1/16/16

Mod Note (Andy): Best of Eddie, this was originally posted in September 2010. To see all of our top content from the past, click here. If there's an old post from Eddie you'd like to see up again, shoot me a message.

Who is rich? This is the perennial question in any progressive tax scheme. Where you draw the line makes a big difference to a lot of people. With the sun about to set on the Bush tax cuts, the debate is raging online, and I wanted to find out what you guys think. First, the preliminaries:

Those people making $250,000 a year or more seem to be the targeted income level to be considered "rich" in America. But they'd be the first to tell you that they're not. Two recent news pieces have the debate raging. The first was written by a Chicago law professor. I guess it was so incendiary that the original piece was taken down, but you get the gist from the above link. Even at $455,000, the good prof is barely making ends meet.

Next was a letter to the Wall Street Journal from Glen Esnard, a Southern California real estate executive. He tells a similar tale of woe about how $250,000 ain't what it used to be, and then finishes up with the not-so-veiled threat that he and his quarter-millionaire buddies might just take their ball and go home:

Apparently our president thinks that living in America is so wonderful that we will never leave, despite being directly attacked and held responsible for the political class's inability to constrain its desire to buy votes with our money. He should think again.

Esnard was then pilloried by Felix Salmon as the "sob story of the day". The law professor was taken apart by none other than Tyler Cowen. Not a lot of sympathy in those circles.

I don't mean to make light of the above situations, because both men have good points. And you know I'm not the type to vilify someone for their success. But the question of who really is rich has always fascinated me. As a kid growing up in a blue collar neighborhood, I figured anyone with a million bucks was rich. A couple decades later when I was swinging the bat, P&L might swing a million bucks in a day. It's all relative.



I FOUND THE ANSWER

It wasn't until recently that I found the answer to my question, and it came from someone eminently more qualified to answer it than I. I can't remember how I came to buy his book (because I normally wouldn't buy a book with a title as simplistic as How To Get Rich), but Maxim Magazine founder Felix Dennis answered the question of who is rich for me once and for all. According to Dennis (who says he's worth anywhere from $400 million to $900 million and that any legitimately rich person who can narrow their actual worth down more than that is lying), here is how it breaks down by overall net worth:

  • $2-4 million: The comfortable poor
  • $4-10 million: The comfortably off
  • $10-30 million: The comfortably wealthy
  • $30-80 million: The lesser rich
  • $80-150 million: The comfortably rich
  • $150-200 million: The rich
  • $200-400 million: The seriously rich
  • $400-800 million: The truly rich
  • $800 million - $1.998 billion: The filthy rich
  • $1.998 billion and Above: The super rich

So by his definition, one isn't "rich" until one is worth a minimum of $30 million. He also published a chart I would call "liquid" net worth (cash on hand or readily available), and the bare minimum liquid to be considered "rich" by Dennis was $2 million.

I think those are pretty accurate figures, actually. $30 million overall and $2 million liquid sounds about right. The guys making a quarter mil a year and struggling to keep the lights on would probably agree.

Incidentally, the book is great fun to read. Dennis started off with nothing and created an empire worth almost a billion in spite of himself. He's a dyed-in-the-wool party animal, and the book is wildly entertaining (if you're into hookers, cocaine benders, and Legionnaires Disease like I am). On top of that, he gave the best and most unvarnished advice about getting rich I've ever read, summed up in two sentences:

  1. Don't try to get rich because you won't make it, and
  2. You'll ruin your life in the attempt

Apart from all that, I'd like to hear what you guys think about what it means to be rich. Does $250,000 a year in income make you rich? Is $30 mil overall and $2 mil liquid closer to the real definition? Somewhere in between? Or does it take more than $30 mil to be rich in your book?

The number changed a lot for me over the years, I'm interested to hear what it is for you.

Comments (95)

Best Response
9/21/10

If you prevent your lifestyle from scaling up you can live nicely off 100K a year. Realistically, expenditures increase along with salary.

I find 22K as a poverty figure to be interesting also. 2 full time earners making minimum wage will pull down over 30K gross.

You know why I don't care about poverty stats? Because it is their fault. Hear me out. You have no education and no skills, those are the people who work forever on minimum wage. Then they start pumping out kids even though they have no plan on how to pay for them. Now they put on the sad face and expect me and you to subsidize them.

No one stays on minimum wage if they work hard. You know why people are paid so little? Because they blow off work, call in sick all the time, quit in a moments notice, fuck around, etc. Go to any retail store, the ones that all pay minimum wage, and find the manager and ask them what kind of turnover the store has. You will always find well over 100% if not grossly more. If anyone of us got a job at McDonalds or a gas station we would be running that place in 6 months because 1) we all know how to work like slaves 2) we value money 3) we don't want to be losers. Granted, you are not going to be buying models & bottles, but you will be making 30-35K with benefits.

Point it, minimum wage is good. It is a base line for you to build off of. Too many people have bad attitudes or poor work ethic and stay at that level. I say fuck them.

Whenever I go to NJ I get gasoline. Always have an Indian guy pump my gas. The guy is usually in uniform, nice, efficient, does the job perfectly. Suppose Indian people didn't exist. You know what, you would have a high school drop out doing the job, fucking it up, giving people attitude and quiting whenever he got hung over. Lesson? People in this country have no work ethic and people in other countries where people are REALLY poor come here and make the best of things.

Can we start up a Soylent Green factory so these losers have an actual purpose??

9/21/10

500,000 GBP of cash flow per year in London is imo F*** you money.

9/21/10

k, this site is a bit bias in the answer, but tell you what.... i know quite a few people who would be happy with 250K a year! Those who claim they are struggling to pay the bills needs a reality check.

I know family who pays for everything with 65K a year!

not Rich ... i agree... struggling...? now that is just ask for a ass kicking!

9/21/10

$250,000 in income is the Obama standard for being "rich".

If you have 10 million dollars, you should be able to earn 2.5% per year on that amount and thus earn 250k in income per year. Therefore, I think 10 million is the minimum needed to actually be considered rich.

9/21/10

I agree totally with this scale of wealth. 30-80 is when you become lesser rich... meaning you can have 2 big, luxurious houses, one or two full time staff at your primary residence, a few nice cars, regular 5-star vacations with the whole family, and security for all your children and their educations, etc.... 30-80m is really not THAT rich... it's just when life STARTS to become wonderful and easy... at 10 million or so, it's clearly not a struggle, but you're not RICH... 3 kids private educations (At all the best schools up through mba or jd) will cost you 2 million dolalrs, etc

9/21/10

note that the above comment does not apply until you reach "patriarch" type age... like 55-60, a wife of 45 and 3 kids in college/HS

9/21/10

This question is difficult to answer as rich can be defined as many different things. I recently had a similar conversation with a director at my office (I just became a 2nd year analyst) about what amount of money paid all at once is truly life-changing?

Together we talked about it and settled on about 10-12million as a lump sum payment.

The logic goes as follows:

Use 2mm: buy yourself a nice house a car and some other material shit; still cant buy that yacht but no one is crying for you.

The remaining 10 million allows for some freedom; you could spend it all if you are a ri-tard. Or, you could park the whole fat wad in a CD collecting 5% a year netting your ass 500k of relatively low risk income and ~250K after tax.

Now most of you would probably say that is basically bitching out. But is it really? Even in my relatively short career I have seen enough of my friends get laid off to know that a steady paycheck is a big fuckin deal, and a guaranteed 250k with 0 effort is worth the opportunity cost(in my opinion) of seeking a higher return elsewhere.

Is 250k F-U money? No. But it buys you freedom. Dont like your job? Quit. Want to spend more time with your kids? Do it. Want to start a company in your free time? Don't sell 50% equity to get some vulture to give you the 100k you need to get your idea off the ground.

You could still work if you like and pretty easily double that income if you have a decent spot in finance firm....or you could do whatever you want. That's whats life changing about 12mil. It gives you freedom.

So if I had a net worth of 30mill with 2million cash, I would immediately increase my cash ratio to at least 12mill in cash.

