Finally an intelligent article

Discussion in 'Freedom and Liberty' started by Rockfish Dave, Apr 20, 2009.


  1. Rockfish Dave

    Rockfish Dave Monkey+++

    This is a slippery slope, but I am glad that it is being brought to the forefront. My wife and I are concerned with the new tax increases.

    Let me explain: We both work, we both put ourselves through college and graduate school, we both have paid and studied for professional certifications. As a consequence of all the extra work that we have and continue to do we have close to 200, 000 in student loans and we have have postponed starting a family so that we could "get ahead" and give our future children the advantages we did not have.

    http://finance.yahoo.com/retirement/article/106934/Wealth-Less-Effect-Earning-Well-Feeling-Otherwise

    Wealth-Less Effect: Earning Well, Feeling Otherwise<?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:eek:ffice:eek:ffice" />
    by Gary Fields
    Monday, April 20, 2009
    provided by

    Proposed Tax Increases on Six-Figure Earners Highlight Mounting Costs of Living -- and the Relativity of Prosperity

    Ellen Parnell and her husband, Donald Parnell Jr., seem like the kind of well-off couple President Barack Obama has in mind when he suggests raising taxes on families earning more than $250,000 a year. A surgeon at Fort Sanders Sevier Medical Center in Sevierville, Tenn., he drives an Infiniti. They vacation at a beach resort every year.

    Yet, right now he is working seven days a week. The car is more than a decade old, the vacation home in Sandestin, Fla., comes at a moderate weekly rate because members of Ms. Parnell's extended family own it. Her family of five would like more room than they have in their 2,500-square-foot home, yet they can't afford anything larger. The downturn has them skittish about paying for renovations.

    "I'm not complaining, but the reality is Obama may call me wealthy, but I thought we were just good old middle class," says Ms. Parnell. "Our needs are being met, but we don't have a load of cash to cover wants."

    It is a tricky situation in which some Americans find themselves after a long boom: They are by no means struggling, compared with the 98% of Americans who make far less, but depending on where they live and the lifestyle choices they have made, they don't necessarily feel rich, either. Worse, in their view, they are facing the same tax rates as those making millions. Some of the expenses are self-inflicted -- like private-school costs and conspicuous consumption. Others, though, are unavoidable, like child-care costs, larger health-care deductibles and education expenses, especially college.

    Under Mr. Obama's budget proposal, two of the highest tax brackets would see rates rise, and deductions would be reduced for households earning more than $250,000 annually. President Obama said Wednesday, "We've made a clear promise that families that earn less than $250,000 will not see their taxes increase by a single dime."

    By any statistical measure, that income level is at the top of the bracket. But for those closest to the line, the money might be less a sign of affluence than it is of the industry of dual-income couples. It is possible, say observers, that veteran civil servants could fall into the higher tax bracket.

    The political calculation is dicey. The White House needs the additional revenue to cover some of its ambitious policy agenda, especially a health-care revamp. But some polling data suggest households that earn above $200,000 went heavily for Mr. Obama in November.

    Until more details of the tax changes are disclosed, it is unclear whether people making big six-figure sums will be affected at all. They may, for example, be able to avoid tax increases if any number of deductions pull them below the threshold. But that isn't stopping those who earn near the threshold from worrying about it.

    Already, many members of Congress are seeking to scale back some of the proposed tax increases, which call for raising the top federal tax rates to 36% from 33% on households earning $250,000 or above.

    Wealth and comfort "depends on where you're coming from," said Lois Avitt, a sociologist and founding director of the Institute for Socio-Financial Studies in Charlottesville, Va. To a family earning $50,000, $250,000 is well off, but for the family earning $250,000, rising college and medical costs and dropping home values make the perception debatable.

    The reasons for the insecurity are that net worth is declining at the same time that expenses like education and health care, two of the biggest concerns cited by members of that income group, are going up faster than wages and income, says Heidi Shierholz, an economist at the Economic Policy Institute in Washington. "Those are the biggies. They are huge parts of the set of middle-class aspirations, and the prices of those have increased way faster than income." The bursting of the housing bubble makes that more stark.

