Tuesday, April 21, 2009

Tax Code

Our new president wants to have higher taxes on folks that make more than 250K per year. Some folks are saying, hey, 250K is not doing bad, but that's not wealthy either... why are you taxing the upper class?

Other folks are saying, rich and wealthy are relative terms and the money has to come from somewhere and the taxing has to start at a certain level, so tough cookie to the $250,001/year folks.

I had a similar conversation with a friend who was raised by a single parent. When we were in college, he noted that anyone who lived in a household that made more than 100K per year is rich and should be able to pay for college. I was that person living in that household and my mom and stepfather essentially told me iaintgonebeabletodoit, when it came to paying for college.

[Bitter side note: The government paid his whole tuition and I'm still paying two car note's worth of student loans each month, putting him on a faster track for amassing wealth.]

Sorry, got sidetracker... The point is he was on the outside looking in, so he didn't notice that raising five kids costs a lot of money, not to mention the cost of living, private school tuition for my little brothers and a small vacation every five years or so. He wasn't trying to hear anything I was talking about though. He heard 100K and thought about what his mom made and said we must've been squandering our money away.

Now the couple in the article linked above has the same argument I had with my boy, but making 250K, not 100K. They have $1200 of disposable income each month, but still feel that that's just comfortable, not wealthy.

Also, here's a copy of the current tax code (got this from someone who commented on a post, so it could be all wrong)

10%: from $0 to $8,025
15%: from $8,026 to $32,550
25%: from $32,551 to $78,850
28%: from $78,851 to $164,550
33%: from $164,551 to $357,700
35%: $357,701 and above

What say you? Is 250K wealthy no matter what? Is some other amount of money wealthy no matter what? Do you believe in the current tax code?

Personally, I believe in a flat tax. I really do. I also believe in the scripture to whom much is given, much is required. And I would argue that if I make 1 million dollars and you tax 25%, much HAS been given. If someone makes $10,000 and you tax 25%, little has been given.

I know all the bible heads are about to kill me for this, but you know the story where the woman only had a penny or something and she put it in the church and then a rich man came and put less than 1% of his income or something in, but it was still WAY more money literally than her little penny. Then Jesus said the woman really gave more figuratively because that was all she had... I'm not saying Jesus is wrong, I'm saying YES, she gave more, but it's not like it was difficult for her give.

What was she going to do with that penny anyway? She wasn't going to get good interest on it. She couldn't invest with that bad boy. She probably couldn't even buy food. So she's looking at that penny like yeah, I might as well throw this at the church and see if Jesus can make it do what it do...

I'm just sayin'


ThummyB said...

I'm over here dying at your Bible analogy. Too funny and too true!

No way is 250K rich! It's not doing bad by any stretch of the imagination, but at that price point you're still operating on a somewhat 'upper middle' class budget, esp. if you have a family. As you noted earlier...Thummyb making 250K and supporting herself is waaaay different from ThummyB and hubby making a combined 250K and supporting 2-3kids.

I would say that you are wealthy when you are able to comfortably pay your bills, pay into your savings (retirement funds, college funds, vacation funds, etc), and still have money with which to play. Now I can't put a dollar amount on that b/c if your expenses are low, then you may be able to amass wealth at 250K...but if you have a more expensive lifestyle, then you may be just barely getting by at 750K.

Sorry - I didn't touch on taxes at all. I'm not sure how I feel about those yet.

kay* said...

you know, i think it all depends on the situation. for a large family living in a big city 250k is not a lot. for a single person, like me, living in the big city - with no debt on top of that - that is MORE than enough. i would love to be making 250k! on the other hand a family living in a small town might be okay with that. it all depends on the situation. however, for the most part i think an income of 250k is pretty decent and nothing to complain about.

taxes - well that's a whole other issue. our tax brackets here in canada are different and all i know is taxes are too high in general and i am taxed too much on my cheques.

Spiderlgs said...

Wealthy and rich are relative terms or course. But the fact is that we all make choices that determine our financial status. Having children is a choice, vacations are a choice, the house you live in the car you drive are all choices. Shoot, I got a furlough day and no cost of living increase and no raise based on years of service, but them the brakes. I would have more disposable income if I had chosen to go to a school that cost $5000 a year instead of $45,000. I could have bought a used car instead of a new one. I could have limited my vacations. Hell, I could live at home right now.