No being married to a paycheck, and have lifestyle options is my definition of rich.

9/21/10

Is someone with an IQ of 135 smart? To the CalTech electrical engineering faculty, probably not. However, to the average person, that's pretty smart-- 99%-tile. Hell, Mensa is only 98 %-tile and, for some reason, it has become synonymous with "smart."

Well, $250,000 yearly income is about 99 %-tile. To me, it is reasonable to say that is "rich." Most academic papers on the topic start the "rich" or "upper class" category at the 99 %-tile.

Slate.com had an article on this a few years ago:

But people in Georgetown mansions don't necessarily compare themselves to fellow Washingtonians in Anacostia. Relative income really works at the neighborhood level. As we know from the work of Cornell economist Robert Frank, people rate their well-being not so much based on how much they make and consume, but on how much they make and consume compared to their neighbors. After all, you have to compete with them for status and for important positional goods such as housing and schools. And here the CNBC crowd has a point. It is certainly true that in a few ZIP codes and neighborhoods, brandishing a $250,000 salary is like bringing a knife to a gunfight. There is a significant number of rich people--including a healthy contingent of filthy rich people--in places like New York City and San Francisco. If you want to live in a neighborhood where starter homes cost $1 million, and you want to send your kids to private schools, and you want to go on great vacations and have a beach house, then $250,000 likely won't cut it. For people in this situation, the knowledge that they're doing better than 98 percent of their fellow Americans is little solace when the investment banker down the street has just pulled down a $2 million bonus.
http://www.slate.com/id/2198806/

9/21/10

Patrick and I were going over the recent U.S. poverty figures from the Census Bureau the other night. A couple things about the numbers surprised me.

First of all, the official poverty line for a family of four was $22,000 this year. I really have no way to judge, but that seems awfully high to me. You're not living high on the hog at $1,850 a month, but you can feed a family on that. Obviously, housing is going to be sub-par, but it's still a roof over your head. I'm not trying to be a dick here, I was just surprised that you're considered "impoverished" if you make $22k or less.

Especially when compared to the median household income of $48,000. Again, I don't have a lot to base it on, but $48k seems awfully low for the median household income. Note that it's the median, and not the average, so there are the same number of people making less than $48k as there are making more.

I just thought the numbers were interesting. If $48,000 is the "real" middle class (as the median number would suggest), then I guess $250k a year would seem wealthy. The thing I found really odd (and somewhat disturbing) is that the official poverty line seems to be rising to meet the median income.

This just in: Household net worth drops again:
http://www.cnbc.com/id/39233593

Silver lining: Consumers lowered their overall debt load by another 2.3% this quarter.

9/21/10

We are definitely due for a realignment of progressive taxation levels, but 250k a year for the majority of the country is rich.

The problem with having a nationwide tax rate is that the cost of living is very different across different geographical areas, and there is no sensible way to adjust for geographical differences. 250k is nothing in NYC, but in Kansas you are Donald Trump.

It can be argued that those above 250k have more opportunities to engage in transactions which get favorable tax results (such as capital gains or sophisticated investment transactions), whereas those who make less have less access to making money using those methods. While you probably won't hear many politicians saying it out loud, our tax system favors those with investable capital, and only those with extra money have that.

I think the 250k level should be raised to 350k. Additionally, there should be another level at around 750k-1m+ which would feature a modest (~1%) increase, in order to soften the blow on the 350k crowd. I think its safe to say that if you make 750k a year, you are rich.

In reply to sleeplessinlondon
9/21/10
sleeplessinlondon:

The remaining 10 million allows for some freedom; you could spend it all if you are a ri-tard. Or, you could park the whole fat wad in a CD collecting 5% a year netting your ass 500k of relatively low risk income and ~250K after tax.

Wait, which CDs pay 5% a year anymore???

9/21/10
Edmundo Braverman:

On top of that, he gave the best and most unvarnished advice about getting rich I've ever read, summed up in two sentences:

  1. Don't try to get rich because you won't make it, and
  2. You'll ruin your life in the attempt

From personal experience I've found this to be true, but I don't know why this happens. Thoughts? Why does chasing the money inevitably end in failure?

Side question: The phrase "do what you love and the money will follow" is all I hear from the guys I would consider rich. All of them are or were at one time business owners, and it seems all of them chased a dream. My question is what happens to the people who take their shot and come up short? You never hear about them.

9/21/10

$250k/yr is more than i could ever dream of spending

9/21/10

If you have 3 children and a wife, then buying a nice house in manhattan costs 10-12 million dollars. Let's keep that in mind. A 4 bedroom, 6000 square foot apartment in an extremely nice neighborhood with nice views, a friendly doorman, etc... ONE APARTMENT.. one apartment, for that matter, that is not over-done with fancy works of art or overly large and distasteful new money bullshit with 8 bedrooms and diamond studs on the black velvet chairs in the screening room.

Again - I agree with the scale above. 30-80m is where one enters the level of becoming actually rich.... but being TRULY rich is in the many hundreds of millions

There's nothing wrong with NOT having money and having a lot of money is in NO WAY a prerequisite for enjoying life, but this is America, and we work in finance... let's dream big. Dare I mention it: "greed is good"

9/21/10

My goal has always been to hit $5 million of inflation-adjusted net worth and retire. A farm on one of the Great Lakes is the perfect retirement plan. Short of massive, massive sovereign risk, all of your basic needs in retirement- aside from clothing- are taken care of for as long as you can push a plow.

I think the right way to handle this is to raise everyone's taxes by 1-2% this year and remove the tax cuts on the top two tax brackets next year. It's the responsible thing to do- as long as it's combined with spending cuts.

In reply to Edmundo Braverman
9/21/10
Edmundo Braverman:

First of all, the official poverty line for a family of four was $22,000 this year. I really have no way to judge, but that seems awfully high to me. You're not living high on the hog at $1,850 a month, but you can feed a family on that. Obviously, housing is going to be sub-par, but it's still a roof over your head. I'm not trying to be a dick here, I was just surprised that you're considered "impoverished" if you make $22k or less.

Really? That's only 15 dollars a day per person...

Even in the slums a 1 bedroom apartment will run you $500 a month. That leaves you $1350 for everything else for 4 people: food, clothing, transportation etc.

You've got kids, how much would it cost to feed and clothe 2 infants just enough to keep them healthy?

In reply to speeddemon
9/21/10
moneytoblow:
sleeplessinlondon:

The remaining 10 million allows for some freedom; you could spend it all if you are a ri-tard. Or, you could park the whole fat wad in a CD collecting 5% a year netting your ass 500k of relatively low risk income and ~250K after tax.

Wait, which CDs pay 5% a year anymore???

When you have that much cash on hand and are willing to invest with one financial institution, I would assume you could negotiate your CD rate upwards to where you wanted it to be ~ 5%. If not, you could always say F#!* you, I'll take my money somewhere else...

In reply to surferdude867
9/21/10
surferdude867:
Edmundo Braverman:

First of all, the official poverty line for a family of four was $22,000 this year. I really have no way to judge, but that seems awfully high to me. You're not living high on the hog at $1,850 a month, but you can feed a family on that. Obviously, housing is going to be sub-par, but it's still a roof over your head. I'm not trying to be a dick here, I was just surprised that you're considered "impoverished" if you make $22k or less.

Really? That's only 15 dollars a day per person...

Even in the slums a 1 bedroom apartment will run you $500 a month. That leaves you $1350 for everything else for 4 people: food, clothing, transportation etc.

You've got kids, how much would it cost to feed and clothe 2 infants just enough to keep them healthy?

It's clearly not an ideal budget, but it can be done. I can buy a 10-kilo (22 lb) sack of potatoes at the fresh market for 4,95EU, a frozen pizza big enough and with enough toppings to feed my two boys for 3EU, kilos of green beans, tomatoes, mushrooms, and most other fruits and vegetables for 3-5EU a kilo.

In the States, you're getting enough "Value Meal" calories for $15 a day to have diabetes by age 10 and be morbidly obese by the time you hit high school.