    Mark Zandi, chief economist at Moody's Economy.com, says data show that over the last 10 years, education costs have risen 5.91% annually, and health- care expenses have gone up 4.16% annually, while wages and income have risen only 3.7% over the same time span. That means many families are seeing a greater percentage of their income going toward those two areas.

    Education costs, which are far outstripping wages and income, are especially worrisome for this income bracket because upper-income earners are much less likely to receive the kind of financial aid that lower income levels can expect.

    The drop in net worth has been staggering. The Federal Reserve, in a recent report, found that U.S. households' net worth dropped by $11 trillion, a decline of nearly 18%, during 2008. That wealth includes everything from home values to mutual funds and life insurance, college and pension funds. The decline equaled the combined output of Germany, Japan and the U.K.

    Changes to the tax code don't generally make adjustments for high costs of living in particular areas of the country.

    San Jose, Calif., Mayor Chuck Reed calls a family living in Silicon Valley earning $250,000 "upper working class." That is about what two engineers working at a technology firm can expect to make, but "a family earning $250,000 a year can't buy a home in Silicon Valley," he said.

    James Duran owns a human-resources company in Silicon Valley and is president of the Hispanic Chamber of Commerce in California. He supported Mr. Obama, but is worried about the tax proposals. He has laid off some employees in recent months and has been wondering how he can fund an extension of those workers' health-care benefits.

    Mr. Duran said he and his wife earn about $400,000 annually, but "I'm barely getting by." They have high property and state taxes, as well as college tuition and savings to cover. "I'm an Obama man, but this side of him is a difficult pill for me," he said.

    Van Moore, an optometrist in Sevierville, makes just enough in his practice that he worries he might qualify for the tax increase. Mr. Moore said he was contemplating adding two staff workers and another doctor to his practice, but then the economy went soft. In the years after he finished optometry school, his first job brought in less than $20,000 a year. Then he made $50,000 for several years, all the while dealing with his $150,000 student-loan debt, which he still has. Now he is making just above $250,000.

    "I'm not in a mobile home with no utilities or running water and holes in the floor," he said. "I'm not poor, but I'm not rich."

    For the Parnells, their perception of themselves is based on the math. The value of their house is down $60,000. Ms. Parnell says the couple's gross income last year was about $260,000. Taxes, premiums for medical care and deductions for Social Security and their 401(k) contributions cut the gross to about $12,000 per month. The family tithes $1,300 a month at their church. Their mortgage, second mortgage and payment on land they bought is nearly $4,000 a month. Other expenses, including their family car payment, insurance and college funds, as well as basics like food, utilities and donations to charities, leave them with about $1,200 left over each month.

    "I'm not after sympathy. We are blessed. What I want is a reality check on what rich means," Ms. Parnell says. "I can pay my mortgage and I can buy some clothes. I'm not going without, but I'm not living a life of luxury."

    Write to Gary Fields at gary.fields@wsj.com

    Copyrighted, Dow Jones & Company, Inc. All rights reserved.
     
  2. Seawolf1090

    Seawolf1090 Adventure Riding Monkey Founding Member

    The chickens are finally coming home to roost. Many Obamamites are finally beginning to realise they made a big mistake.

    I love telling them, "I told ya so!" :D
     
  3. SLugomist

    SLugomist Monkey++

    live within yourmeans.
     
  4. Mountainman

    Mountainman Großes Mitglied Site Supporter+++

    <style></style>Earn $250K and can hardly make it??? Looks like you have everything covered along with your retirement accounts that you will never collect on. Those people that pay "$1,300 a month at their church", I hope you are buying an interest in it.
     
