is not whether other people pay those, as well. The issue is how much of a burden taxes are. Taxes are a huge burden for a lot of people who make less than $250K, but they're also a huge burden for the Joneses. In other words, tons of people are getting taxed way too much as it is...

    Taxes are a MUCH bigger burden for those making less than 250K, both percentage wise and how little is left after tax, so let's not make Joneses seem like some fucking martyrs when middle class is getting DPd on taxes.
    I'm not saying rich/wealthy should be DPd as well, but i think it is at least fair if tax burden is distributed a little more evenly across income groups. AND I am only talking about percentage of income, and not the full burden because even as much as I bitch about taxes it's is still not as much of a burden on me as it is on someone making 20-30 k less, even if we pay the same percentage of income.

    So your advocating that the bottom 50% actuallys pays income taxes rather then getting it all back with an additional few thousand more than they ever paid in? Am I reading this right?

    Follow the shit your fellow monkeys say @shitWSOsays

    Life is hard, it's even harder when you're stupid - John Wayne

  • In reply to Argonaut
    econ's picture

    Argonaut wrote:
    econ wrote:
    Argonaut wrote:
    econ wrote:
    heister wrote:
    Do you know how the federal gross income tax rate is figured? Let me give you a little insight. In places where there is a state/city income tax you can write that off your tax bill. So with the Jones' example they paid about 40k in state and city income taxes. This would make their federally taxable 210k in a 250 plus bracket. This alone changes the percentage significantly with out including other taxes paid its almost a 5% jump in the percentage of federal income taxes with no change in income.

    Let's not forget other taxes, as well. When people only look at income taxes, they don't get the whole effect. What about sales taxes, capital gains taxes, etc? They get in your pocket every which way. I saw a study a few years ago (I might try to dig it up later) that showed how some lady making $50K/year paid nearly 50% in taxes, when all taxes were considered. I've also seen statistics of tax revenues as a percentage of GDP and government spending as a percentage of GDP, and it ain't pretty.

    OTHER people pay those taxes too. I am pretty sure that I paid more than they did in sales tax, and I'm gonna have to pay regular income tax rate instead of capital gains because I haven't held any positions long enough to qualify for the capitalization criteria.

    The issue is not whether other people pay those, as well. The issue is how much of a burden taxes are. Taxes are a huge burden for a lot of people who make less than $250K, but they're also a huge burden for the Joneses. In other words, tons of people are getting taxed way too much as it is...

    Taxes are a MUCH bigger burden for those making less than 250K, both percentage wise and how little is left after tax, so let's not make Joneses seem like some fucking martyrs when middle class is getting DPd on taxes.
    I'm not saying rich/wealthy should be DPd as well, but i think it is at least fair if tax burden is distributed a little more evenly across income groups. AND I am only talking about percentage of income, and not the full burden because even as much as I bitch about taxes it's is still not as much of a burden on me as it is on someone making 20-30 k less, even if we pay the same percentage of income.

    Nobody said the Joneses were martyrs...

  • In reply to heister
    Argonaut's picture

    heister wrote:

    So your advocating that the bottom 50% actuallys pays income taxes rather then getting it all back with an additional few thousand more than they ever paid in? Am I reading this right?

    Maybe something is wrong with your vision too...

    Who gets back more than they paid?

    20% of the bottom 50% also includes 2/3 households in the 25 to 50 k income group, who already pay from 12 to 17.5% in income tax. AND they don't generally have the creative accounting opportunities.

    http://en.wikipedia.org/wiki/Household_income_in_t...

    More is good, all is better

  • In reply to Argonaut
    cphbravo96's picture

    Argonaut wrote:
    econ wrote:
    Argonaut wrote:
    econ wrote:
    heister wrote:
    Do you know how the federal gross income tax rate is figured? Let me give you a little insight. In places where there is a state/city income tax you can write that off your tax bill. So with the Jones' example they paid about 40k in state and city income taxes. This would make their federally taxable 210k in a 250 plus bracket. This alone changes the percentage significantly with out including other taxes paid its almost a 5% jump in the percentage of federal income taxes with no change in income.

