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Your Take: $250,000 vs. $500,000 vs. What Is Rich?

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CurrencyHere’s an interesting question that popped up in my head as a result of Warren Buffett’s op-ed last week – should the bar for “high income” be at $250,000, $500,000, or some higher value? Should the bar be at a dollar amount relative to median income or should it be a calculated based on how many taxpayers it would capture?

In 2008, 4.3 million tax returns had an AGI above $200,000. That represents 3% of the total returns that year. Median income for 2008 was $52,029, or approximately one fourth of that figure.

My feeling is that we should probably tie our tax returns more to the median income, rather than calculating approximately how many people it will affect. I think $250,000 and $500,000 are simply nice round numbers people like to use but the reality is that very few people make over $200,000. 3%. Three people out of a hundred earned more than $200,000 in 2008 (granted, I know things can be deferred and there are other games to play but let’s keep it simple).

This makes me wonder… does it matter? There will be so few people, percentage-wise, that are affected if the bar were set at $250,000 compared to $500,000 that I hope this isn’t a sticking point!

What do you think? Where do you think the bar should be?

{ 39 comments, please add your thoughts now! }

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39 Responses to “Your Take: $250,000 vs. $500,000 vs. What Is Rich?”

  1. OK says:

    The president will most likely make a windfall in income once his second term is over, and will probably break all kinds of records making hundreds of millions of dollars from book deals, lectures and royalties. This will be on top of the close to $6 million pension he will collect as former president. He will have the kind of financial security that he can pass on for many generations, and deservedly so. When the president, and many others who are essentially “set for life” go after people making over 250k, but much, much less than themselves, I find it very discouraging. There will always be the millionaires who leapfrog to riches because of unusual ability, talent, hard work and/or fortune, but building wealth slowly through good old-fashioned hard work, dedication, patience and risk-taking is the promise that all Americans aspire to. That is where most people making $250,000 – $1 M live. If we do not cherish the principle that hard work and success should be respected, and not demonized, this country will become polarized into a super-wealthy class and a working class, without meaningful income mobility. When government panders to the “middle class”, the super wealthy will be OK regardless. It is those considered too rich to be given a break, but who are not rich enough to weather the storm of higher taxes and/or adverse financial events that bear the brunt.

    • raul says:

      I see your point clearly. I do not think $250K is particularly rich. However, this is merely a return to tax rates which coincided with great prosperity. It was slow and staedy growth which was not destined to the collapse caused by wars and tax cuts. Who pays for the fraudulent charges of Haliburton? (Did anybody check Cheney’s blind trust?) Who is going to pay for the huge profits of the MIC? Not those of us under $250K, I hope.

  2. raul says:

    What is the amount of tax revenue on the group bewtween $250 and $500K? If it is not a significant amount then why have they not already offered that. There are those of us below the median income who do not think $250K is terribly rich. In business you could lose that amount quickly.

  3. Damon Day says:

    250,000 to me is just about the point where someone can have a comfortable lifestyle and start to think about investing in or starting businesses. Not that you can’t do that making less, but 250,000 is not enough to be rich, but is enough to take a shot at becoming a job creator. I think restricting burdens on these people is better for the economy as a whole.


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