Wednesday, July 28, 2010

Why Are People Who Make $200,000 a Year Grouped in With the Millionaires?

And yet another article on one of my favorite topics, tax cuts for the “wealthy.” Here is this author’s suggestion:
Congress should maintain the cuts for individuals earning $200,000 or less, and families earning $250,000 or less. And it should restore the Clinton-era tax rates to the very rich.
I’m still confused as to how an individual making $200,000 a year or a family making $250,000 can be considered the “very rich.” This is absurd. Yet every article I read about this topic refers exclusively to the multi-millionaires, and all of their tax breaks and excesses. Let me tell you, an individual making $200,000 does not have the benefit of all of these tax breaks and excesses. And somehow, in every article I read, no one makes the distinction between the very rich and the pretty well off who make up the starting point of this tax bracket. No one particularly stops to think that most people making $200,000 consider themselves to be part of the middle class, as opposed to the very wealthy.

I understand that $200,000 may fall into the “wealthiest 2%” as the tax brackets are defined. Fine. But don’t act like these are the people who are out “stealing from the middle class” and stashing their money into bank accounts in the Cayman Islands. In a city like New York, San Francisco, or even Chicago, this income does not bring one anywhere close to living the life of luxury with a closet full of Chanel or a yacht, particularly if you are also investing for retirement, paying back student loans, paying a mortgage and ridiculous property taxes, and saving money for emergencies.

He also says:

When it comes to creating jobs, the last people who need more money in their hands are the wealthiest 2 percent of Americans.
While this may be true for someone who makes $2 million a year or more, this isn’t true for me. I could definitely use more money in my hands. Why shouldn’t I? I work for it, don’t I? I haven’t been laying on my ass since I was 22 years old and a fresh faced young college graduate. No, I’ve been working a full time job. Who are the people making $200,000 a year? They are lawyers, doctors, accountants, and other professions which either require a lot of school (and student loans) or a lot of experience on the job. They aren’t the lazy; they aren’t people living off a trust fund. They get up and go to work every day in the same way that someone who makes $30,000 a year does. Yet, somehow everyone seems to believe that they deserve to be punished along with anyone who has managed to demand an income in the millions.

And apparently I’m doing something wrong here:

Turns out that when they were given all of those tax cuts, the top two percent of the population used them to speculate in exotic derivatives, to drive up the prices of high-end real estate, pay exorbitant prices to the designers of $4,000 blouses and $2,000 shoes.
Right. That’s what I was out doing. To be sure, I have a few Louis Vuitton purses in my closet, but those were each one time a year expenses to reward myself for a year of hard work. (Merry Christmas to me.) The majority of the money I make has gone to rent or mortgage, savings (retirement and otherwise), life insurance, and disability insurance. I buy clothes, but believe me, I’m not out blowing $4,000 on a blouse or $2,000 on a pair of shoes. I wish. I think the most I’ve ever spent on a pair of shoes is $300 or $400, and that is a rarity. You know why some people are “rich”? Because they aren’t out blowing every dollar they earn on things they don’t need.

In fact, throughout the article, he refers to McCain’s seven homes, and Wall Street types with private jets. This strikes me as nothing more than an effort to rile people up. Let me tell you something: individuals who make $200,000 a year do not have seven homes or private jets. They don’t live much differently from “the middle class” at all.

He then (of course) discusses the inheritance tax:

By definition the sons and daughters of multi-millionares -- the Paris Hiltons of the world -- are the only people who would benefit by eliminating or cutting the inheritance tax since it only affects muti-millionaires.

It is just plain wrong for our government cut back on food programs for children to give Paris Hilton more money to buy another pair of $1,300 Manolo Blahnik shoes.
Again, let’s be clear. There is a huge, colossal difference between the Paris Hiltons of the world and someone who has managed to accumulate $3 or $4 million over the course of a lifetime to leave to their children. Yet these folks at the lower end get thrown in with people who die and leave hundreds of millions of dollars. Am I the only one who sees a difference? If my parents work hard all of their lives and manage to save and accumulate an estate worth a few million, why should that be exorbitantly taxed when it has already been taxed when they earned it?

In short, the mass generalizations applied to the arguments in favor of letting the tax cuts expire just kill me. Let’s call a spade a spade. $200,000 earners are not the “very rich.” Someone has to be at the lower end of the group who is lucky enough to get their taxes raised – and believe me, those people are not the evil doers they are made out to be in the media. They are very likely the savers who will also be lucky enough to have their estates taxed when they die.

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