  5. dragonfly

    dragonfly Monkey+++

    I've been doing something wrong!
    My income has never been above $40K a year, I never had retirement benefits, no 401 k's, and no IRA's....
    It's odd to me, that these people just cannot make it!
    I made it with 6 kids, and had a 1,200 sq ft home!
    The newest car I ever owned, was a 1996 I bought in 1999!
    Yeah, live within your means, means "charge it" on a credit card to an awful lot of people.
    When I went to the bank a couple weeks ago, I was doing paperwork to have my land I recently bought, paid for automatically from my account each month.
    The "new" manager there almost died when he asked me how many credit cards I had....
    I told him NONE.
    Never have had one, and never will.
    I spend my money accordingly:
    1) Roof over my head
    2) Food in my stomach
    3) Clothes on my back
    After that, it's all mine to spend!
    I thought he'd cry!
    He checked my "credit score" it is 0.
    LOL!
    He said how can that be?
    I said it's easy, I don't pay you to charge me for spending my own money, so I have zero credit! ( and,... I have never had to file for bankruptcy!)
    Although, I do own my own home, 3 cars, and no educational or other loans to pay !He just could not get it!
     
  6. Rockfish Dave

    Rockfish Dave Monkey+++

    Nope, we all make the decisions that are best for us. Your choice is clearly what works best for you. We went a different rout and invested (heavily) in our education and marketability. It works best for us. I have no problems with either.

    I do take issue with not being able to keep the fruits of our labor. That labor was foregoing a simpler life for a better financial future. To get the education, military, and work expirience I have, has taken many years of personal sacrifice, and I take issue when someone says that others are entitled to what I have worked very hard for. I am fourty years old and am only just now beginning to see the benifits of all my hard work.

    Isn't the USA founded on hard work and the ability to reap the rewards of your labor (or good fortune)?
     
  7. QuietOne

    QuietOne Monkey++

    It used to be.
     
  8. Minuteman

    Minuteman Chaplain Moderator Founding Member

    "I'm not after sympathy. We are blessed. What I want is a reality check on what rich means," Ms. Parnell says. "I can pay my mortgage and I can buy some clothes. I'm not going without, but I'm not living a life of luxury."

    I think that's what it's about. The perception of "Rich". According to this administration I am rich. This year I will be taxed at the same rate as a miilionaire. Am I a millionaire? Not by a long shot. Do I make a good salary and live a good life? You bet. Is there something wrong with that? Well if you fall for the class envy BS that society, and this administration promotes there is. According to that I am greedy, wasteful and spoiled. Simply because I have risen after 30+ years to the top of my profession. I have lost friends and alienated family simply because they get angry because I can afford to send my daughter to an exclusive private school and they can't. Or because my wife drives a new car and thiers can't.
    I have always lived within my means. When I made 40k a year I lived a 40k a year life. When I made 80k a year, I lived an 80k a year life. When I made less than 10k I slept in my car and even lived in a tent for awhile.
    But now, after 30 yrs of leaving hearth and home for months at a time to travel into third world shtholes around the globe I now make a 6 figure salary. I live in a nice home on my own land and drive a nice vehicle. But if I drop back to 40k again (which is very likely with the price of oil in the tank) then I will live a 40k lifestyle again. My daughter will go back to public school, I'll sell my new truck and buy a used one. I may have to re-finance my home to get a lower payment or just make the interest payments for awhile until the economy rebounds.
    But what irks me is this admistration making me out to be some greedy Donald Trump and wanting to tax the sht out of me to pay for all of thier irresponsible spending programs. And the majority of people are going "Yea, take it from them, they make too much anyway!!"
    Am I rich? Yes I am. I have a wonderful wife, loving daughters, great grandchildren, and a lot of really good friends. Yes, I am a rich man. But am I wealthy? That is a relevant term. I don't ride around in limos, I don't have a platinum credit card ( I don't have any at all). I don't own a Rolex.
    I live on a dirt road, in a doublewide trailer house. Not exactly the lap of luxury. But certainly not tobacco road either.

    One of my favorite tea party signs was;

    "First they came for those who made over $250,000..."



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