Re: Taxing the rich - what is the cutoff?
 

[quote=Schneed10;453146]Major student loans definitely throw a wrench in the works. But few have to rack up the kind of debt that SGG did. Usually, you either get grants or aid, or go to a state school in college to keep the debt lower in undergrad. Law school or med school will undoubtedly be expensive.

As for kids in daycare, I still maintain that there are so few people making $250K who also have 2 or more kids in daycare that it's not even worth discussing. Not too many late 20s/early 30 somethings make that much money, it takes a while to work up to $250K for most folks.[/quote]
I can't speak for the general population, but in the DC area, with so many attorneys and IT professionals, you would be surprised how many 30 year olds with 2 kids and a household income of around $250k there are. As I mentioned, starting salary for a 25-year old is $160k at the major firms, which is thousands of people in this area.

Re: Taxing the rich - what is the cutoff?
 

[quote=firstdown;453143]Also how many people making around 250,000 will decide that it does pay to make the 250,000 and instaed make 245,000 and still bring home more money then if they make $250,000. Heres the math. If a person makes 250,000 their additional tax is $7,000 which drops their pay to 243,000 and if they made $245,000 they do not have this additional tax. For people who have their own business they would just change how they pay themself. For the person who said they only work 2 months to pay taxes here is the math. Their tax bracket is around 33% and 33% of 12 months is 3.96 months or around $82,500 if making 250,000. If we jump that an additional 3% now they are working 4.32 months to pay taxes. I just feel thats not fair.[/quote]

Bad math, but I suspect just about everyone in this thread is making the same mistake.

They would tax an additional 3% only on the amounts beyond $250K.

So if you make exactly $250K, your tax is not affected. If you make $251K, they take 3% of the money BEYOND $250K. So it would be 3% of $1000. Or $30 extra.

That's the biggest reason why those making $250K wouldn't feel it at all. If you make $500K, you're going to feel an appreciable difference in your tax bill, but you make so darn much it wouldn't be a problem.

Re: Taxing the rich - what is the cutoff?
 

[quote=onlydarksets;453148]That's the marginal tax rate, not the average tax rate. You pay the percentage on the bracket in which that particular dollar of income falls:
[URL="http://en.wikipedia.org/wiki/Tax_rate#Marginal"]Tax rate - Wikipedia, the free encyclopedia[/URL][/quote]
Here's a better explanation:
[url=http://en.wikipedia.org/wiki/Progressive_taxation#United_States]Progressive tax - Wikipedia, the free encyclopedia[/url]

Re: Taxing the rich - what is the cutoff?
 

[quote=onlydarksets;453150]I can't speak for the general population, but in the DC area, with so many attorneys and IT professionals, you would be surprised how many 30 year olds with 2 kids and a household income of around $250k there are. As I mentioned, starting salary for a 25-year old is $160k at the major firms, which is thousands of people in this area.[/quote]

I should run that lawyer salary by my lawyer friends around here in Philly. They start out at $60K. Must not be "major" firms.

Re: Taxing the rich - what is the cutoff?
 

[quote=firstdown;453143]Also how many people making around 250,000 will decide that it does pay to make the 250,000 and instaed make 245,000 and still bring home more money then if they make $250,000. Heres the math. If a person makes 250,000 their additional tax is $7,000 which drops their pay to 243,000 and if they made $245,000 they do not have this additional tax. For people who have their own business they would just change how they pay themself. For the person who said they only work 2 months to pay taxes here is the math. Their tax bracket is around 33% and 33% of 12 months is 3.96 months or around $82,500 if making 250,000. If we jump that an additional 3% now they are working 4.32 months to pay taxes. I just feel thats not fair.[/quote]

You do realize that it's a progressive tax don't you? In 2008 you pay 33% on anything above $164,550 (you pay .33 on 85K not the entire 250K).

Re: Taxing the rich - what is the cutoff?
 

[quote=Schneed10;453153]I should run that lawyer salary by my lawyer friends around here in Philly. They start out at $60K. Must not be "major" firms.[/quote]
[url=http://www.infirmation.com/shared/search/payscale-compare.tcl?city=Washington]Sortable Salary Comparisons[/url]

These numbers don't include bonuses, which run $15-60k (or higher) depending on hours billed.

