$250k is wealthy? How about a "grandparent" tax!

The nation is in turmoil, guys. We're poor. In an effort to resolve this, a tax policy on families making over $250,000 a year is being hotly debated. Some say that amount of money is CRAZY PANTS and anyone making that should set sail on their fancy jet from their third luxury home straight back to reality, where a country of starving children needs pennies for grain. Others, however, argue $250,000 isn't much. To urban homeowners who already face increased federal and state tax on top of municipal tax, higher sales tax and childcare costs, that number is whittled to middle class in a heartbeat. I'm in the second camp. I'm not saying $250,000 a year is poor by any stretch (not that I make that per se*, just argument's sake), but the reality is that income to a city family lacking other support can translate to a modest home, one car and road trip style vacations. It's certainly not jetting off to France or collecting pure bred horses that dance in silly costumes.

A more accurate picture of wealth lies in nuance.

It's a little narrow that everything from taxes to sliding scale tuition is judged on income when so many factors contribute to wealth, such as family support, inheritance, circumstance and location. In the case of my husband and me we don't have any support from our kids' grandparents. We sent ourselves to college, come up with our own down payments and have to hire childcare for any moment we are away. Are we hurting? Should you cry for us or sign us up for Welfare when we are fortunate enough to have a roof over our heads and medical insurance? Of course not. (Also, try to hold back your jealousy over my Target wardrobe.)

My point isn't to garner sympathy for any particular income bracket. We lean liberal and support Obamacare. We do agree with taxing the wealthy to make a better life for everyone. I'm just saying an arbitrary number is a narrow view of what wealth is. What if they change it to $150,000? What if they pick $85,000? Do your feelings change? I can think of plenty of people who would kill for an $80k-a-year job and others who think any household with two people making $50k each are swimming in dough ripe for taxing.

Unless you have extended family support on top of a high income, $250,000 isn't jet-set luxurious, especially if one is saving for retirement and college while paying off old student loans. Add caring for an ill family member into the mix or other hardships and that "wealthy" paycheck is gone like any other. I have known doctors with roommates. Yeah, a doctor salary is sweet cheeks . . . after you pay off a $200,000 student loan.

So what is the right number? I don't believe there is a right number to determine who is wealthy. I know people who make far less than $250,000, but whose parents paid for their education, gave them down payments for their first homes and care for their children while they work. That translates to a lifestyle encroaching on the "magic number" territory. What about a Loving Family Tax for people who live at home until they can save up a downpayment on a house? I'm kidding, but I will remind the room I was on my ass at 17 so we don't all start on the same foot.

It's all relative anyway. $250,000 salary jobs are usually only available in major cities where important work is being done. If you follow the rule of thumb that your house should cost twice your annual income, guess what? There isn't a single home for sale in Lincoln Park, the family-friendliest proximal neighborhood to downtown Chicago, for under $500,000. Not one.

Is the solution for everyone to move out of the city and into the 'burbs? Oh, because there's no problem unloading a house these days. Sarcasm! Besides, a move to the suburbs requires a hefty commute, usually necessitates a second vehicle, and costs an already time-taxed breadwinner even more precious moments from his or her family.

Also to consider are people who live in smaller cities earning salaries commensurate with the cost of living in their areas, but who would garner a $250,000 salary in a major city. Should people earning $150,000 in Indianapolis be subject to the new tax? What about those who make $40,000 in Allen, South Dakota?

I think a more accurate picture of wealth is looking at net worth, family size, zip code and extenuating circumstances. Of course that would mean considering nuance and it's much easier to judge people on their income. Quarter mil! Everybody scream!

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*My annual income would buy a year's supply of crackers

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  • I agree, cost of living in your city really makes a difference. We would be considered middle class judged on what we make, but we are a one car family, and are having a really hard to time scraping the money together for a downpayment on a house (we currently rent). If my mother in law didn't watch my daughter for free while I worked, I'd have to stay home. I could never afford to pay for daycare on what I make.

  • In reply to Erin:

    Agreed. We're trying to sell our house right now. (It goes on the market Monday!) We bought in 2006 at the height of the boom, so it will be a squeeze getting enough out of it so scrounge a downpayment on something in a better school district. I don't need a mansion or a wine cellar or even a big yard.