    Let's not forget other taxes, as well. When people only look at income taxes, they don't get the whole effect. What about sales taxes, capital gains taxes, etc? They get in your pocket every which way. I saw a study a few years ago (I might try to dig it up later) that showed how some lady making $50K/year paid nearly 50% in taxes, when all taxes were considered. I've also seen statistics of tax revenues as a percentage of GDP and government spending as a percentage of GDP, and it ain't pretty.

    OTHER people pay those taxes too. I am pretty sure that I paid more than they did in sales tax, and I'm gonna have to pay regular income tax rate instead of capital gains because I haven't held any positions long enough to qualify for the capitalization criteria.

    The issue is not whether other people pay those, as well. The issue is how much of a burden taxes are. Taxes are a huge burden for a lot of people who make less than $250K, but they're also a huge burden for the Joneses. In other words, tons of people are getting taxed way too much as it is...

    Taxes are a MUCH bigger burden for those making less than 250K, both percentage wise and how little is left after tax, so let's not make Joneses seem like some fucking martyrs when middle class is getting DPd on taxes.
    I'm not saying rich/wealthy should be DPd as well, but i think it is at least fair if tax burden is distributed a little more evenly across income groups. AND I am only talking about percentage of income, and not the full burden because even as much as I bitch about taxes it's is still not as much of a burden on me as it is on someone making 20-30 k less, even if we pay the same percentage of income.

    How come making things "fair" always includes rules that force things to be unequal and/or lopsided?? It seems oxymoronic, doesn't it?

    I also have a feeling that low income people (who pay little to no taxes...or get "earned" tax credits) depend on and use the services provided by the tax revenue far more often than those in the upper income bracket...which isn't fair either...pay more and receive less?

    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

  • In reply to MCBB687
    cplpayne's picture

    MCBB687 wrote:
    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.

    Stupid generalization with the FO over 30 making 250k. Also, they live in Huntington which I believe is in Long Island and the article stated that it was a NYC suburb. Guess what.....The "nice suburbs of Jersey" are NOT any cheaper. If you have a nice piece of property in Bergen, Morris, or Essex County prepare to pay anywhere from 15-30k in property taxes.

    "One should recognize reality even when one doesn't like it, indeed, especially when one doesn't like it." - Charlie Munger

  • In reply to cphbravo96
    absinthe's picture

    cphbravo96 wrote:
    Argonaut wrote:
    econ wrote:
    Argonaut wrote:
    econ wrote:
    heister wrote:
    Do you know how the federal gross income tax rate is figured? Let me give you a little insight. In places where there is a state/city income tax you can write that off your tax bill. So with the Jones' example they paid about 40k in state and city income taxes. This would make their federally taxable 210k in a 250 plus bracket. This alone changes the percentage significantly with out including other taxes paid its almost a 5% jump in the percentage of federal income taxes with no change in income.

    Let's not forget other taxes, as well. When people only look at income taxes, they don't get the whole effect. What about sales taxes, capital gains taxes, etc? They get in your pocket every which way. I saw a study a few years ago (I might try to dig it up later) that showed how some lady making $50K/year paid nearly 50% in taxes, when all taxes were considered. I've also seen statistics of tax revenues as a percentage of GDP and government spending as a percentage of GDP, and it ain't pretty.

    OTHER people pay those taxes too. I am pretty sure that I paid more than they did in sales tax, and I'm gonna have to pay regular income tax rate instead of capital gains because I haven't held any positions long enough to qualify for the capitalization criteria.

    The issue is not whether other people pay those, as well. The issue is how much of a burden taxes are. Taxes are a huge burden for a lot of people who make less than $250K, but they're also a huge burden for the Joneses. In other words, tons of people are getting taxed way too much as it is...