Re: Taxing the rich - what is the cutoff?
 

[quote=724Skinsfan;452815]What point of mine are you disagreeing with? I'm fairly certain my post said nothing about people earning 250k deserve to get taxed more.[/quote]

[COLOR=black][FONT=Verdana]Wasn't disagreeing, was just quoting you.. :)[/FONT][/COLOR]

Re: Taxing the rich - what is the cutoff?
 

I found my daughters 4 year degree cost use around $60,000 going to an in state school. She just graduated this year and has found her first job making $36,000 plus benefits. So while thats not a ton of money it is giving her a good start. When she was looking at schools I gave her the choice of any in state school (not private) which really helped with cost. In Va. we have pretty good schools and I just did not see an advantage of going out of state but I'm sure thats not true for all people.

Re: Taxing the rich - what is the cutoff?
 

Probably works for the state or government. Them lawyers get squat diddy. But even at major/minor law firms they still don't make enough to warrant 250K education tab.

Re: Taxing the rich - what is the cutoff?
 

[quote=saden1;453158]Probably works for the state or government. Them lawyers get squat diddy. But even at major/minor law firms they still don't make enough to warrant 250K education tab.[/quote]
To be fair, for SGG that included 4 years undergrad, which probably accounts for half of it.

Re: Taxing the rich - what is the cutoff?
 

[quote=onlydarksets;453155][URL="http://www.infirmation.com/shared/search/payscale-compare.tcl?city=Washington"]Sortable Salary Comparisons[/URL]

These numbers don't include bonuses, which run $15-60k (or higher) depending on hours billed.[/quote]

OK thanks for that info. I had no idea the average lawyer made so much money.

Re: Taxing the rich - what is the cutoff?
 

I remember a professor I had early on in college pulled me aside once and suggested I should look into going to law school. I should have listened. :doh:

Re: Taxing the rich - what is the cutoff?
 

[quote=Schneed10;453162]OK thanks for that info. I had no idea the average lawyer made so much money.[/quote]
The dilemma is that, in order to get those jobs, you have to either attend a top 10 school (which in most cases will set you back $140k+), or be at the top of your class in a top 50 school (which can still cost you $140k+).

Re: Taxing the rich - what is the cutoff?
 

[quote=onlydarksets;453165]The dilemma is that, in order to get those jobs, you have to either attend a top 10 school (which in most cases will set you back $140k+), or be at the top of your class in a top 50 school (which can still cost you $140k+).[/quote]

OK yeah, now it's starting to make sense.

I found this source for attorney starting salaries in the US, it's definitely not in the 6 figures. I guess to land a job at a "major" firm you need, like you said, top credentials:

[url=http://www.payscale.com/research/US/Job=Attorney_%2f_Lawyer/Salary]PayScale - Lawyer Starting Salaries, Average Salary for a Lawyer[/url]

And this chart here seems to indicate why you guys in the DC area would be used to very high lawyer salaries:

[url=http://www.payscale.com/research/US/Job=Attorney_%2f_Lawyer/Salary/by_City]PayScale - Attorney / Lawyer Salary, Average Salaries by City[/url]

Re: Taxing the rich - what is the cutoff?
 

[quote=Schneed10;453168]OK yeah, now it's starting to make sense.

I found this source for attorney starting salaries in the US, it's definitely not in the 6 figures. I guess to land a job at a "major" firm you need, like you said, top credentials:

[URL="http://www.payscale.com/research/US/Job=Attorney_%2f_Lawyer/Salary"]PayScale - Lawyer Starting Salaries, Average Salary for a Lawyer[/URL]

And this chart here seems to indicate why you guys in the DC area would be used to very high lawyer salaries:

[URL="http://www.payscale.com/research/US/Job=Attorney_%2f_Lawyer/Salary/by_City"]PayScale - Attorney / Lawyer Salary, Average Salaries by City[/URL][/quote]
No question. NYC and DC are the lawyer capitals of the country. NYC tends to set prices for the rest of the country, in terms of when salaries increase. Salaries have skyrocketed lately. 10 years ago, starting salary was around $85k in DC.

So, it's possible that my world-view is skewed when it comes to this. About half the people I know fall into the mid-30s, 2 kids, household income over $250k (lawyers, IT, investment banking) category. All of them can afford the increase, but only a few would I categorize as affluent, and none would I describe as "rich" or "wealthy".

