$300,000 Is Rich: Don’t Deny It

2008 June 20
tags: , , , ,
by Kelly

Guest Post by: Kate Olson

This article in a recent BusinessWeek magazine instantly made me bristle – “Taxing the Not-So-Rich Rich” makes the case that families bringing in a combined income of greater than $250,000 aren’t necessarily wealthy and shouldn’t be taxed as such under presidential nominee (D) Barack Obama’s proposed tax plan. This plan would increase taxes for couples making greater than $250,000/year and individuals making greater than approximately $200,000.

Now, I understand that no one wants to be included in a subset that includes additional taxation, but when (as the article states) the average income of families in the United States is $48,200, how can anyone claim that a family income of 5x the average isn’t well-off?

The defense that the families portrayed in the article (and many of my twitter followers) are using is that it all depends on the area of the country that the family lives in – I disagree. At the risk of sounding extremely judgmental, I find it incredibly sad that people living in obvious comfort (and luxury) dare to claim that they’re at all hard-up when the majority of the country (yes, including me) live on a mere fraction of the $250,000 threshold. Remember, that average of $48,200 is a national average. I guarantee that there are families living in the “high-rent” areas that are making considerably less than even that $48,200 – poverty certainly doesn’t have geographic boundaries.

I think this is the heart of the issue – people spend the money they have. One of my twitter followers, @mclgreenville made this point to me and it’s so true. I remember being completely broke in college and just dying for the day I’d be making $32,000 a year. That seemed like a lot of money for about a month until I adjusted my spending habits to reflect my new income – I then started feeling poor again and started using credit cards again. The families in this article may be stretched to afford the lifestyles to which they are accustomed, but an income of $300,000 is nothing to take lightly.

Of course people don’t want to be taxed more for higher incomes – no one wants to be taxed more! My issue with this article and the families in it is that these people simply don’t have perspective on what constitutes a high income. A friend pointed me toward the Global Rich list this morning and this website just confirmed my thoughts on this matter – according to this index, at a combined family income of $75,000 my family is the 49,322,169 richest one in the world. The shocking part? We are in the top 0.82% in the world.

Makes you think, doesn’t it? Taxes aside, shouldn’t we be thankful for what we have rather than complaining about the little bit we might have to give up?

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Kate Olson is an educator, e-learning and online networking consultant, website designer, blogger, and mother living and working near La Crosse, Wisconsin. Her past professions include accountant (tax, audit, insurance) and stay-at-home mother. She does web design and consulting work as Kate Olson Consulting, LLC.

Kate blogs about her professions and lots of tech/geeky stuff at Kate Says and is also the founder of and writes about her adventures in motherhood at This Mommy Gig. You can also find her on twitter as @kolson29 and at LinkedIn.

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This post is part of the b5media Business Channel Great Blog Off! Find out more about the Blog Off here.

The Business Channel is supporting Accion International for the Great Blog Off. You can make a donation directly to Accion. Donations are, of course, tax deductible.

from → individual, tax policy

9 Comments leave one →
2008 June 20
Alan H.

This wouldn’t be an issue if the United States would adopt a flat income tax. It seems odd that we use the term “progressive” to describe a tax system that punishes success.

2008 June 20
Chris Masters

If taxing the rich would help anything I would be more for it. the only reason people want to tax the rich is because they are envious and want to punish the rich for their success. It doesn’t matter to them that by doing this, they are actually going to hurt the economy and themselves in the process. the American people are their own worst enemies sometimes.

2008 June 20
Robert Muzingo

I’m truly sorry you’er having a hard time in these economic times. That your life style has gone down really fast. I have’nt a clue what your tax is. On $300,000 a year. Nor do I know weather or not you should pay more tax on it, aka RICH… I do know the things that the people in the houses , I drive by, Have. I do not believe that 2500 sq. ft. house with all that goes with is called POOR. There is so many going up too. I don’t know personely , any one that has one or is close to getting one. That price is out of this world. To be able to buy one, I would call Rich. I grewup in a small town, we rented most of the time. My father finilly bought one in 1962 for $12000. I personelly have not bought a house yet. Mobil Home. Yes it paid for. An yes it’s 26 years old. Can I afford one now, NO. Do you have health insurance? Yes you do. Do I have heath insurance ? No … Can you afford Rice and Beans? Yes … I can too. When My wife need Insulin, aka diabetic. I have to decide, whats more important. $300 a month. I’m sure your a hard worker, aka $300,000 a year an all that. Your much smarter than me. I work 10 hours a day, at a hot manufaturing plant all day, I bring in 26,000 a year. But most of all this is not to blame you for what you have. It’s just to let you know where , I’m coming from. This is the best Blessing , God The most High ,Has ever could give me, That is to walk with me ever step of the way.

2008 June 20
Michael Gowin’s Blog » Friday Quicklinks

[...] $300,000 is Rich: Don’t Deny It @ taxgirl.  My family’s income falls right around the national average (read the article to find out what it is).  I don’t like taxes any more than the next guy, but $300,000–annually–is a lot of money. [...]

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2008 June 20
TexasEd

Rich is a relative term, i.e., it means different things in different cultures, societies, neighborhoods, etc. So, I object to the continued use of “tax breaks for the rich” and other volatile terms. I understand what she was saying in the article, but the broader point, on a tax blog, should be whether people should pay different tax rates because thay earn more money. As others above have noted, our progressive tax system is nothing but socialism. Look at which taxpayers pay the most, and consider that some non-taxpayers get tax refunds (earned income credit). How can you justify that in the tax code? The flat tax would be a solution, but I don’t see it ever happening unless there’s a major upheaval in Washington. (LOL)!

2008 June 20
Another Tax Geek

The problem isn’t with households in that range paying ‘more’ per se, it’s that they pay more (as in more income subject to tax) AND are then subject to a higher rate. It’s the latter that is a slap in the face to success. My household is approaching this range (with both of us working, busting our tails), and we’re hardly wealthy. In fact, in our area, being able to afford decent housing at our income is still an issue.

IMO, many of the objections people, including myself, have with the progressive system we have could be alleviated if the brackets were simply moved up. It seems wrong that a household in the 250K range has the same marginal rates as Bill Gates, when they’re clearly not even in the same economic stratosphere.

2008 June 20
Kelly

Another Tax Geek,

You make an excellent point re the tax brackets. They clearly don’t take into account economic reality.

2008 June 23
b5media - Best of the Biz Channel Blog Off

[...] 2, Taxgirl. Wow, telling you which post I like best from among the ones that I wrote would be like my great-grandmother telling which great-grandchild she liked best. She always said she might have one, but she’d never tell. So, instead, I’m choosing this great guest post from the always fun Kate Olson - are folks who make $300,000 really rich? [...]

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2008 June 24
» Writing Elsewhere | Kate Says

[...] I wrote a guest post on Tax Girl last week for their blog-off titled “$300,000 is Rich - Don’t Deny It!” where I give my oh-so-humble opinions on some political and societal tax news and [...]

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