    Taxes are a MUCH bigger burden for those making less than 250K, both percentage wise and how little is left after tax, so let's not make Joneses seem like some fucking martyrs when middle class is getting DPd on taxes.
    I'm not saying rich/wealthy should be DPd as well, but i think it is at least fair if tax burden is distributed a little more evenly across income groups. AND I am only talking about percentage of income, and not the full burden because even as much as I bitch about taxes it's is still not as much of a burden on me as it is on someone making 20-30 k less, even if we pay the same percentage of income.

    How come making things "fair" always includes rules that force things to be unequal and/or lopsided?? It seems oxymoronic, doesn't it?

    I also have a feeling that low income people (who pay little to no taxes...or get "earned" tax credits) depend on and use the services provided by the tax revenue far more often than those in the upper income bracket...which isn't fair either...pay more and receive less?

    Regards

    Agree. I think we should have incentive neutral entitlements (lump sum), and a flat tax system instead of graduated.

    That way we lower marginal tax rates and provide small but adequate entitlements.

  • Argonaut's picture

    ok, i guess we can remove all the social assistance for the poor and create Tijuana country-wide.
    It's not like there are no rich people in Mexico, Colombia, or in South Africa.
    It's just that in Johannesburg rich people have to pay anyways, but for things like electric fences around a compound and AK-47 armed guards, and bulletproof SUVs. Oh, and there's always risk that their working people armed guard will tell his buddies exactly when it will be best to rob the house and I am pretty sure he won't be risking his neck when the rich family is getting slaughtered by the pissed off peasants.
    So please, do share your views about a comprehensive tax system that in your opinion will ensure the most prosperity for this country.

    More is good, all is better

  • LeveragedFiend's picture

    Don't get used to the mockingly sarcastic ANT because it's only a matter of time before angry ANT unleashes the full power of the free market on yo ass.

    It’s no mystery that ass has always been tits’ greatest enemy... It’s almost like a Muslim-Jewish thing, but with tits and ass.

  • TNA's picture

    I'm in a good mood right now. I'll keep mocking.

    But seriously, people just glaze over what my point is. Poverty is a behavioral issue, not something the government can just dump money on. There are poor people, high school drop outs, drug addicts, etc in Europe and they have way more tax that us.

    Besides, revenues are down because earnings are down. If citizens are not earning a lot the government isn't. This raise taxes all the time crap is annoying.

    Am I the only one who thinks that the bar should be set real high for any measure that takes money from people? I don't get how people can be so flippant about pickpocketing people.

  • Argonaut's picture

    Ok, Ant, what IS being suggested? Everyone is just bitching.
    I mean come on, this is supposed to be a forum of people who at least somewhat understand macro, not FriendsOfSarahPalin.com

    Personally I view tax breaks for the poor as an opportunity to teach them good financial habits (like saver's credit) that will hopefully one day make them if not well off, but at least self-reliant.If they are encouraged to save some money NOW at the price (to the rest of the country) of the tax break, that price is a lot lower than the price of having to take care of them when they are old and have no retirement. OR the cost of having old people begging, dying, and rotting on the streets, I hate to be so graphic.

    MOREOVER, poor people make so little money, that even if an equal tax rate is imposed on them, the additional revenue would not even attempt to cover the fucking domino effect that would ensue.
    1. forcing a great number of them out of the work force and into crime (because what's the point of working 40 hrs at $8 an hour when you only make $1300 a month, out of which take home pay is $975 IF you are lucky, after a 25%income tax)
    2. as a result forcing businesses to either offer a more competitive wage to menial labor employees and thus raise the cost of goods and services, which would in turn AGAIN lower the overall standard of living OR stop expanding/growing/producing, which too, would lower the overall standard of living.
    3. Cost of increase in the police force AND a pay increase needed to attract cops because they now would be more likely to have to deal with violent offenders/risk their life.
    4. Increasing volatility/destabilization would force the very wealthy who are bitching about paying taxes to move to safer countries and pay more taxes for an opportunity to raise their children without having to pay huge ransoms or bury them young.