Re: Taxing the rich - what is the cutoff?
 

[QUOTE=Schneed10;453162]OK thanks for that info. I had no idea the average lawyer made so much money.[/QUOTE]

The average lawyer does not make so much money. The notion that anyone can get a $160K job just by graduating law school is dead wrong, and it is the misconception which draws young 22 year olds into the profession. There are about 180 accredited law schools and the big firms tend to hire about 50% of their attorneys from the top 15 schools and the remainder from the top 40 or so. Rarely does a big firm hire a law student from a second tier law school, let alone a third tier law school.

Most 3rd, 2nd, and 1st tier law school grads become public defenders, prosecutors, government lawyers, public interest lawyers, or small firm lawyers. The average law school grad does not work for a 1,000+ attorney firm paying $160K to newly minted attorneys.

Moreover, many big firms pay a lot, but they expect their first years to pay them in blood and with their first born. There is a reason why roughly 50% of those highly paid lawyers leave their jobs within the first 3 years, notwithstanding the fact that they are faced with a mountain of debt.

EDIT - I just read your other post in which you basically said what I noted above.

Re: Taxing the rich - what is the cutoff?
 

750k house with 150k down seems low and high as far as the money goes, especially if they wanted to be close to work.

also, if they actually had to go to a dentist/doctor they'd throw those numbers out of whack as well (besides loans), since PPOs and dental plans just don't pay for everything.

not saying your numbers are completely unreasonable, but it's not the end all, and a dual income household in DC can very easily hit 250k.

the biggest thing is the relative buying power of that 250k isn't nearly as high in DC as it would be in montana, but both households get taxed equally, since there's no CoLA for major cities (of course, it's a bit harder to make 250k/year in montana though).

Re: Taxing the rich - what is the cutoff?
 

[QUOTE=saden1;453141]Look on the bright side, it' an investment in yourself and potential earning. Plus your interest is tax deductible, and I'm not sure about this one but couldn't you deduct your loan payment as an educational expense as well?[/QUOTE]

The interest is deductible, but I still take a huge hit on the interest for my student loans. The student loans are, to my knowledge, not deductible as an educational expense (e.g., a Hope of Lifetime Learning Credit) because I am no longer a student.

Re: Taxing the rich - what is the cutoff?
 

[quote=Sheriff Gonna Getcha;453170]Moreover, many big firms pay a lot, but they expect their first years to pay them in blood and with their first born. There is a reason why roughly 50% of those highly paid lawyers leave their jobs within the first 3 years, notwithstanding the fact that they are faced with a mountain of debt.[/quote]
That's an excellent point that I failed to mention.

Re: Taxing the rich - what is the cutoff?
 

You mean to tell me lawyers aren't as rich and flamboyant as they are on tv?

Re: Taxing the rich - what is the cutoff?
 

[quote=saden1;453154]You do realize that it's a progressive tax don't you? In 2008 you pay 33% on anything above $164,550 (you pay .33 on 85K not the entire 250K).[/quote]

Your fuzzy liberal math makes my head spin. Flat tax baby!!

Re: Taxing the rich - what is the cutoff?
 

[quote=onlydarksets;453132]If you have young kids requiring daycare and student loans, this budget goes out the window, and the 3% is going to be felt.[/quote]

Not for a couple making exactly $250K. They would not be affected at all. They make 0 in excess of $250K. 3% of 0 is 0. Me = good at math.

A couple making $300K would pay an extra 3% on the $50,000 in excess of $250K. 3% of $50,000 is $1500 per year.

The extra $50K a year in income would allow someone to cover the student loans you mention, the daycare, and the $1500 extra in taxes, and still fit just fine into the budget I laid out.

Re: Taxing the rich - what is the cutoff?
 

I think I agree with those who said that the question isn't "What is rich?" but rather "Is it fair that the 'rich' should pay a higher percentage?" Whether it is 250k, 500k or whatever is minutae to me. All the same. You're still arbitrarily making someone fork over more money than the next guy.

Re: Taxing the rich - what is the cutoff?
 

One final point, doesn't saying that you need more than $250K to be comfortable in DC just fail to pass the sniff test? If anybody wants to see how $250K can be comfortable in any market, give it to me, I promise I'll show you!