But at least I have an income to complain about, so I'm not going to complain about taxes, because that money I've paid into unemployment and into Programs like WIC is paying someone's rent and feeding someone's family.

Florence said...

I vehemently disagree with your argument! $100,000 is, IMO, enough to live on for most families in America. $250,000? Cake. The thing is, American's are accustomed to a certain lifestyle and don't want to make the necessary adjustments (myself included).

And HELL NO there shouldn't be a standard tax rate. H-e-l-l to the NO. After taxes, a person making a million dollars would be left with $750,000. The person making $10,000 would be left with $7,500. MAJOR difference. Even at the current rates, poorer people still get the short end of the stick. All things being equal, $15 of $$8,026 hurts a helluva lot more than $15% of $32,550.

Are you a Republican? LOL

~la negrita

T said...

I love the comments. This post must be too long because I thought there would have been a lot more comments.

@ thummyb, I disagree that 250K isn't rich, but you and I never see eye to eye on what constitutes wealth. The couple in the article makes 250K, goes on vacation every year, saves for retirement, college, etc and has 5 kids and $1200 disposable income (after all those expenses). I think that's rich and it fits into your definition of wealthy as well.

@ spiderlgs, I agree that people make money choices, like having kids or going on vacation, but would you not have kids to save money? Or if you had the money and knew kids at your child's local school were being shot, would you send your kids there instead of sending them to private school? Or would you move to Springfield, IL instead of living in Chicago to save money? I wouldn't.

Some money choices are frivolous, but some money choices are necessary to live your best life and give your kids the best opportunities to do the same and no one should be made to feel like their choices are wrong because they cost more than other people's choices. Please believe if people who are struggling had the money of people with disposable income, they'd make the same choices you made to buy a nice car or my parents made to sending my brothers to private school.

@ Florence, all jokes aside, I'm an independent. I've been told a bunch of times that I act/think like a republican. If I wasn't a black woman (double minority who understands the danger of just doing what's best for the majority), I probably would be a republican. They have some good money points. I agree that 250K is comfortable, arguably wealthy depending on what part of the country you live in and how many kids you have, but we can't spend people's money for them. That irks me to no end.

100K is enough to live on, but no one making 100K can send a child to college without assistance. That's just not realistic.

Seriously, I could do line by line expenses for a family living in a city or metropolitan area to show you why that won't work.

ThummyB said...

@T - I didn't read the embedded article, but I would agree...that family sounds like they are doing fine. They do fit my definition of 'wealthy', but somehow not my definition of 'rich'. I guess that's b/c rich seems to be an unattainable place for me...and thus anything attainable doesn't seem rich. Does that make sense?

For instance:
- In my mind, Rich would equate to money beyond all normal limits and spending abilities. I'm talking private jet to St. Tropez money.

- Whereas wealthy just seems comfortable with a touch of luxury. Perhap, 1st class seats to Paris money.

One of these is in my wildest dreams while the other is in my 10 year plan ;-)

Spiderlgs said...

I would definitely choose to have children based on how much money I make. I think its important to do so. It's a choice to sacrifice the new car, the vacations, possibly the biweekly hair appointments, and to do some deliberately. Family planning is important and I think a lot of people selfishly have children they cannot afford to provide for.

Kismet said...

I'm late. But:

250K is rich and wealthy. You can't convince me otherwise.

Things like retirement funds, small vacations, private schools, etc--those are "choices" that not everyone is even remotely able to make. Which makes them privileges. Which is a problem because at least the retirement fund should be a human right (by retirement fund I assume you mean above and beyond social security dividends?).

The problem is--and someone above said it and I agree--we see our privileges as necessities instead of seeing them as privileges that need to be dealt with. For example, if a proportional amount of money (perhaps taxes???) went into schools, anti-violence or policing (your pick), etc. initiatives, quality teachers and facilities, etc. then it would seem like a need. But that doesn't change the fact that it is.

And yes, if you make six figs then it is your responsibility to come up off some of that funding and help out. Don't give me that "I made it it's mine" bull. That's like a black person coming out of college and saying the civil rights movement, affirmative action, and the end of slavery didn't help him at all. No one makes it all on their own. Even the most resilient and independent exec has an assistant, a dry cleaner, a mechanic and someone who harvested the organic red leaf lettuce he or she ate in his salad for lunch....

(I get real passionate about class issues yal...my bad)