$250K/year is not a lot of money when you spend it.

[savalez]

I heard that yesterday on an AM radio show about money management. He was talking about how a "big" tax increase is coming (Ooohh scary). I don't want to say his name because I see no point in giving him publicity but it was on a Seattle station (normally Progressive).

The host basically said that these days a two income household earning $250,000 per year has a mortgage payment (big house?), car payments (BMW's?), school bills (private?), and other bills (vacation home? boat?). So after all that $250K is not a lot of money.

Essentially he wants Middle Class status to be determined by how much you have left over, not by how much you spend.

How out of touch can one be?

[bigdarryl]

1. Thats more money than the average working person make

even as a family

[Wounded Bear]

2. Neither is 10k/yr

[n2doc]

3. My response to these folks-They did just fine back in 2000

They will do just fine after the BTC go away. When you have that much income you can find places to cut that don't make a significant difference in your lifestyle. Fewer nights out, cheaper restaurants, cheaper vacations, maybe leasing a lower level car.

On the other hand, cutting Soc Sec or medicare to keep these cuts will kill people. Literally.

[taught_me_patience]

17. Indexed for inflation, 250k in 2000 is more like $350k today

Also, the majority of a household's budget are fixed costs - Mortgage, Student Loans, Daycare, food... etc. Discretionary spending might only be 10% of a household's budget.

[n2doc]

19. Oh how does anyone make it on less?

Sheesh. Give me a break. We all get used to what we have, and adjust if less comes in. My point is those with more can adjust in ways that are less, far less, likely to cause serious heartbreak.

[yellowcanine]

51. All the same I am not going to feel sorry for anyone making $250 grand. Food is not a "fixed cost"

by the way. You can eat for a lot and you can eat for a lot less. And in the U.S. the AVERAGE cost of food is less than 11% of the household budget. Meaning for someone making over $250 grand the % is a lot smaller - at least, could be a lot smaller. If I can decide whether to stay home for dinner or eat out, at least part of food cost is discretionary. And mortgage costs - it is only a fixed cost after you decide to buy a certain house - one has the choice of whether to be "house poor or not"; at least people with $250 K in income have that choice. Same with autos. As I said, you are not going to make me sorry for that couple making $250 K.

[ProgressiveEconomist]

63. Is that a Republican talking point yet? Taking inflation into account

another way shows just how weak that argument is.

Yes, $250k is "only" five times median household income now, compared to eight times in 1993.

[HiPointDem]

67. i bet bill gates has a lot of expenses too. doesn't make him 'middle-class'.

[spinbaby]

4. Obviously we were doing it wrong

We actually had one year when we made close to that amount. We squirreled away every cent we could for retirement and are now VERY glad we did. I guess we should have been out buying new cars and trading in the house we bought decades ago for under $40 K.

[Major Nikon]

5. That's true for those who live beyond their means

There's no shortage of people who spend every dime they make as soon as they make it. If you make $250K and you have two homes, expensive cars, boats, etc., I have no doubt you're going to be cash poor.

All the more reason to raise their taxes. Let the government do something useful with the money rather than letting some asshole piss it away.

[Major Nikon]

32. Ummm, here's what you're forgetting

A tax break given to the wealthy with no commensurate reduction in spending means one of two things.

Either other people have to be taxed more to make up the difference,

...or

The government must borrow more money, which must be eventually paid back by someone else (not likely from high income earners), with interest.

It's not a complicated concept, but it's one that the GOP has a hard time grasping.

Enjoy your short stay here.

[FarLeftFist]

36. He said Soviet Russia, HA! Surely collecting taxes isn't in our Constitution or anything.

[Major Nikon]

37. As a troll he was worse than most

...and should find a new hobby.

[JDPriestly]

78. But you see, rich people like it when the government borrows money

rather than raise taxes. That's because rich people are the ones who profit from loaning money to the government, and everybody has to pay the taxes that service the debt.