Keep in mind, the budget I laid out is LAVISH. That is a ton of discretionary spending. If you need more than $250K to be comfortable, you need to have your head examined.

Re: Taxing the rich - what is the cutoff?
 

[quote=Schneed10;453182]One final point, doesn't saying that you need more than $250K to be comfortable in DC just fail to pass the sniff test? If anybody wants to see how $250K can be comfortable in any market, give it to me, I promise I'll show you!

[B]Keep in mind, the budget I laid out is LAVISH. That is a ton of discretionary spending[/B]. If you need more than $250K to be comfortable, you need to have your head examined.[/quote]
Sorry, Schneed, but that's just picking and choosing. You laid out what [U]you[/U] believe is an average budget. You missed a number of [U]huge[/U] expenses, which we discussed. Let's look at another realistic budget, based of your initial work:

[quote]PreTax Income $250,000

Expenses
Federal Taxes -61,229
State Income Tax: Maryland -11,948
Healthcare Insurance: PPO @ $120 per Paycheck -3,120
Dental Insurance: $20 per Paycheck -520
Mortgage: $750K House, $600K Mortgage @ 6.0% -43,168
[B]Childcare (all 3) -43,200
[/B]Car Payment 1: $30,000 Car -6,453
Car Payment 2: $40,000 Van/SUV
Car Maintenance -2,000
Gasoline @ $300 per Month Per Car -7,200
Groceries for Family of 5: $1200 per Month -14,400
Electricity & Heat -2,400
Water -540
Cable TV, Phone, Hi Speed Internet, Cell Phone -3,000
Home Maintenance -5,000
Groundskeeping -2,000
[B]Student Loans -15,000
[/B]Total Expenses -221,178

Discretionary Income before Federal Tax Return 70,419
Federal Tax Return: Assuming AMT Kicks In 21,407
Discretionary Income 91,826

Discretionary Spending
Retirement Savings @ 10% of Income -62,500
College Savings: 3 Kids @ $300 per Month Per Child -10,800
Vacation -5,000
Christmas, Birthdays, and Gifts -5,000
Entertainment & Merchandise @ $400 per Month -4,800
Eating Out @ $200 Per Month -2,400
Discretionary Spending -90,500

Annual Savings (Loss) ($40,271)
[/quote]That's a $40k negative budget. I think that covers all of the "lavish discretionary funds". I even took out one of the cars (assuming you have a jalopy that's paid off). You can even remove one of the kids, and it doesn't get you down to break even.

I am certainly not saying you can't live comfortably at $250k. I'm saying it sure ain't "rich" (even from a cash flow perspective), which was the original question.

Re: Taxing the rich - what is the cutoff?
 

[quote=FRPLG;453180]I think I agree with those who said that the question isn't "What is rich?" but rather "Is it fair that the 'rich' should pay a higher percentage?" Whether it is 250k, 500k or whatever is minutae to me. All the same. You're still arbitrarily making someone fork over more money than the next guy.[/quote]

Is it really arbitrary if it is based on income? Arbitrary indicates randomness, like everyone whose social security number ends it 8 is placed in tax bracket X. That would be arbitrary.

I mean, even the Fair Tax people argue that their plan is a progressive form of taxation. I guess I'm confused by what you would offer in place of progressive taxation. A flat tax for everyone regardless of income?
Abolishing the Federal Government entirely?

Re: Taxing the rich - what is the cutoff?
 

[QUOTE=SC Skins Fan;453186]I guess I'm confused by what you would offer in place of progressive taxation. A flat tax for everyone regardless of income?
Abolishing the Federal Government entirely?[/QUOTE]

I would like to see a flat tax, with people making under $X exempt altogether. Of course, that would force the government to drastically reduce spending, but I'm all for slashing various budgets (e.g., defense, certain farm subsidies, etc.).

Re: Taxing the rich - what is the cutoff?
 

[quote=Schneed10;453179]Not for a couple making exactly $250K. They would not be affected at all. They make 0 in excess of $250K. 3% of 0 is 0. Me = good at math.

A couple making $300K would pay an extra 3% on the $50,000 in excess of $250K. 3% of $50,000 is $1500 per year.