9/21/10

Edmundo, I'm pretty sure those numbers are before taxes.

Great post though, the minute I saw the title I was thinking of bringing up the Felix Dennis chart. His liquid worth chart is good as well. I can honestly say I don't have the slightest bit of sympathy for the law professor and the other guy. 250k is enough to have a comfortable existence pretty much anywhere in the country provided you keep your RE costs in check and don't send your kids to private school (if they're smart, they'll still make it into a great college). Considering that the increased tax burden affects income that is necessarily superfluous when compared to the wider population, I would laugh at these people were I ever to meet them. I simply know too many people making a fifth of that in cities far more expensive than Chicago or wherever that guy in Cali lives.

9/21/10
9/21/10

igaida nailed it in my opinion. Productivity leads to higher costs of living driven by higher rent rates and other factors due to good old urban economics' bid/rent curve. The handy CNN calculator puts me at almost half my salary living in Seattle for a similar living standard. Yet on top of the drastically higher living costs, I get taxed significantly higher? No wonder so many IBD analysts end their first years with credit card debt.

Though I am a liberal (boo, hiss, I know), I think the suggestion of "take your kids out of private school" from that article's counter-point was pretty indicative of ignoring the relative costs of certain areas. Having grown up in San Francisco in 80s, for example, public school represented selling yourself short in the highest degree to my family and others in our income bracket (the so-called "upper middle class"). Of course, the tax man never saw it that way.

Would certainly be nice if taxes came out of our net incomes after operating expenses (envy those firms!) like rent and food as a % of salary. Might actually be that way for all I know, I'm not a CPA.

"Dude, not trying to be a dick here, but your shop looks like a frontrunner for the cover of Better Boilerrooms & Chophouses or Bucketshop Quarterly."

-Uncle Eddie

9/21/10

This is a pretty neat site for some perspective on this:
https://www.networthiq.com/

Though I would argue that that site is skewed a bit high, since people that care enough to track their net worth are probably better with their personal finances than the average person.

9/21/10

Yeah, for some reason I figured you would be the only person to get the reference.

People just have no work ethic in this country. Plain and simple.

I think that 22K poverty figure is under representing things also. If you have a family and make that much you qualify for medicare (medicaid), food stamps, Heating assistance, welfare, etc. When you add in all the benefits things look a lot better. Section 8 takes care of housing.

Do we have anyone on here whose family owns rental units that rent to section 8? My friend does and they all destroy the place. Disgusting.

In reply to TNA
9/21/10
Anthony .:

If you prevent your lifestyle from scaling up you can live nicely off 100K a year. Realistically, expenditures increase along with salary.

I find 22K as a poverty figure to be interesting also. 2 full time earners making minimum wage will pull down over 30K gross.

You know why I don't care about poverty stats? Because it is their fault. Hear me out. You have no education and no skills, those are the people who work forever on minimum wage. Then they start pumping out kids even though they have no plan on how to pay for them. Now they put on the sad face and expect me and you to subsidize them.

No one stays on minimum wage if they work hard. You know why people are paid so little? Because they blow off work, call in sick all the time, quit in a moments notice, fuck around, etc. Go to any retail store, the ones that all pay minimum wage, and find the manager and ask them what kind of turnover the store has. You will always find well over 100% if not grossly more. If anyone of us got a job at McDonalds or a gas station we would be running that place in 6 months because 1) we all know how to work like slaves 2) we value money 3) we don't want to be losers. Granted, you are not going to be buying models & bottles, but you will be making 30-35K with benefits.

Point it, minimum wage is good. It is a base line for you to build off of. Too many people have bad attitudes or poor work ethic and stay at that level. I say fuck them.

Whenever I go to NJ I get gasoline. Always have an Indian guy pump my gas. The guy is usually in uniform, nice, efficient, does the job perfectly. Suppose Indian people didn't exist. You know what, you would have a high school drop out doing the job, fucking it up, giving people attitude and quiting whenever he got hung over. Lesson? People in this country have no work ethic and people in other countries where people are REALLY poor come here and make the best of things.

Can we start up a Soylent Green factory so these losers have an actual purpose??

What about the people who were born into circumstances that prevented success? I'm not talking "my parents didn't make enough to send me to private school or university," I'm talking "My mother smoked crack when she was pregnant, I was malnourished as a child, and my father kicked the shit out of me for the first fifteen years of my life."

Do you think there is an element of luck to the whole process?

9/21/10

20mm+ is what I consider loaded, in total net worth. I mean obviously 50, 200mm is strait baller, but If I had 20mm I would consider myself rich. Although my goal is 100

--
"Those who say don't know, and those who know don't say."

9/21/10

@FinancePun If you grew up in San Francisco in the 80s and were upper middle class, there's a good chance I beat the shit out of you. Sorry about that, bro.

@Anthony I actually looked long and hard at Section 8 when I had a few properties, but ultimately decided against it because of the paperwork and the fact that once a house was Section 8, it was very difficult to take it out of the system. If you want to talk about sick dis-incentives for people to lift themselves out of poverty, HUD was paying twice the market rate for rent to us landlords so the people could live there for free, ostensibly. (as the landlord, you were supposed to collect a percentage of the overall rent from the tenant every month, but no one I knew ever did because the government was paying you way over market rate anyway without ever having to deal with the tenant) Yes, the places typically got trashed, but they weren't the Taj Mahal to start with.

@surferdude There is absolutely a component of luck to life, and anyone who tells you they did it all on their own is full of shit. Some people are born into circumstances beyond reparation. Those who manage to make something happen are a testament to the human spirit. The others are a sad fact of life. But for the grace of God, and all that...

In reply to TNA
9/21/10
Anthony .:

Do we have anyone on here whose family owns rental units that rent to section 8? My friend does and they all destroy the place. Disgusting.

If your friend cares about the condition of the property, then he is an idiot and should screen his tenants better or kick out the shitty ones and find new ones...

In reply to Kools
9/21/10
Kools:
Anthony .:

Do we have anyone on here whose family owns rental units that rent to section 8? My friend does and they all destroy the place. Disgusting.

If your friend cares about the condition of the property, then he is an idiot and should screen his tenants better or kick out the shitty ones and find new ones...

Yeah, you obviously know nothing about being a landlord. It is very hard to evict someone once they are in the unit. Additionally, we are talking about Section 8, not general renting. Section 8 is subsidized by the state for low income individuals. Unfortunately, low income, more times than not, means disrespect for other peoples property and no manners. My friend was not a slum lord, just people would absolutely destroy his place.

As for the poster above, yes, luck plays a part. In the end, what are you going to do? Piss and moan about how you didn't get lucky? The poor in this country are 100x better off than poor in India or Africa. Cry me a river. Also, the bad luck excuse gets so overused. Just like the fat excuse. So many people talk about genetics when in reality only a small fraction could legitimately use that excuse. The rest just eat junk food and use genetics as a safety blanket to make themselves feel good for being losers.

9/21/10

Btw, it's super rich bracket or bust. Anything short of that and I would never be able to lead my favorite team (Paris-Saint-Germain) to 3 straight Champions Leagues, Ajax-style.

9/21/10

22K will take you MUCH further in Fuckitville, IA then in San Francisco...

It would be interesting to see regional poverty stats vs. a giant blanket stat for the entire US

9/21/10

Section 8 housing is the way to go regardless of what Kools says. The benefit is in the fact that you are all but guaranteed to get your payments since they are coming from the government. Its a pretty safe bet that the same people that shit in plastic bags and leave them in the living room (that actually happened to a guy I know that owns section 8 housing) are probably the same people that aren't very reliable when it comes to rent.

As to the point of the thread, pretty much everything has been said that's worth reading. There needs to be some sort of parity between state/local taxation and federal taxation. Part of the reason (Read part not whole) that living in NYC and San Fran is so expensive is because the tax rates are so high. Making 300k in manhattan is like making 100k in a lot of other places. So to place a blanket tax rate on people who earn X regardless of location, seems faulty. Obviously its the individual's choice to live in location Y but if that's where they work and go to school etc. Then its unreasonable to expect them to up and move.