    Provided we want to avoid turning this great country into the next Colombia/soviet Union/socialist china (BTW, HOW do you think czarist Russia turned into soviet union, huh?) , that leaves middle and upper class as suitable sources of tax revenue. Between the two of them the middle class is getting raped, while the upper class is paying taxes at approximately the rate of the poor, who simply can't pay more.

    More is good, all is better

  • Argonaut's picture

    On the government level yes, i agree there needs to be more accountability of how they spend our money.
    But again - middle class is too busy slaving to bitch, and the rich don't bitch about the right things "oh, i don't understand why i cant get a big tax break to enroll my kids in a private school"

    More is good, all is better

  • In reply to TNA
    LeveragedFiend's picture

    ANT wrote:
    I'm in a good mood right now. I'll keep mocking.

    But seriously, people just glaze over what my point is. Poverty is a behavioral issue, not something the government can just dump money on. There are poor people, high school drop outs, drug addicts, etc in Europe and they have way more tax that us.

    Besides, revenues are down because earnings are down. If citizens are not earning a lot the government isn't. This raise taxes all the time crap is annoying.

    Am I the only one who thinks that the bar should be set real high for any measure that takes money from people? I don't get how people can be so flippant about pickpocketing people.

    This also applies to foreign aid. With no strings attached, it's actually counterproductive and makes the beneficiaries worse off (they become dependent and less efficient).

    Anyways I'm out to get some girls with big booties.

    It’s no mystery that ass has always been tits’ greatest enemy... It’s almost like a Muslim-Jewish thing, but with tits and ass.

  • TNA's picture

    I don't necessarily support a flat tax because lower income people will be hit harder. With that said, if you look at sin taxes and which socio economic group they hit the hardest, I think you will see that the poor are being targeted as it is.

    I've said in many threads that if you really want to help the poor, yoh will ban state lotteries and cut cigarette taxes/alcohol tax. Rich people can go to the Bahamas. Poor people enjoy these little pleasures.

    Here is my point at the purest sense. Rich people can afford to carry much more of the tax burden. Absolutely. If your worth 10MM and we take 5MM, you are still far better off than a poor family. Absolutely. It makes economic sense also. Absolutely.

    But is it morally and ethically right to simple take from someone who rightfully earned it simply because we set an arbitrary level saying they don't deserve that money anymore?

    My stance is that past a certain point, taxation becomes government shake down. We, as a rich nation, should provide a safety net for those who do not succeed. With that said, this safety net should not become some entitlement to live a wonderful life. At the end of the day, the USA gives more tools and more opportunity than any other nation. This is why immigrants from the poorest countries come here. If you don't take advantage of what we offer, we will give you an existance, but not a great one.

    And if economic benefit is going to be our ethical system, why not just advocate euthanasia, sterilization and other draconian measure that would have wonderful economic benefits? I don't mind the system, but at least be consistent.

  • In reply to Argonaut
    heister's picture

    Argonaut wrote:
    Personally I view tax breaks for the poor as an opportunity to teach them good financial habits (like saver's credit) that will hopefully one day make them if not well off, but at least self-reliant.If they are encouraged to save some money NOW at the price (to the rest of the country) of the tax break, that price is a lot lower than the price of having to take care of them when they are old and have no retirement. OR the cost of having old people begging, dying, and rotting on the streets, I hate to be so graphic.

    To teach them about savigs? Your joking right, I have never seen someone from the ghetto save money ever. They dont trust banks would rather have their money as cash in their pocket. And you questioned me when I said that people get more than they pay in. Heres an example for you. A friend of mine was volunteering doing tax returns for poor people. He said that he ran into at least 50 if not more people who were "going" to school on government grants. Mind you they had been going to school for over a decade and had yet to get any kind of degree. They didnt work yet were awarded on average over 7000 dollars on their tax returns. Then you have the people who do work and they try to claim 6 kids when they only actually have 2 but they "promise" they are the sole provider for their nieces and nephews. Then the very next person comes up in line and tries to claim the very same kids. Now if you think that the poor have no "creative accounting tricks" you are just acting like the poor people are this overly oppressed group that can never succeed. I however had have a different view, they are a group of people that would rather take easy street by staying poor then work hard in school/life and try to better themselves.