The wealthy are not really worried about the national debt as long as they can scare the rest of us into doing without in order to pay the interest on the debt.

[JustAnotherGen]

6. Extremely Out of Touch

He doesn't make that kind of money - or he would know better.

Look, my husband and I aren't tooling around in a Ferrari and a Porsche.
Property taxes are so exhorbitant in NJ we can't see the point in purchasing a house.
But we are in the "95%" and rest assured - that is a LOT of freaking money.

We had no problem being taxed more as individuals making more than 200K a year and more than double that now - we are going to be okay. Seriously - Let's say it ends up being $90K to $120K to the fed . . . it's not going to make one iota of a difference to us.

I think what I HATE about these people (the host in question) is that they never as, "HOW MUCH DO YOU REALLY NEED?".

And right now - the couple making a million dollars a year in NJ - double income no kids is paying LESS than us on average.

How is that fair? So if you have to tax us to tax them so they can pay their fair share - then SUNSET the tax breaks for millionaires now!!!!!

[Ikonoklast]

7. The logic used to support that position is, well, there isn't any.

It would follow that a person that makes 100 million dollars a year and spends 101 million is to be pitied for being a million in debt.

If you refuse to live economically no matter your income level, then you deserve whatever is coming down the pike.

[FirstLight]

8. fuck them

I have never made more than $15K/year, and that was ONE year in my life I had it good... so fuck those fuckers very fucking much!

[taught_me_patience]

9. It really depends on where you live

If you live in expensive cities like New York, DC, Los Angeles, SanFrancisco... then 250k is really not that much. Here's how it breaks down:

Income 20k
Federal/State/Local Taxes: 35%
After tax income 13k
savings @ 10% of income: 2k
take home: 11k


Expenses:
Mortgage (850k) + property taxes: 5k
Student Loans (200k): 1k
Day care (2kids): 2k
Car+insurance+gas ($500(Honda Accord)/$200/$300): 1k
Food + Health Insurance: 1k
Other bills: 400

Left over after expenses: $600

[uponit7771]

10. Nope....they can live under their means..buy a smaller

...house, part cash for small suv etc

[taught_me_patience]

25. I just showed how 250k can be whittled away with not a very lavish lifestyle

in an expensive city. An 850k house in Kansas City is a mega mansion. But in NYC, it could be a one bedroom apartment and in Los Angeles, it could be a 3/2 1800 house in Culver City... not lavish by any means. Notice no BMWs or vacations in my real world calculations.

[Luminous Animal]

30. Then don't buy. Rent. If you live in NYC and feel the compulsion to buy, move and commute.

Funny, how I can manage to live in San Francisco and take vacations all over the world and not make near that amount of money. Oddly enough, so do many of my friends who also do not make that kind of money.

In San Francisco, about 11% of the population can afford to buy. Which is why we are 70% renters here. What do you think the other 89% do with their lives?

[Luminous Animal]

64. It's odd that your comparisons don't include car, food, & housing for the 20K a year person.

Just how do you think that they are surviving without them?

[Luminous Animal]

20. I always find it amusing when people say that $250,000 K in a city like San Francisco

The vast majority who live here do not make anything near that amount of money.

[raccoon]

21. Thank you. I was thinking something similar, you'd be rich on that in Smalltown, SC, or Smalltown,

many other states...not so in the cities you mentioned.

[Johonny]

22. I totally agree

To live the average middle class lifestyle of the baby boomer generation in LA you better have 150-250 K. That so many don't tell you all you need to know about upward mobility in the USA. Forget being rich, today's younger generation are struggling to make it to middle class. When they complain they are told they are weak, complainers, expecting too much, not hard workers,... it is a joke. Most 18-35 year olds can't buy into the neighbor hoods they grew up in. The funny thing is people claim oh to expect to be as well or better off than your parents is to live beyond your means. In today's America if you aren't living as poorly as you can you are a PIG. Really the middle class and the poor aren't the pigs, the wealthy who have all your money, haven't increased wages to keep up with inflation and keep job creation low are the pigs. When people realize even doing great compared to others in America still doesn't get you ahead and the true middle class dream is nearly impossible to obtain anymore, then they start voting Democratic.