The extra $50K a year in income would allow someone to cover the student loans you mention, the daycare, and the $1500 extra in taxes, and still fit just fine into the budget I laid out.[/quote]
Yes, you are correct on the 3% - my bad. I still disagree on the budget, though.

Re: Taxing the rich - what is the cutoff?
 

[quote=onlydarksets;453185]Sorry, Schneed, but that's just picking and choosing. You laid out what [U]you[/U] believe is an average budget. You missed a number of [U]huge[/U] expenses, which we discussed. Let's look at another realistic budget, based of your initial work:

That's a $40k negative budget. I think that covers all of the "lavish discretionary funds". I even took out one of the cars (assuming you have a jalopy that's paid off). You can even remove one of the kids, and it doesn't get you down to break even.

I am certainly not saying you can't live comfortably at $250k. I'm saying it sure ain't "rich" (even from a cash flow perspective), which was the original question.[/quote]

You're way biased on this one though. There are [B]very few[/B] couples with 3 kids requiring daycare who also make $250K, mainly because people who make $250K are in their 40s or higher. If all 3 kids do require some form of care, it would be of the after-care variety for at least one (if not two) of the kids, which is a fraction of full daycare costs. I maintain that your daycare cost has to come out of the equation. Is there a scenario where someone could have 3 kids who were born back to back to back, ages 3, 2, and 1, all requiring full daycare? And at the same time owing $200K in student loans? I guess so, but it's so friggin rare and not worth discussing from a political standpoint.

Student loans are an issue in this budget, I'll grant you that. But I can find room for those. Drive a $20,000 car and a $20,000 minivan instead. Cut your grocery bill back by $200 a month by buying chicken instead of steak. Don't spend so much on Christmas. Do the yardwork your damn self. And cut your $400 a month in entertainment down by half.

Re: Taxing the rich - what is the cutoff?
 

Not to mention that a portion of the couples who make $250K or more are made up of one bread-winner and one stay-at-home parent. Surgeons, high-level lawyers in the firms you mentioned, executives, brokers, real estate agents, and salesmen are some that come to mind. In which case there are no childcare costs.

You can come up with a scenario where someone would struggle on almost any income, but that doesn't mean it's worth discussing from a policy perspective. If we're setting a cutoff for a higher tax rate, we should be talking about whether MOST people would be comfortable. From a policy standpoint, we can't try to account for every worst case scenario.

Re: Taxing the rich - what is the cutoff?
 

[quote=Schneed10;453193]You're way biased on this one though. There are very few couples with 3 kids requiring daycare who also make $250K, mainly because people who make $250K are in their 40s or higher. If all 3 kids do require some form of care, it would be of the after-care variety for at least one (if not two) of the kids, which is a fraction of full daycare costs. I maintain that your daycare cost has to come out of the equation. Is there a scenario where someone could have 3 kids who were born back to back to back, ages 3, 2, and 1, all requiring full daycare? And at the same time owing $200K in student loans? I guess so, but it's so friggin rare and not worth discussing from a political standpoint.

Student loans are an issue in this budget, I'll grant you that. But I can find room for those. Drive a $20,000 car and a $20,000 minivan instead. Cut your grocery bill back by $200 a month by buying chicken instead of steak. Don't spend so much on Christmas. Do the yardwork your damn self. And cut your $400 a month in entertainment down by half.[/quote]

Daycare is 3 mos-6 years, not 1-3 years. Even so, I addressed that:
[quote=onlydarksets;453185]You can even remove one of the kids, and it doesn't get you down to break even.[/quote]

Look, you setup a budget for one demographic and applied it across the entire tax bracket. You've made assumptions about the average age, education level, debt, parenting age, and child age that are not as universal as they once were. Pointing that out is not bias - it's informing the discussion.

And where did I ever say that you could not live comfortably on $250k?

Re: Taxing the rich - what is the cutoff?
 

[quote=Schneed10;453198]Not to mention that a portion of the couples who make $250K or more are made up of one bread-winner and one stay-at-home parent. Surgeons, high-level lawyers in the firms you mentioned, executives, brokers, real estate agents, and salesmen are some that come to mind. In which case [U]there are no childcare costs.[/U][/quote]
That's incorrect. Everyone pays for preschool.