If I had asked people what they wanted, they would have said faster horses - Henry Ford

In reply to Kools
9/21/10
Kools:

22K will take you MUCH further in Fuckitville, IA then in San Francisco...

It would be interesting to see regional poverty stats vs. a giant blanket stat for the entire US

Exactly. Fact is, the country is too large, and each region has its own distinct interests. Either the federal government should give some power back to the states, split up into distinct units, or continue down this dysfunctional path where the interests of its constituents are not aligned, thus resulting in a breakdown of values, ethics, even culture.

looking for that pick-me-up to power through an all-nighter?
In reply to TNA
9/21/10
Anthony .:

Yeah, you obviously know nothing about being a landlord. It is very hard to evict someone once they are in the unit. Additionally, we are talking about Section 8, not general renting. Section 8 is subsidized by the state for low income individuals. Unfortunately, low income, more times than not, means disrespect for other peoples property and no manners. My friend was not a slum lord, just people would absolutely destroy his place.

I've been involved with regular and Section 8 tenants and obviously you can't just give Johnny Poorfuck a 30day notice to evict, you just have to understand the rules set by the government and plan accordingly.

Your friend shouldn't just take any Jimmy Imbecile with section 8 off the street. He should screen the Section 8'ers and pick people who are interested in maintaining that status. He should be able to judge how people live when he meets with them (ie how clean their car is, how they present themselves, etc...) He needs to understand that it may take a little longer to find a tenant, but finding a long-term tenant that takes reasonably good care of the property is how you generate quality cash flow.

9/21/10
In reply to happypantsmcgee
9/21/10
happypantsmcgee:

Section 8 housing is the way to go regardless of what Kools says. The benefit is in the fact that you are all but guaranteed to get your payments since they are coming from the government. Its a pretty safe bet that the same people that shit in plastic bags and leave them in the living room (that actually happened to a guy I know that owns section 8 housing) are probably the same people that aren't very reliable when it comes to rent.

I've found that it is also usually a better idea to rent to Section 8-ers that have to pay at least some portion of the rent

In reply to Kools
9/21/10
Kools:

I've found that it is also usually a better idea to rent to Section 8-ers that have to pay at least some portion of the rent

Very true, but I would still rather get 400/month from uncle sam and only have to worry about 100/month or less from (insert offensive term).

If I had asked people what they wanted, they would have said faster horses - Henry Ford

In reply to nutsaboutWS
9/21/10
nutsaboutWS:

20mm+ is what I consider loaded, in total net worth. I mean obviously 50, 200mm is strait baller, but If I had 20mm I would consider myself rich. Although my goal is 100

Ahh, sounds like you're betting that a loaf of bread is going to cost $1 million along with Eddie.

Btw, it's super rich bracket or bust. Anything short of that and I would never be able to lead my favorite team (Paris-Saint-Germain) to 3 straight Champions Leagues, Ajax-style.

And sounds like you're betting taxes on the middle class will put folks in a higher tax bracket than the rich right now. Either way, I think one of you is right. Perhaps both. :D

In reply to TNA
9/21/10
Anthony .:

If you prevent your lifestyle from scaling up you can live nicely off 100K a year. Realistically, expenditures increase along with salary.

I find 22K as a poverty figure to be interesting also. 2 full time earners making minimum wage will pull down over 30K gross.

You know why I don't care about poverty stats? Because it is their fault. Hear me out. You have no education and no skills, those are the people who work forever on minimum wage. Then they start pumping out kids even though they have no plan on how to pay for them. Now they put on the sad face and expect me and you to subsidize them.

No one stays on minimum wage if they work hard. You know why people are paid so little? Because they blow off work, call in sick all the time, quit in a moments notice, fuck around, etc. Go to any retail store, the ones that all pay minimum wage, and find the manager and ask them what kind of turnover the store has. You will always find well over 100% if not grossly more. If anyone of us got a job at McDonalds or a gas station we would be running that place in 6 months because 1) we all know how to work like slaves 2) we value money 3) we don't want to be losers. Granted, you are not going to be buying models & bottles, but you will be making 30-35K with benefits.

Point it, minimum wage is good. It is a base line for you to build off of. Too many people have bad attitudes or poor work ethic and stay at that level. I say fuck them.

Whenever I go to NJ I get gasoline. Always have an Indian guy pump my gas. The guy is usually in uniform, nice, efficient, does the job perfectly. Suppose Indian people didn't exist. You know what, you would have a high school drop out doing the job, fucking it up, giving people attitude and quiting whenever he got hung over. Lesson? People in this country have no work ethic and people in other countries where people are REALLY poor come here and make the best of things.

Can we start up a Soylent Green factory so these losers have an actual purpose??

As always, Anthony brings a great perspective to the conversation.

I always tell people that minimum wage jobs weren't created/aren't intended for a single mother with multiple kids. They are intended for high school and college kids trying to earn some spending money and as supplemental income to full time workers and retirees.

The larger issue is the lack of responsibility people are willing to take for themselves (and family) and the outright willingness of our government to support their irresponsible decisions. At this point there is NO easy fix and there may not be a fix at all, but at some point we need to triage this wound. And that comment is not made to start any sort of political debate, but to point out the nature of most people...which is to get what you can for free. 'Why buy the cow if you get the milk for free?' comes to mind. Why work if someone is going to pay your rent, provide you food and put credit on your EBT card?

It seems absurd that the government would try to put a concrete title on something that has so many variables...cost of living being the one with the largest impact. It also irritates me to hear someone say to someone else that "your kids don't have to go to a private school, so you actually have more money then you claim...so give it to someone else". What utter bullshit. You also don't need to eat at McDonald's or microwave that TV dinner either because you could just eat Ramen Noodles, at $0.10 each, and give that savings to someone who has less. Where does it stop?

This poverty line figure is also a joke. Even the poor people I've known or met still have TV and cell phones...which are certainly luxuries in my book.

At any rate, Anthony hit the nail on the head. The folks that work minimum wage jobs, outside of the ones I listed above, tend to be untrustworthy, uneducated and completely unreliable. I worked in retail stores while I was in school (not in a retail capacity, but I interacted with them daily) and the ones that were reliable were either elderly, and supplementing their SS payments, or they were parents (typically) that were working full time during the week and trying to get some extra cash on the side. The rest were people who barely graduated from high school (or didn't) and who, in an abnormal fit of responsibility, might request a day off knowing they would be too hungover in the morning to come in...yet will still go out and drink heavily despite having their request denied. Just plain ole' irresponsibility and selfishness.

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

9/21/10

Hahaha at Soylent Green, shit would be unhealthy though.

On the luck topic way back up, it's interesting how people only ever factor in luck when it comes to income, really. Some people are just smarter than others, yet no one really bitches and whines when one kid gets a 4.0 and the other one doesn't quite make the Ivy League cut. At least people seem to take some semblance of responsibility for their work ethic in that regard as well. Some people are stupid, some people are smart, some people are idiots but work their asses off the make the grade, etc, but if you ever mentioned anything like "grade redistribution" people would throw a hissy fit.
Granted, GPA doesn't determine whether or not you get to eat dinner tonight, but still....

"I don't know how else to put this, but... we're over." "Okay. I disagree."

9/21/10

Anthony,

While I agree with your conclusions on a lot of S-8 occupied units, I disagree a bit on the cause. Simply put, no incentive to take care of your building. Partly due to leading and lagging effects, I've talked to a few apartment landlords and renters in smaller cities in TX and they have overall refused to rent to anyone with an S-8 voucher. Part of it seems to be ideological (dun wan no guvmint benafits in mah home), some of it does seem to be influenced by racism, the lion's share (which certainly feeds off of the first two) comes down to depreciating property value. I'll leave anyone to draw conclusions from my anecdote.

"Dude, not trying to be a dick here, but your shop looks like a frontrunner for the cover of Better Boilerrooms & Chophouses or Bucketshop Quarterly."