[frylock]

29. now, what percentage of people that live in those cities make 250000?

what percentage makes signifigantly less than 250000, yet still manages to make it in those cities?

[FarLeftFist]

38. That person is then living way beyond their means.

[uponit7771]

53. yeap over 4 times their AGI goes into a house! Few banks would go for that unless they had huge down

[FarLeftFist]

56. And who pays $500/month for a Honda Accord?? Honda won't even let you pay that.

[taught_me_patience]

60. How much does it cost per month to finance a 25k car for 60 months @5% interest?

Oh yeah... $471/mo. Honda Accords are easily topping $25k after taxes. Oh yeah, my my assumption assumes only ONE person in a household has an Accord... the other person is driving a car that is already paid off... if not... add another $471 to my assumption.

[taught_me_patience]

62. A house at 4x gross is easily in line with lending standards

With interest rates so low, 5,6,7x gross income is attainable. This ain't 1980 anymore.

[uponit7771]

73. That's not the point, you can live in 300k house not 850k house

[Viking12]

43. $500 a month for a Honda Accord?

$200 for insurance? $300 for gas?

[taught_me_patience]

58. I'm talking two cars for a couple

But, yeah, a new Honda Accord is $25k after taxes. A 60 month loan at 5% would yield payments of $471/mo. Insurance for two cars is $200/mo here in LA. And gas... yeah... $300 = 75 gallons =* 25mpg = 1875 miles driven... actually probably conservative for a couple.

My figures are conservative for a couple on auto expenses... it assumes one car is paid and the other is financed. If you were talking two Honda Accords, then add another $500 to my estimates.

[Sirveri]

69. Or they could rent for about 1k/mo and not live in the city.

If I was pulling 250k/yr I'd pay cash for a house in three years and not have a mortgage. But apparently I'm not capable of surviving in the bay area since I only pull down about 30k a year.

[NNN0LHI]

44. This retired union autoworker would be real dismayed if that asshole couldn't make his Honda payment

[taught_me_patience]

61. It was in response to the OP that suggest people who make $250k

are rolling in BMWs and living lavish lifestyles. Apparently you did understand my response post showing how an ordinary lifestyle, with ordinary cars can whittle away $250k in expensive cities.

Your post is utter garbage nonsense.

[demwing]

48. Are you being sarcastic?

$850k Mortgage? - Rent, or buy a house you can afford.
500 car payment? - Drive a used car,
200 Insurance? - I Pay $85
What are "Other Bills"

For that matter, what is "Left over after expenses?" I don't have that item on my budget

[Jackpine Radical]

54. Baloney. You don't pay 35% on $20k per year.

In fact, I don't think you pay anything except Soc Sec & Medicare on that amount. Mortgage interest &property taxes are deductible. Etc.

[taught_me_patience]

65. It's 20k/month. All expenses are monthly in my comparison

and 35% is easy:

25% income tax withholding
8% FICA/Social security
9% State income tax

It's actually closer to 40% tax withholdings.

[Jackpine Radical]

71. OK, I misunderstood.

[hunter]

66. But then you live in San Francisco...

If I had to choose between a big house in Kansas, or a tiny apartment in San Francisco, I'd go with the tiny apartment in San Francisco.

Presumably there is some sort of free market involved here.

$250,000 is the same in either place. What you don't get in San Francisco compared to Kansas, say a big house, is in balance with what you don't get in Kansas.

[Bonobo]

68. Why do you count 2k savings/month as an expense? WTF?

That's twisted beyond belief.

[taught_me_patience]

72. Its not on the expense line!

I never called it an expense. It does affect monthly cash flow, though. 10% contribution to a 401k is not unreasonable.

[Skittles]

75. LOLOL

you are SOOOOOOO out of touch!!!