    When we looked at the numbers, we considered me going back to work full time, but I could never afford it! I'd have to make at least $60k for it to make any sense and hello, I haven't been employed full time in six years. I'm sure a job like that would just drop out of the sky. So even at a "high" income level, factors like the market value of your house and present circumstances make all the difference.

    I'm to complaining, I know lots of people are truly suffering and I'm very thankful for what I have, it's just not "wealthy" by a long shot.

  • Hi Jenna, I'm curious. Are you leaving CPS altogether or are you trying to get into a better Chicago Public School?

  • In reply to Greg:

    Oh man. This is tough to say. Our local CPS school is great, but there are issues and it seems like you have to be a genius to navigate the system, so we're hoping to get into a better public school district on the north shore. So . . . not CPS.

    We suck, right? Trust me, it hurts me to say that. I wanted so badly to fight for this community. I put in a lot of hours here between the park effort and the play group I teach. But I'm afraid if I move to a different neighborhood in the city I'd be jumping from one frying pan into another.

    Thanks for asking!

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    250K is not rich. Especially considering that many are living under one roof to save money during these difficult economic times. If you do not have 7 or more figures in your bank account you are no longer considered middle class. You are Poor. Those earning 250K or more per year should be taxed while those earning 250K (individual and combined household) a year should not. Yes the poor are the majority. Yet the few are the most richest and hoarding monies instead of putting it back in the system to circulate for use, not saving. Take the money from the wealthy please. I wish to add that I personally consider money to be an illusion and a form of control. If money did not exist that would be fine by me. Or ancestors and indigenous family existed without money. Either spread the wealth or get rid of it to make it more fair.
    If we all woke up one day and decided not to go to work and not to use money any longer, I would be fine with this also.
    Blessings,
    Sarah :0)

  • In reply to Sarah Blogs:

    Interesting perspective, Sarah! Thanks for responding!

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    Thank you Jenna for sharing your article. Lovely Piece <3
    Blessings to you,
    Sarah :0)

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    While I agree with you that 250K is not rich, this is what happens when you have a president that engages in class warfare and groups of politicians that use the term millionaires loosely while knowingly meaning families earning 250K.

    The problem is, even if you took ALL of the income of the "wealthy" - the top 1% - each year, there would not be enough to cover the spending our government currently does and wants to continue with. It is the same with the Bush / Obama tax cuts (Obama extended them, so he owns them now too). If they ended them for "the rich", the government MAY take in an additional $800B/year, while if they ended them for EVERYONE, that number goes up to $4000B/year.

    Our "progressive" federal income tax system works only when everyone pays something. We now have a situation where almost 50% pay ZERO and some even get more back than is withheld from paychecks. This half has almost no skin in the game, so what do they care if federal income taxes are raised.

    Remember, "The government cannot give to anybody anything that the government does not first take from somebody else. "

  • In reply to Harlon Katz:

    Thank you so much for your informed opinion. Maybe there's not enough money to go around. Maybe I should be taxed more. I don't really have the answers. It's just frustrating that a group that is already being taxed nearly 50% might be taxed *more* when that group doesn't fit the loopholes that keep millionaires united with their money.

    I know owning a home and affording to have a mother who stays home with small children are blessings beyond belief in this economy. I just wanted to point out that it's not a "jet set" lifestyle. We're trying to save for retirement and put aside something for the kids to go to school and if this tax thing happens, well, I guess we can't afford to . . . be responsible with the money we've earned?

  • My husband pays more than 250,000 a year in taxes. He is able to take care of me.

    Frankly, a woman shouldn't marry a man who can't easily take care of her. No excuses that "taxes are too high" and this and that. And my response to any suggestion from a man to "go back to work" would be "forget that noise". I want to enjoy my life, not sit around some office.

  • In reply to Lydia29:

    Judging from your email address I have a strong suspicion you are not who you say you are. Knowing my regular commenters, this is just troll bait. I'll allow this to be visible for now. And if it's legit? Wow.

  • What's wrong with my e-mail address? I don't want to get spammed.

    And frankly, I see envy quite a bit at my position in life and the nice things that I have. That doesn't sit well with women who have much poorer husbands - and I guess that's how you wanted it. So spam away at the "troll bait".

  • In reply to Lydia29:

    In that case, I apologize. I have a lot of trolls here who are men's rights activists and they get really nasty about stay-at-home-wives. Just warning you! I do hide anyone who is a repeat offender or who says anything particularly nasty - which is most of them.