-Uncle Eddie

In reply to Edmundo Braverman
9/21/10
Edmundo Braverman:

It's clearly not an ideal budget, but it can be done. I can buy a 10-kilo (22 lb) sack of potatoes at the fresh market for 4,95EU, a frozen pizza big enough and with enough toppings to feed my two boys for 3EU, kilos of green beans, tomatoes, mushrooms, and most other fruits and vegetables for 3-5EU a kilo.

Do you still live in Paris? I've never seen prices like that anywhere around here, then again, I have yet to venture into what I hear is the disturbingly low-priced store that is Leaderprice.

"I don't know how else to put this, but... we're over." "Okay. I disagree."

9/21/10

FinancePun, on a small scale I would definitely agree. The only person I know with S8 exposure owns 7 apartment buildings so the benefits out weigh the costs. Point well taken though.

If I had asked people what they wanted, they would have said faster horses - Henry Ford

9/21/10

All I am saying is that low income people tend to be low income for a reason and more times than not they had a part in it. I know it is dick to say, but I am happy being "that guy". If you have no education or skill and you have no money it is grossly irresponsible to have children, an entirely preventable occurrence. Minimum wage is simply a starting point, but you can never move up unless you work hard. I am not surprised that there is a relationship between low education and lack of work ethic since they are both one in the same. With that said, I find the lack of survival desire remarkably shocking.

Show up to work, do a great job, ask for more responsibility and you will do fine. Yes, there is an element of luck, but you do not need any luck to graduate college or move up within a job. All you need is determination and patience. Anyone that pisses and moans about poor schools or bad families only needs to look back at the people who survived wars, depressions and immigrations and see that human being can preserver under adversity.

People who are making 250K a year probably did not get there by accident. Even if you had rich parents who gave you the best of everything, you still need to show up, do the work and perform. Unless you are Soros kids or have Hilton as your last name you cannot fuck up non stop and have your parents get you out of jail. Making 400K a year isn't going to buy your way into Harvard. These kids still work hard and are constantly pushed. I find it shocking that the answer is always to tax the people who work hard or who produce to substitute people who do nothing.

Let them eat cake.

In reply to liberty
9/21/10
Liberty M:
Edmundo Braverman:

It's clearly not an ideal budget, but it can be done. I can buy a 10-kilo (22 lb) sack of potatoes at the fresh market for 4,95EU, a frozen pizza big enough and with enough toppings to feed my two boys for 3EU, kilos of green beans, tomatoes, mushrooms, and most other fruits and vegetables for 3-5EU a kilo.

Do you still live in Paris? I've never seen prices like that anywhere around here, then again, I have yet to venture into what I hear is the disturbingly low-priced store that is Leaderprice.

LOL. Yes, I still live in Paris. I've never been in the LeaderPrice store, but I do buy LeaderPrice stuff from time to time because when it comes to things like hot dogs and salami, my kids don't know any difference.

My secret to low prices is to show up at the fresh markets early in the morning where the chefs stock up for their daily menus. All the freshest produce at rock bottom prices. The prices are actually a side benefit, really, because I'd be doing the same thing if it were twice as expensive. The food is that fresh.

How on earth did this thread go from wealth thresholds to bargain grocery shopping?

9/21/10

Edmundo I have a question for you: What's the salary per year in euros to be considered rich in France especially when you live in Paris? Thanks.

In reply to TNA
9/21/10
Anthony .:

...All you need is determination and patience. Anyone that pisses and moans about poor schools or bad families only needs to look back at the people who survived wars, depressions and immigrations and see that human being can preserver under adversity...

That is my problem with all of these excuses about old text books and bad teachers. There are far too many people who have achieved something from virtually nothing. There are far too many people who can to this country without money in their pocket or a place to rest their head and somehow they made it. Often these people didn't speak any language other than their native tongue yet managed to be successful while working with people they couldn't even communicate with.

If you could point a finger at a situation like the projects or trailer parks and say, "Look how disadvantaged these people are, they don't have access to any sort of education and they are unable to be successful in life because of the utter lack of opportunities" and somehow prove that to be true...then maybe I would develop some sympathy for the situation. However, the fact remains that people do make it out (regardless of how small the number may, or may not, be) so it blows a huge hole in that "argument" and actually highlights that something else is contributing to the issue...not the lack of knowledge/awareness of, or access to, meaningful opportunities. And my opinions are not based on some disillusioned sense of reality...the fact is, I have seen first hand and have heard from people in situations like the ones listed above who attest that the issues have more to do with a lack of morality and with misguided perceptions than it does with disadvantageous situations or pure inability.

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

9/21/10

I don't find it shocking that people who make more money- and have better ability to pay taxes- are asked to step up to the plate before other groups.

Yes, some of the federal government's spending makes my skin crawl. And I'm not certain all of this welfare spending is necessarily a good thing when I am hearing reports of people saying they get more money from the government if they have another baby and how they want to have as many kids as DCFS will let them have.

But, I am better able to afford a tax increase than my cousin who works 60 hours/week as a waitress. If there's no way to cut unnecessary spending that doesn't make us a better country and we need more tax revenue to fund the government's basic services, it's easier for me to bear more of the burden- as a proportion of my income- than it is for her.

And I think the Clinton tax schedule isn't unreasonable in how it distributes the tax burden- the only thing I'd like to see changed from Obama's tax bill is a small increase on the lower tax brackets from the Bush tax schedule- just to show that we're all in the same boat and everyone is going to suffer until we get spending and the deficit under control.

In reply to FabulousFab
9/21/10
FabulousFab:

Edmundo I have a question for you: What's the salary per year in euros to be considered rich in France especially when you live in Paris? Thanks.

Whew, that's really hard to say, buddy. Things are really different here. Ostentatious wealth is heavily looked down upon, so you don't see the traditional markers of high income that you do in the States. I live in the 16th which is all old money. I would bet that incomes in my neighborhood wouldn't be too impressive, even though it's one of the wealthiest in Paris. When you're talking about 150-200 years of generational wealth, income is really more of a side issue.

Just to try to put a couple numbers on it, doctors here make about 50,000EU a year. So if you're making 150,000EU, you're way ahead of the game. Because the taxation is so oppressive, the bulk of everyone's income has to be kept under the radar. The only ones you see flashing cash are the foreigners.

In reply to Edmundo Braverman
9/21/10
Edmundo Braverman:
Liberty M:
Edmundo Braverman:

It's clearly not an ideal budget, but it can be done. I can buy a 10-kilo (22 lb) sack of potatoes at the fresh market for 4,95EU, a frozen pizza big enough and with enough toppings to feed my two boys for 3EU, kilos of green beans, tomatoes, mushrooms, and most other fruits and vegetables for 3-5EU a kilo.

Do you still live in Paris? I've never seen prices like that anywhere around here, then again, I have yet to venture into what I hear is the disturbingly low-priced store that is Leaderprice.

LOL. Yes, I still live in Paris. I've never been in the LeaderPrice store, but I do buy LeaderPrice stuff from time to time because when it comes to things like hot dogs and salami, my kids don't know any difference.

My secret to low prices is to show up at the fresh markets early in the morning where the chefs stock up for their daily menus. All the freshest produce at rock bottom prices. The prices are actually a side benefit, really, because I'd be doing the same thing if it were twice as expensive. The food is that fresh.

How on earth did this thread go from wealth thresholds to bargain grocery shopping?

Sorry haha, I'm a girl, I guess when I have to leave the kitchen I find it necessary to relate back to it.
Thanks for the tip, I guess I'll be getting my produce on if I actually find one of them in the 16th.

*insert relevant comment about wealth thresholds*

"I don't know how else to put this, but... we're over." "Okay. I disagree."

9/21/10

French people who live in the 16th usually inherited their places like Edmundo says. The top decile of incomes make 50k euros which is flabbergasting. 95th percentile is around 75k euros. Of course Paris is very different from the rest of the country and I'm sure the number are significantly higher when considering the Paris area alone. Still, it's pretty surprising considering how expensive life there is.