[quote=Schneed10;453198]You can come up with a scenario where someone would struggle on almost any income, but that doesn't mean it's worth discussing from a policy perspective. If we're setting a cutoff for a higher tax rate, we should be talking about whether MOST people would be comfortable. From a policy standpoint, we can't try to account for every worst case scenario.[/quote]
That, we agree on. The difference of opinion is that I believe the demographic I describe makes up a larger portion of the population than I think you would admit. I can't find any numbers on it, but send them on if you have them.

Re: Taxing the rich - what is the cutoff?
 

onlydarksets, your budget isn't realistic, it's someone living beyond their means budget.

Re: Taxing the rich - what is the cutoff?
 

[quote=saden1;453205]onlydarksets, your budget isn't realistic, it's someone living beyond their means budget.[/quote]
I never said it was - I said the "lavish discretionary money" that Schneed put in capital letters has to go away. With a couple of very realistic tweaks, it's a comfortable, but not lavish, budget.

Re: Taxing the rich - what is the cutoff?
 

[quote=saden1;453154]You do realize that it's a progressive tax don't you? In 2008 you pay 33% on anything above $164,550 (you pay .33 on 85K not the entire 250K).[/quote]
What source do you have that says its a progressive tax. I did find that he also wants to increase SS tax for people making over 250,000.

Re: Taxing the rich - what is the cutoff?
 

[QUOTE=saden1;453205]onlydarksets, your budget isn't realistic, it's someone living beyond their means budget.[/QUOTE]

Perhaps, but it's not like they are driving around in BMWs with gold-plated 22s and sippin' on $500 bottles of champagne. Households earning more than $250K live [U]very[/U] comfortably in any market with any reasonable number of kids, but they are by no means "rich" (which is what this thread is about).

It strikes me as somewhat unfair to say to upper-middle class families, "You make more money than the rest of us, so hand over your money to the rest of us by allowing the government to tax you at a rate that is four times higher than mine." True, those upper-middle class families benefitted from our current government and infrastructure. But let's not act like families earning $250K are just sitting on trust funds their parents set up or merely have to breathe in order to make the cash; that is by far the exception to the rule. Most households earning $250K+ have breadwinners who have to bust their asses to make that kind of money and took enormous risks to get there (see, e.g., school debts incurred without any promise of a good ROI). Many people earning $40-$50K per year work 9-5 jobs. Most people earning $250K work 11 hour days, don't leave work at the workplace, etc. Moreover, even under a flat tax system, their per capita tax burden is far and away more onerous than that which others have to carry.

Don't get me wrong, the lives of those earning $250K or more is not a sob story. But, these people are NOT rich IMO.

Re: Taxing the rich - what is the cutoff?
 

[quote=onlydarksets;453185]Sorry, Schneed, but that's just picking and choosing. You laid out what [U]you[/U] believe is an average budget. You missed a number of [U]huge[/U] expenses, which we discussed. Let's look at another realistic budget, based of your initial work:

That's a $40k negative budget. I think that covers all of the "lavish discretionary funds". I even took out one of the cars (assuming you have a jalopy that's paid off). You can even remove one of the kids, and it doesn't get you down to break even.

I am certainly not saying you can't live comfortably at $250k. I'm saying it sure ain't "rich" (even from a cash flow perspective), which was the original question.[/quote]

Holy crap! Looks like your fictitious couple has bigger problems then the $0 extra tax dollars they would be paying under a system that added 3% to income over $250K. Better get them some food stamps and start up the welfare payments pronto! Hope no one in the D.C. area makes any less than $250K because they might as well put a gun to their head right now!

Re: Taxing the rich - what is the cutoff?
 

[quote=firstdown;453214]What source do you have that says its a progressive tax. I did find that he also wants to increase SS tax for people making over 250,000.[/quote]
[url]http://www.thewarpath.net/parking-lot/23698-taxing-the-rich-what-is-cutoff-4.html#post453152[/url]

Re: Taxing the rich - what is the cutoff?
 

I sure would love to try to scrape by on $250k. :)

Re: Taxing the rich - what is the cutoff?
 

[quote=onlydarksets;453219][URL]http://www.thewarpath.net/parking-lot/23698-taxing-the-rich-what-is-cutoff-4.html#post453152[/URL][/quote]
So for a link I get someones post here on this thread? I was looking for a real source. I did not see any links on that page so I'm assuming it was a post you directed me too.