[fishwax]

77. lol

[JDPriestly]

79. The rule used to be that your debts should only total about 1/3 of your

income, maybe at most 40%. That should include your house payment.

If you owe more than that proportion of your income, then you need to pay off your debts and forget the expensive house. Buy a used car, and then you have no payments.

Remember, the tax proposal would add to the taxes over $250,000.

[MADem]

80. Huh? 850K mortgage, only five grand in taxes? My house is worth much less and I pay way more in

taxes. Doesn't sound like a "high cost" area to me with that kind of tax rate...

I also don't make anywhere near that kind of scratch--not even close.

[taught_me_patience]

81. 850k Mortgage @ 4% = 4k/month

taxes in Los Angeles are approx 1.25% = $11k or nearly 1k/mo. Hence the 5k estimate for mortgage + property taxes.

[MADem]

82. So five grand a month for "rent to own" basically? That's obscene.

I'd downsize.

[salin]

84. I've lived in two of those markets you mention

on incomes of under 25,000. Not easy, but done by many folks in those communities who work service industry jobs.

[Dawgs]

85. No worries. Anyone making $250,000 will not see their taxes increase. n/t

[hollysmom]

11. well, let's just say I managed to save over 75% of my gross earnings on my best year over 100K

for supporting me being laid off in my 50's before retirements kicked in. it was only one good year with lots and lots of over time and no time to spend money, but still - .

let's just say, I live a nice simple life without all the goodies most people consider a neccessity, big screen TVs, new cars, smart phones, etc.

[DiverDave]

12. Have em live on 47K

and see how I live.

[SammyWinstonJack]

59. Let them live on 27k and see how we live.

[DiverDave]

83. I'm sorry, I wasnt rubbing your nose in it

Not my intention at all.
Not to get into a pissing contest (and then I let er rip)
We lost our house, our car was repossessed,our elec. was shut off, I STILL have a bad tooth that I cannot get fixed... I got hurt at work and have to live on 2/3 of what I made before.
And I'm worried I cant go back to driving a truck, I dont have any other skill.
For a few months we were fine but 6 months we cannot pay our bills any longer.
I have always been able to take care of my family, and now...
It is a VERY stressful time and I dont know if our marriage can take it.
Guilt has a way of kicking me around.

[sinkingfeeling]

13. Maybe we shouldn't tax income then. Let's add a 27% tax on spending. (Hint:

sometimes called a 'flat tax' or 'FAIR tax'.) Is that what the guy wants?

[bemildred]

14. Well, heck, let's just give everybody that much then. nt

[JHB]

15. Your critique is true, but it also falls for the distraction

Yes, the people who say $250K "isn't all that much" get my goat too, but focusing on that threshold is a distration all by itself.

Below is a graph of inflation-adjusted tax rate thresholds for the last 60 years. Not the rates, mind you, just the breakpoints from one rate to another. Look at the levels that were treated differently by the tax system in the past.

For example, in 1955 there were 24 tax brackets. For married couples filing jointly, 16, two thirds of the total affected incomes over the equivalent of $250K.

Couples with that level of income are successful professionals, and are definitely affluent, but they aren't rich, and focusing on that level lets the multimillionaires and billionaires off the hook. It's the extreme concentrations of wealth and income that are warping political reality.

[wiggs]

16. No one mentions that the 250,000 threshold is adjusted gross income....that's what is

taxed. Not your net. So I bet someone getting taxed at the 250K level is actually making much more...probably 350K or more, which is not bad. Pretty damned good, in fact.

Talk of 1 million being the threshold is ridiculous.

And speaking of thresholds for rich....Ann Romney said she 'doesn't feel rich'...and they pull down 20 million per year (that we know of). I don't think we should rely on wealthy politicians and capitalists to determine what the threshold is.