  • "... and they get really nasty about stay-at-home-wives"

    I thought the knuckle-draggers wanted women to stay at home. So they could (try to) maintain control of them.

    I put a thin, magnet-type advertisement from a hard-core divorce lawyer on my refrigerator. If I hear anything resembling an attempt to control me from my husband, I just click the back of my fingernails near the ad.

  • In reply to Lydia29:

    You would think that's what they'd want - women who stay in the kitchen. But the guys drawn to MRA can't get women, so they're really bitter. I've got a spam folder a mile long where they say I'm a mooch off my husband. I have two little kids! We have a life insurance policy on me so if I die, my husband can hire a full time nanny and housekeeper. If I had no worth, why would we need that policy? I don't argue with these guys, I just stick them in "spam" and dismiss them as idiots.

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    And this is why if tomorrow everyone decided not to go to work or use money I would be fine with it. The Illusions surrounding it is horrible. As for the lovely house wife who's hubby can afford to pay 250k in taxes, Awesome! The more of us who can stay home and be comfortable or well off is a great thing. Im grateful Im able to stay home and care for my family. My husband does his best to provide for us and God Bless him. And God Bless anyone else who cares for the ones they love be it man or woman and continues to pay taxes also. It would be nice if the taxes I pay out were my decision to make what they go towards and how much of it goes towards it. Our tax payers money is spent and do we really know towards what?? Makes you wonder why the rich get richer and the poor get poorer. At any time, ANY, the wealthy can spread the wealth. Yet this is not the case. So someone please do as the French (75% tax on the wealthy) or continue being victims to the system of illusions.
    Blessings,
    Sarah :0)
    Love to you all,
    Sarah :0)

  • Right now, our combined income is about 30K/yr (or maybe a little less). With this in mind, 250K seems like a fortune to me. However, I do agree that 250K isn't necessarily "rich" by any means.

    My father used to teach 4x overtime classes at his university. All online classes, so he was able to do that. It brought his income up to about 250K, and yet he was always complaining about the taxes--even when he had 6 kids to claim for the child credit and lived in a 110K house. We had trouble making ends meet...but in my father's case, I think he was making stupid financial decisions.

    Wait, I'm not sure what kind of point I'm trying to make...it's only 6am and my brain is fuzzy.

    I guess the point is that despite his stupid spending habits, 250K is still not that much. The tax rates are definitely deplorable at that level, and it's definitely nowhere near "rich." Upper-middle class, sure, but not extravagant.

    Oh yeah. And I agree with you at starting on different financial footings. Because of dad's high income, I was qualified for only unsub Stafford loans in undergrad. And yet I was paying for school myself...entirely through the stafford loans. Wait, I think once he bought my books for me. The first semester. Then every semester after that I lived off of my loan refunds and my jobs. On the plus side, the loan refunds gave me the financial "independence" to move out. On the negative side, after I'm done with grad school, I'm going to have about 80K in loans. All government, but still, it's painful looking at that number.

    So, while we're talking about taxes and money--can we get the government to recognize that families don't always pay their "expected family contributions" to school, so that the students who are on their own can actually afford school?

    Forgive me if I'm not making sense. The tea is still kicking in.

  • In reply to Holly:

    One thing that bothers me with people trying to make the point I made about $250k is when they say it isn't' that much. Yes, it's a lot of money. My point is those in that income bracket are already taxed the most (those making less are taxed less and those making more find loopholes). I'm just saying there are other factors that better determine wealth.

    What also bugs me when people try to make arguments about high salaries not being "much" (and bugs other people - hence this post not receiving backlash) is when people list all their expenses at a high income level and it includes things like a $900 car payment and mortgage payments on a six-bedroom house. When people have $2k in their "vacation budget" every month and complain money is tight, yeah, that is an asshole thing to do. Of course $X isn't much money - once you spend it!

    My point is that $250k can look like this: $500 car budget, mortgage on a 2-bedroom city home close to job, retirement, taxes, child's college education. RULE OF THUMB: If you have a car payment, you are not wealthy.

    I love your point about the "expected family contributions" to school. What if the child wants to better this lives, but the parents don't want to pay? No one can force them to send their kid to school, and yet where does that leave the kid? Especially if the parents are middle class but don't see the value in education. It's crazy. In my situation, I got emancipated through the public school system at 17, so when I applied to college the state looked at my personal income and didn't require my parents'. THANK GOD or I never would have gotten educated and escaped that town.

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