If you think LeaderPrice is bad, check out ED. If you think ED is bad, go to Aldi or Lidl. The hard discount market knows no bottom. Check Tati if you want the clothing equivalent.

9/21/10

Just bought the book by Dennis, love it.

And wealth, along with expectations for standard of living, is absolutely relative.

http://ayainsight.co/ Curating the best advice and making it actionable.

9/21/10

I like the 20-30 million cutoff. Now my question is how much in net worth can you reasonably expect to accrue after a 25-30 year career in finance (say S&T). Assume you make it to the MD level for 10-15 years but never C-Level. Obviously quite a bit of variability but lets toss some numbers around. Maybe some of the industry veterans will have a better feel on how their net worth compares to their annual incomes over the years because I have no feel as an analyst!

9/21/10

For the purposes of the following analysis I will use the following basic things to characterize the avg. $250K income household: 4 family members (parents + 2 non-college aged kids) that lives in a decent size city (not Bumfuck, AL but not NYC or SF, rather a place like Dallas or Seattle or whatever), own a very nice house, 2 "luxury" vehicles (for this purpose I dont mean ultra-luxury like ferraris,etc but rather average model BMW, Audi, etc.), both kids attend private schools (K-12), obviously need to spend on food and clothing (shop at nice department stores and occasionally luxury boutiques), take 1 family vacations per year (obviously not yachting in st. tropez but rather things like renting a ski cabin in like Aspen/Vail for a week), healthcare costs (doctor visits, medicine, dental, etc.)

Given the above lets run some numbers to see how much it would cost to live this, we'll call upper middle class lifestyle, that is by no means "rich."

+ Household Annual Gross Income: $250K
- Annual Taxes (Assume 35%): ($87.5K)
= Net Annual HH Income: $162.5K

- Annual Housing Costs (Mortgage on $800K home with 20% down, 5.2% interest, HOA fees, insurance, utilities, all net of tax shields): ($44K)
- Annual Vehicle Costs (assume they lease both vehicles; both being avg model, plus insurance, gas, etc): ($17K)
- School Tuition (assuming cost/year/child is ~$12K): ($24K)
- Food (lets assume $20/day avg per family member): ($29K)
- Clothing/Other (lets assume $3K per family member/year ): ($12K)
- Vacation (family vacation low assumption):($5K)
- Healthcare (assume avg of $100/month/family member no major illnesses but does include maybe orthodontic work, etc. with your typical 80/20 insurance plan): ($5K)

Total Living Costs: ($136K)

Net Balance that Goes to Savings/Year: $26.5K (effectively what you are saving for your kids college and your retirement)

Obviously some of these assumptions will vary per location and some may be a bit high or low or whatever but they are meant to be representative...from this I would argue that this would not constitute a "rich" household or lifestyle...but rather a nice, well-off, upper-middle class family/lifestyle...by no means are they rich.

This was just meant to put things into perspective that really $250K/year...although it sounds high honestly doesn't get you more than an upper-middle class lifestyle.

9/21/10

Just bumped into this--looks like $250,000 IS "super rich" by many-a-standard....
http://blogs.forbes.com/kashmirhill/2010/09/21/sup...

"I don't know how else to put this, but... we're over." "Okay. I disagree."

9/21/10

I like the 20-30 million cutoff. Now my question is how much in net worth can you reasonably expect to accrue after a 25-30 year career in finance (say S&T). Assume you make it to the MD level for 10-15 years but never C-Level. Obviously quite a bit of variability but lets toss some numbers around. Maybe some of the industry veterans will have a better feel on how their net worth compares to their annual incomes over the years because I have no feel as an analyst!

Everyone does it differently. I normally target 30% of my salary and all of my additional compensation for savings each year.

BTW, don't count on making MD. In fact, if I were a betting man, I'd put 80-90% odds that you won't get past VP. It's not you- you're probably a completely brilliant guy who graduated at the top of his class at a target school- it's just your competition.

9/21/10

While I understand the need for the government to raise revenue, I don't understand why we have to pick taxation schemes that disincentivize hard work and investment. This has never made sense to me, and it makes less sense as I begin to experience the disincentive myself.

What is so appalling to both sides of the political aisle about replacing taxes on income with taxes on consumption, i.e. a VAT on businesses and a consumption tax on individuals? This shift would, in my opinion, radically change the incentives in the tax system for the better. Instead of disincentivizing work, we would be effectively raising the price of consumer goods and incentivizing saving/investing.

In reply to SCLID
9/21/10
SCLID:

What is so appalling to both sides of the political aisle about replacing taxes on income with taxes on consumption, i.e. a VAT on businesses and a consumption tax on individuals? This shift would, in my opinion, radically change the incentives in the tax system for the better. Instead of disincentivizing work, we would be effectively raising the price of consumer goods and incentivizing saving/investing.

Oh, don't worry. That's coming too. But it's not an either/or thing. I predict the government will impose higher tax brackets and a VAT in the next 10 years (and maybe in as little as two years). They'll get us coming and going.

9/21/10

I don't know why the government just doesn't tax us all at 100% and get it done with. That is the end game. Sad thing is we could give all our money to the government and it still wont be enough.

Taxes should be going down, not up. I am against any increase in taxes, period.

9/21/10

One of my finance teachers ironically corrected me by saying "wealth redistribution" rather than taxes ;)

9/21/10

Cutting the federal budget by 40% (so basically less the federal income tax) would put it at the same level it was at in.... 1997. We weren't exactly living in the Stone Age then. Add the increased budget and there's absolutely no need for tax increases to additionally fund poorly managed and underperforming government programs and their earmarks.

"I don't know how else to put this, but... we're over." "Okay. I disagree."

In reply to Edmundo Braverman
9/21/10
Edmundo Braverman:
SCLID:

What is so appalling to both sides of the political aisle about replacing taxes on income with taxes on consumption, i.e. a VAT on businesses and a consumption tax on individuals? This shift would, in my opinion, radically change the incentives in the tax system for the better. Instead of disincentivizing work, we would be effectively raising the price of consumer goods and incentivizing saving/investing.

Oh, don't worry. That's coming too. But it's not an either/or thing. I predict the government will impose higher tax brackets and a VAT in the next 10 years (and maybe in as little as two years). They'll get us coming and going.

Completely agreed. I guess the larger issue is that the discussion over relative levels of taxation is always about "fairness" and never about incentives. Lowest common denominator I suppose...

9/21/10

Definition of Rich: Being able to be a player in the world. This 1 trillion is the lower limit, lol.

In reply to whartongrad08
9/21/10

It may sound like only an "upper middle class" existence, but it equals or surpasses 98% of American households. Hell, the hypothetical family SAVES more than a quarter of all households MAKE in a year. Maybe this is revealing my middle class upbringing, but expenses like private school tuition, ski vacations to Vail, $800k houses and BMWs are not budget items. They are luxuries. Luxuries typically enjoyed by the rich.

It has been said before, but it bears repeating: the median household income in this country is $44k. This hypothetical family makes six times the national median. Six. Think about how different your life would be if your income suddenly increased (or decreased) by a factor of six.

whartongrad08:

For the purposes of the following analysis I will use the following basic things to characterize the avg. $250K income household: 4 family members (parents + 2 non-college aged kids) that lives in a decent size city (not Bumfuck, AL but not NYC or SF, rather a place like Dallas or Seattle or whatever), own a very nice house, 2 "luxury" vehicles (for this purpose I dont mean ultra-luxury like ferraris,etc but rather average model BMW, Audi, etc.), both kids attend private schools (K-12), obviously need to spend on food and clothing (shop at nice department stores and occasionally luxury boutiques), take 1 family vacations per year (obviously not yachting in st. tropez but rather things like renting a ski cabin in like Aspen/Vail for a week), healthcare costs (doctor visits, medicine, dental, etc.)

Given the above lets run some numbers to see how much it would cost to live this, we'll call upper middle class lifestyle, that is by no means "rich."