[Luminous Animal]

33. Yep.

[treestar]

18. that's just crazy

250000 is very high to be considered middle class. They make more and thus spend more, but that doesn't mean they should not have to pay their taxes. That's a lot of money to most people. The figure was likely chosen based on a study of what it costs for a middle class life. And 250K is above that. People who make more than that can pay the taxes they did before the Bush years. If they have to drive a Honda rather than a Porsche

[RC]

47. That is why the limit needs to be $100,000.

$100,000 is much more realistic.
Median household income for 2006-2010 is only $51,914, so why the $250,000 cutoff? That is household, not individual.

http://www.democraticunderground.com/1002920304#post8

[Marrah_G]

23. They will only have to pay the higher tax on the money earned OVER 250k

[high density]

27. Yeah, the GOP has confused people on our progressive taxation system

They have people apparently believing that at the moment you go from $249,999.99 to $250,000.00 you suddenly get hit with thousands in retroactive taxes.

[eridani]

24. I think that Edelman essentially gives them a freebie show--

--because it's indirect advertising for his services. Same for that Crash Talk show. I wish they'd fill their weekend blank spots with more local content like Northwest Gardening, but there may be a serious budget issue with that.

[Art_from_Ark]

31. Great idea!

I'll gladly take a minimum wage job at that price, as long as it's US dollars. Heck, I'd even take it in Canadian, Australian, even Singapore dollars

[hadlow]

34. I'm curious...

What level of income should the gov. start charge punitive tax rates? Shouldn't it really vary by geographic area and cost of living? It certainly cost a whole lot more to live in NY or LA than say, W. Va. Should it be lower than $250K do you think? Maybe anything above the national income average? I really do not know and am curious what others here think about this. Thanks...

[Incitatus]

39. Punitive?

Welcome to DU

[B Calm]

40. So now the rich are being punished, of please!!

[thelordofhell]

41. Enjoy your $250K pizza

[B Calm]

42. PUNISHED

Those poor rich folks are being punished. I think I'm living in the Twilight Zone. .

[NNN0LHI]

45. Brave New World of Ronald Reagan

[NashvilleLefty]

46. PUNITIVE?!?!?!?! How about "fair share"?

Let's get one thing straight, whatever someone makes it is because of out society, and so they should give something back to the very society that gave them that salary.

$250K is 6 times what I make, and I consider myself "comfortable". If they are taxed 50%, then they will still take home almost 3 times what I make before taxes.

How the FUCK is that "punitive"?

[NNN0LHI]

49. He is dead, Jim

[Marrah_G]

50. I think 250 is a good number

The wealthy have had lower and lower taxes over the last 30 years. With those lower taxes they have gotten wealthier and wealthier while cutting jobs, shipping jobs over seas and lowering wages.

The wealthy needing low to no taxes so they can create jobs is a myth. It's a dog that just won't hunt anymore.

[JHB]

52. Did we spend the entire Cold War punishing the rich?

Why do your refer to high marginal taxes as "punitive", and ignore its function as a market-based disincentive for the already-wealthy to grab every last buck?

[Historic NY]

55. People are working for stuff they buy, not what they need....

his philosophy is what got us to here. If your status is determined by what you have then, you lead a shallow life. I like things but I don't obsess over them & my life doesn't revolve around them.

[Chisox08]

57. Let me take out my violin

Aww how cute another out of touch 1%er whining about how tough the have it. Try living on less than 10% of that and then come talk to me about what is not a lot of money.

[kentuck]

70. $40 million is not a lot of money when you spend it.

Ask Mike Tyson. And many others.

[TBF]

74. The tax code needs a reality check -

those making 250K should not be taxed at the same rate as those making a million for example.

I will say that bringing home that income means different things for different people - for some of us it is tackling the huge graduate school loans we took out to even have a chance at such a lifestyle, for others it is just icing on the cake of money they already inherited from their parents ...

And I'm really not happy about paying all those taxes only to see it spend on more war-mongering.

But, even with those factors considered my vote is to let the tax cuts expire.

[MADem]

76. Hell, let's all move to Malibu, then--we'd need a couple of million a year to "get by."

What an idiot. Out of touch is right!