We have always focused on the dollar amounts to determine if one was "rich", and that is a mistake, as I'll show. Its become even more of a mistake as the wage gap has grown (which is an issue I'll tackle some other time)
First, why we shouldnt look at dollars to decide if someone is "rich":
Obama wanted to set tx rates on "The Rich", but did you notice how the lower limit kept changing? The lowest end was $75K at one point, and as high as $250K, with the preferred target being $125K. But when he was asked how much he made, he only admitted to the presidential salary of $250K, and then said "but he wasnt rich". And that didnt include his speaker fees, investments, book royalties, the bribes, kickbacks and other dirty money politicians get, or any other sources of income; just the presidential salary. So why can you earn half of what he did and be considered "rich" when he isnt? Well, besides the usual hypocrisy we expect from all politicians?
The answer is Cost of Living for the Area. How much are you getting
paid compared to what everyone else is? And how much does it cost to live where you live?
"In the olden days....." You know, back in the 1980s, it was a simple formula: Economically speaking,
Assuming the standard house was a 2 bedroom, one bath, 1200 square ft, there would be an "average" price for the zip code. You would then compare your annual salary to that price. Assuming you paid every penny of your annual salary to that cost, how long would it take you to pay that house off?
If your house was equal to 5 years salary, you were solidly middle class.
If it more like 7-8, you were lower class.
If it was more than that, you were "poor".
On the other hand
If only took 2-3 years salary, you were upper class
And if your salary could pay it off in 18 months or less, you were "rich".
This was why teachers may have only been getting paid $30K a year, but they were getting paid 3x what most the people in town were, and could buy a house in 3-4 years, so they were actually getting paid quite well. And most places you look and see them "on strike", they are still getting paid 2-3x more than most the rest of the town, and can buy a house in 4 years, so they're not really as "underpaid" as they claim.
This just illustrates my point, though; $125K is big time pay reserved for top lawyers, specialist doctors, and some mayors here in "fly over" country between the mountains, but in California, or New England, it's basically just middle class, and in some areas, you're not even that well off. In Seattle, they want to make $15 minimum wage, and it still wont really pay enough for people to live on. In central Indiana You can buy a house and a car inside of 3 years on that wage.
So the next time you want to tax "the rich", maybe you should look to zip codes instead of dollars to figure out who's "rich" first? And if you think you're that poor, lookat what it csts where you live You might just be better off that you realize.