+ Household Annual Gross Income: $250K
- Annual Taxes (Assume 35%): ($87.5K)
= Net Annual HH Income: $162.5K

- Annual Housing Costs (Mortgage on $800K home with 20% down, 5.2% interest, HOA fees, insurance, utilities, all net of tax shields): ($44K)
- Annual Vehicle Costs (assume they lease both vehicles; both being avg model, plus insurance, gas, etc): ($17K)
- School Tuition (assuming cost/year/child is ~$12K): ($24K)
- Food (lets assume $20/day avg per family member): ($29K)
- Clothing/Other (lets assume $3K per family member/year ): ($12K)
- Vacation (family vacation low assumption):($5K)
- Healthcare (assume avg of $100/month/family member no major illnesses but does include maybe orthodontic work, etc. with your typical 80/20 insurance plan): ($5K)

Total Living Costs: ($136K)

Net Balance that Goes to Savings/Year: $26.5K (effectively what you are saving for your kids college and your retirement)

Obviously some of these assumptions will vary per location and some may be a bit high or low or whatever but they are meant to be representative...from this I would argue that this would not constitute a "rich" household or lifestyle...but rather a nice, well-off, upper-middle class family/lifestyle...by no means are they rich.

This was just meant to put things into perspective that really $250K/year...although it sounds high honestly doesn't get you more than an upper-middle class lifestyle.

9/21/10

EngPhd - Totally agree that these are all luxury items but I think the point that I was trying to make was that most Americans think that $250K is so exhorbitantly high that people making that amount are flying around in private jets going from their mansion to their vacation home and yachting around st. tropez when in reality these people live nice upper-middle class lives. When you consider what they are paying for in taxes already then even increasing taxes marginally will have an impact on their quality of life. The point that Obama and others are trying to make is that taxing the "rich" ($250K+) will not really impact those folks and will be beneficial overall, when in reality it is a financial burden that does have an impact on these families' quality of life.

9/21/10

The government likes taxing people with no political power. You don't take the middle class because they are the unions, teachers, nurses, etc. All people with voting power. There are no lobby groups for upper middle class. Smokers have no lobbying groups, no one cares. The thing is they use income tax as a distraction while raising the taxes on everyday items. When you look at all the individual taxes used to pay for specific things you wonder what state and federal income taxes actually pay for.

History lesson for the young monkeys.

The Thruway. They told the people that tolls were only going to be on the road to pay for them and then they would be gone. Now they tell us it is for maintenance. Now all the extra money goes into a general fund and they keep upping the tolls on the road. The lesson? Once you allow the government into your pockets they are never taking their hands out.

In reply to TNA
9/21/10
Anthony .:

I don't know why the government just doesn't tax us all at 100% and get it done with. That is the end game. Sad thing is we could give all our money to the government and it still wont be enough.

Taxes should be going down, not up. I am against any increase in taxes, period.

Taxes have fluctuated a great deal over the past 97 years, but we've got some of the lowest income taxes in US history right now.

In 1980, taxes on the rich were double what they are now. Even with the expiration of the Bush tax cuts and even if taxes eventually end up where I think they need to be given the services our government provides (low 40s), taxes will still be well less than 2/3 what they were 35 years ago and less than what they were under Bush Sr.

I know we have this knee-jerk reaction when we see our money going to the federal government, but the fact is that a 39.6% tax rate- or even a 42% tax rate doesn't mean we've gone socialist. It just means we live in a country that needs keep your air and water clean, make sure you can drive to work, makes sure you don't starve if you get down on your luck through no fault of your own, and makes sure that grandma can take care of herself and doesn't need to live in the upstairs bedroom.

It's not a particularly burdensome government, but this system still has its costs- about 20-22% of the GDP. The way I see it, there's a continuum between socialist systems and laissez-faire capitalism. With socialist systems, nobody wants to work and people wind up going hungry. With laissez-faire capitalism in the extreme, we get people dumping so much pollution in our rivers and lakes that they catch fire (google Cuoyahoga River) and people starving in the street.

I think both situations are unacceptable. If we go back to Econ 101, we can actually think about this as a production possibilities curve. Since Reagan, we've shifted more and more towards deregulated, lower-overhead economies. The thing is that under Reagan and Bush, we borrowed so that we could move outside of the PPC to a point that wasn't sustainable- enjoying the benefits of both deregulation and government services.

Now Obama is trying to move us back onto the sustainable PPC. We're raising taxes and cuttting spending. IMHO, that's the responsible thing to do. It would be better if EVERYONE shared the pain of tax hikes, but the tax code is still a lot less progressive than it was 30 years ago.

9/21/10

Fed income tax is only the tip of the iceberg. There are countless taxes, fines, surcharges, fees, etc. I consider them all taxes.

You pay taxes when you buy your car

You pay a fee to get it inspected, registered, plates

You pay taxes on the fuel in the car

You pay tolls on the highway, you pay state and city (sometimes village/town) taxes

You pay cell phone taxes, fees for 911, sales tax, etc

Disposal fees, parking tickets, speeding tickets (all used to generate revenue for the city/state as opposed to anything positive)

Sales tax

State income

Federal Income

Property tax

Social Security

Disability

Capital Gains

Alcohol tax

Taxes on Cigs

on and on and on and on

Bull shit we are paying less

9/21/10

Most of the taxes you cited are state taxes, for the record. Some of them can be rolled into income tax. And states usually have dramatically lower income taxes.

At the end of the day, your federal government accounts for 22% of the GDP. This is significantly lower than it was between 1940 and 1980.

9/21/10

Why don't we truncate the federal government's purview?

The Defense Department loses 100 billion dollars per year: http://grassley.senate.gov/about/upload/Defense-09...
This does not count all the stupid programs that have no plans for being deployed. We still build fighter jets, nukes, aircraft carriers and whole bunch of shit that WILL not be used EVER.

Medicare fraud is as high as 180 billion dollars per year. http://grassley.senate.gov/about/upload/Defense-09...
Cut the fraud and make it more efficient

Our pointless, stupid war on drugs cost American 60 billion a year; not even counting the effect of excess imprisonment.
The Feds should stop the prohibition of drugs and allow the states to decide.

I am not cocky, I am confident, and when you tell me I am the best it is a compliment.
-Styles P

9/21/10

All I have to add to this thread is that 1) I agree with Felix's thresholds, and 2) I'd rather cut my right leg off than pay more than 50% taxes to the government. Everyone in this country is on an equal enough footing, and it is the choices they make that lands them in the position they are. Whether it's having kids with no plans on how you are going to school them or provide for them, as Anthony pointed out, or slacking on the job/no work ethnic.

9/21/10
In reply to IlliniProgrammer
9/22/10
IlliniProgrammer:

Most of the taxes you cited are state taxes, for the record. Some of them can be rolled into income tax. And states usually have dramatically lower income taxes.

At the end of the day, your federal government accounts for 22% of the GDP. This is significantly lower than it was between 1940 and 1980.

Completely agree. I think the federal taxes are just the tip. With that being said, there is a circular relationship with the fed and states.States are always getting money from the fed. My big issue is there is no saving, no building of surplus when times are good.

I am a broken record, but I really believe it. In good times states and the fed spend more. In bad times they just borrow. There is no flexibility in spending.

I am sorry, but government is not in place to milk us dry like slaves. Every time I turn around some government entity has their hand in our pockets. I challenge anyone to tell me we are getting a good deal.

The lottery was supposed to be used to help pay for schools. Now it goes into a general fund. Another example of total bullshit.

In reply to TNA
9/22/10
Anthony .:

Fed income tax is only the tip of the iceberg. There are countless taxes, fines, surcharges, fees, etc. I consider them all taxes.

You pay taxes when you buy your car

You pay a fee to get it inspected, registered, plates

You pay taxes on the fuel in the car

You pay tolls on the highway, you pay state and city (sometimes village/town) taxes

You pay cell phone taxes, fees for 911, sales tax, etc

Disposal fees, parking tickets, speeding tickets (all used to generate revenue for the city/state as opposed to anything positive)

Sales tax

State income

Federal Income

Property tax

Social Security

Disability

Capital Gains

Alcohol tax

Taxes on Cigs

on and on and on and on

Bull shit we are paying less

Don't forget the most mind numbing of them all...estate tax.