    Follow the shit your fellow monkeys say @shitWSOsays

    Life is hard, it's even harder when you're stupid - John Wayne

  • In reply to TNA
    Argonaut's picture

    ANT wrote:
    I don't necessarily support a flat tax because lower income people will be hit harder. With that said, if you look at sin taxes and which socio economic group they hit the hardest, I think you will see that the poor are being targeted as it is.

    I've said in many threads that if you really want to help the poor, yoh will ban state lotteries and cut cigarette taxes/alcohol tax. Rich people can go to the Bahamas. Poor people enjoy these little pleasures.

    Here is my point at the purest sense. Rich people can afford to carry much more of the tax burden. Absolutely. If your worth 10MM and we take 5MM, you are still far better off than a poor family. Absolutely. It makes economic sense also. Absolutely.

    But is it morally and ethically right to simple take from someone who rightfully earned it simply because we set an arbitrary level saying they don't deserve that money anymore?

    My stance is that past a certain point, taxation becomes government shake down. We, as a rich nation, should provide a safety net for those who do not succeed. With that said, this safety net should not become some entitlement to live a wonderful life. At the end of the day, the USA gives more tools and more opportunity than any other nation. This is why immigrants from the poorest countries come here. If you don't take advantage of what we offer, we will give you an existance, but not a great one.

    And if economic benefit is going to be our ethical system, why not just advocate euthanasia, sterilization and other draconian measure that would have wonderful economic benefits? I don't mind the system, but at least be consistent.

    Yep, epsilons need their soma.

    Let's leave morals and ethics out of this for a while. Morally and ethically I want everyone to be happy, but that's not gonna happen.
    Actually, we are discussing a big problem, let's depart from the human element altogether and think in non-human terms.

    In a purely economic sense and opportunity cost analysis we have to maintain the balance between getting the golden eggs and not poking the goose that lays them to the point that he (she?) either dies/gets sick, or leaves.

    On the other hand we have geese/chickens that lay regular eggs. You also don't want to poke them to the point that they die or get sick.

    And then you have birds that don't lay anything right now and can either get nursed health/adulthood and lay eggs, or live off others' eggs.

    So, since mystery birds aren't really a source of egg revenue, and golden eggs are definitely more valuable than regular ones, and regular egg producers are already producing at a higher rate than the golden egg geese, where do you think squeezing for more would produce a better result?

    Keep in mind that squeezed regular egg producers end up becoming the non-producing birds, which as we already established, have a cost to this "farm".

    Frankly, I think that we need a LONG-TERM tax policy that is meant to expand the amount of golden geese and the base upon which they rest and shrink the amount of "non-producers" as well as minimize the length of time "non-producers" remain in that state by facilitating easier upward mobility through all socio-economic layers.

    You can't maintain the health and productivity of a "farm" by letting sick birds run amok and steal eggs, and get everyone else sick as well, and stress the producers and affect their productivity because they don't know what's gonna happen to them and their eggs.

    More is good, all is better

  • Argonaut's picture

    regardless of increasing taxes, i think tax laws need to have purposes other then just collecting the revenue.

    Laws that don't allow the wealthy to move sizable assets overseas without tax penalties may be good for this country because we still have the greatest number of rich people than anyone else, so even if such law would discourage foreign investors, preserving what we have may be more important.

    I personally would like to see some tax incentive for hiring people in america and a tax penalty for keeping the labor force overseas (or over the border).
    $5000 less for a honda or whatever affects me a lot less than the army of the unemployed in detroit. Especially since the people who would have otherwise bought a $2000 old car and took care of it, are now balls-deep in debt on their new piece of shit $12,000 Kia

    More is good, all is better

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