Say what? I have to cut the government a check because I'm dead?

...I guess it makes up for the taxes I will no longer be paying.

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 IlliniProgrammer
9/22/10
IlliniProgrammer:

...We're raising taxes and cuttting spending. IMHO, that's the responsible thing to do. It would be better if EVERYONE shared the pain of tax hikes, but the tax code is still a lot less progressive than it was 30 years ago.

That's the problem right? Not everyone is sharing the burden of paying the taxes yet those folks tend to partake in the use of government provided/subsidized services more than the wage earning, income tax paying folks. What is fair and just is living with what you can provide for yourself...not reaching into someone's pocket to pay for another person's lack of effort/success. How some people justify taking from someone who has earned something and giving it to someone who hasn't as "fair" is beyond my comprehension.

I think a VAT tax is a reasonable solution (although not necessarily simple), but people will complain that it is regressive. I just think about all of the income that goes untaxed because they come in the form of cash tips, getting paid under the table, not having a Social Security number, etc. If we tax consumption everybody suffers to the extent they purchase goods, which includes drug dealers, illegal immigrant workers and those that get paid under the table.

Also, I must have missed some of the spending reductions you mentioned.

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 New Yorker
9/22/10
New Yorker:

All I have to add to this thread is that 1) I agree with Felix's thresholds, and 2) I'd rather cut my right leg off than pay more than 50% taxes to the government. Everyone in this country is on an equal enough footing, and it is the choices they make that lands them in the position they are. Whether it's having kids with no plans on how you are going to school them or provide for them, as Anthony pointed out, or slacking on the job/no work ethnic.

+1 on this, and i disagree with the first poster that 500k in London is f-you money, with all the Arabs and Russians making it their playground that 500k might be lacking in the f-you department.

People like Coldplay and voted for the Nazis, you can't trust people Jeremy

10/7/10

OP: did you actually read the book? Nowhere in it does he say "don't try because you won't get rich."

In reply to LikeToKnow
7/14/12
7/14/12

People who earn 250k/year and are "struggling" have a spending problem, not an income problem. No one needs a $1mil house, pay 40k for private k-12 school, and drive a 7 series.

In the grand scheme of things, if you live in America, have a salaried job and positive equity on your home, you are extremely rich. There are billions of people who probably would have a hard time understanding how much money 250k is, when they survive on a few dollars per day.

That said, the "richer" you get, the "richer" your friends/acquaintances probably get, making "rich" a comparison of the people you associate with. Yes, I would love $1 billion, but I probably would not know how to spend it in my lifetime.

My WSO Blog

"Unbelievably Believable" -- RG3

7/14/12

You guys need to go watch secret millionaires and see how much a check of $10K mean to some people.

if i am comfortably making 100k annually, i really believe that i am well off. I would obvious like to multiply it but i wont cry about it. in all seriousness though, if you're raking in 250K a year, post tax=160K. I'm sure all of your expenses could fit within a 80-100K range.

In reply to 21 Lives
7/17/12
21 Lives:

People who earn 250k/year and are "struggling" have a spending problem, not an income problem. No one needs a $1mil house, pay 40k for private k-12 school, and drive a 7 series. .

u act like a $1m house is nice nowadays...

In reply to TNA
7/17/12
TNA:

I find 22K as a poverty figure to be interesting also. 2 full time earners making minimum wage will pull down over 30K gross.

You know why I don't care about poverty stats? Because it is their fault. Hear me out. You have no education and no skills, those are the people who work forever on minimum wage. Then they start pumping out kids even though they have no plan on how to pay for them. Now they put on the sad face and expect me and you to subsidize them.

No one stays on minimum wage if they work hard. You know why people are paid so little? Because they blow off work, call in sick all the time, quit in a moments notice, fuck around, etc. Go to any retail store, the ones that all pay minimum wage, and find the manager and ask them what kind of turnover the store has. You will always find well over 100% if not grossly more. If anyone of us got a job at McDonalds or a gas station we would be running that place in 6 months because 1) we all know how to work like slaves 2) we value money 3) we don't want to be losers. Granted, you are not going to be buying models & bottles, but you will be making 30-35K with benefits.

Point it, minimum wage is good. It is a base line for you to build off of. Too many people have bad attitudes or poor work ethic and stay at that level. I say fuck them.

I think you are right on point here. I will admit that I grew up in poverty as a first generation immigrant. My parents made less than $2k a month combined during the 90s. We are a family of four living in San Francisco. My parents aren't highly educated because of their circumstances growing up in a communist country. The things that differentiated us from most welfare taking poverty mofos are:

- my parents are hard working. Mom worked 12 hour days at a garment factory earning less than minimum wage because they only pay a flat fee on each completed garment
- mom was good at budgeting and careful spending
- dad works at least 6 days a week in restaurants holding various positions
- I remember my parents didn't take any vacations for the first 10 years in the US

Through hard work and careful planning was how they got out of poverty. I truly admire their abilities and I have absolutely no pity to anyone that was born in the US living in poverty unless they are disabled.

Fuck, writing this post brought tears to me. I am going to call my parents to say what's up.

11/26/12

Rich to me is any reasonable income that is not based on the "time for money" paradigm. $1.5million cash and $100K per year would be rich if it was debt free and came without having to trade 50 hours per week for it. On the other hand, a $400K per year CEO job that costs me 60 hours per week of my life is the opposite of rich.

1/18/14

Edmundo Braverman:

Don't try to get rich because you won't make it
You'll ruin your life in the attempt

Probably the 2 most important lines ever needed to be heard on this site

1/18/14

IMO it always depends to whom you are comparing with.

If you are comparing with Bill Gates: 250k is nothing.
If you are comparing with the bottom 10% of the US, or even the mean: 250k is a lot of money.

We can also think at what you can buy with 250k/year. Since I am not from the US, I will let you argue this.

In addition, I think it also depends on your lifestyle. TV person's lifestyle with Lamborghinis and 10 mil. penthouse apartments is kind'of inaccessible.

1/18/14

Both mentally and physically demoralized after reading this post...

1/19/14

Its threads and posts like some of the above that make this site (and by proxy, in some people's view ,the financial services industry) seem out of touch with general society. Its actually shocking.

1/20/14

it depends on your location and your lifestyle. A $1 million house is excessive for most if you are living in texas but in new york city, that buys you a closet.. If you live in a good school district, private school is a luxury.. there are various ways to cut your costs down.. things like a brand new bmw arent a necessity.. You could always buy used.. after all, it is a depreciating asset. Rich is all relative to your location and lifestyle.. $250k definitely isnt hurting for cash..

1/20/14

Its threads and posts like some of the above that make this site (and by proxy, in some people's view ,the financial services industry) seem out of touch with general society. Its actually shocking.

This thread was started in a year that a bunch of Tea Party congressmen took over the House of Representatives on voters who were fed up with federal spending. The last post to discuss politics was two years ago.

Finance isn't out of touch with reality; finance 4 years ago was out of touch with 2014 reality.

Look, if someone from 1989 showed up today, he'd be running around claiming Christie Allie was a smokeshow, that Democrats and Republicans were both reasonable folks who were great at working together, and that we had a fair tax code which had just been reformed 3 years prior.

In reply to IlliniProgrammer
1/21/14

Right, because people complaining about making 250k were in touch with reality back in 2010.

1/21/14

The enormous living cost difference that the elector is completely oblivious to when making his income/cost of living comparisons is the key to the morally disgusting tactic of making taxes increasingly "progressive".

This was a good read, I thought: http://www.quora.com/Silicon-Valley/Whats-the-dark-side-of-Silicon-Valley/answer/Chris-Raymond-4 (or how you could make $400k/year in Silicon Valley and still feel poor)

1/21/14

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