Tax question

I heard today from a friend that the Obama plan

"Middle class families will see their taxes cut – and no family making less than $250,000 will see their taxes increase. The typical middle class family will receive well over $1,000 in tax relief under the Obama plan, and will pay tax rates that are 20% lower than they faced under President Reagan. According to the Tax Policy Center, the Obama plan provides three times as much tax relief for middle class families as the McCain plan."

Has been adjusted and the "line in the sand" is now $100K instead of $250K. Is that true?

 

Who knows for sure. I don't get why middle class incomes are $250,000 a year I would think the cap should be perhaps a third of that. Who the heck figured out middle class is some family making over $100,000 a year I would think that would be in the upper class.

 

I don't agree. $82K is upper class (1/3 of $250K)? In what world?

 

Lets see being realistic here an average person I know in Florida who is a typical professional say a teacher is earning $40,000 with a Masters. Double that I would take that to be Middle Class that is two average professional teachers with some experience would be pretty much Middle Class. That is here under consideration two experienced professionals as the norm for what this should be.

 

What about two people living in NYC making $80K? Are they on the verge of upper class?

I don't really want to go down this road but that is what I shoot for...being average. Just remember - If you lick the lollipop of mediocrity you suck forever.

 

Being rich is not about how much money you make; it is about how you make your money. In America, everybody seems to want to be "middle class," whatever that means. The Brits have it right, I think. In Great Britain, (a) if you work for your money, you are working class, (b) if your money works for you, you are upper class, and (c) if you work for some of your money and some of your money works for you, you are middle class.

 

I never got the whole deal with money for me I work to meet the needs for my life, and flextime an average of 30 hours a week earning $30,000 a year wioth good benefits. My wife works for herself as an educational advisor for home schooling families and unschooling young people earning around $22,000 a year. We are not rich but I consider our family middle class we have a home we own, can provide for our childrens needs and some of their wants and are frugal in our spending. Example why rent DVD movies when most we can get from the library and do an interlibrary loan from most county libraries. For example we will get The Wrestler right away we put in a reserve for it once they ordered it. The Watchemen we will do that same wait until the libraries order it a reserve a copy to be shipped to our local library to watch - free save for our local taxes. We have basic cable for $12 a month which is fine. Use dial-up for internet access which is clearly suitable.

I think the issue is what should be Middle Class and I say take the average of two professional people like us, double it and you will have a good range on the high end. If $250,000 is Middle Class then they better increase the poverty line a great deal in my view.

 

pretty good discussion on wikipedia:

American middle class

I believe there are way too many variables to use any one measure as "middle class", especially income (around here the number of cars on blocks helps determine your class status). But at least it is directly measurable. Perhaps the term shouldn't be used but rather just income ranges.

 

I could not agree more. Some people have different needs in life. Some like to have/buy certain things or have expensive hobbies. Some would rather work themselves like a dog now in hopes of an early retirement or to prepare and stash away a nest egg in preparation of a life changing event...like...the need to stop working and care for a aging parent or ill spouse.

I agree with increasing the poverty line. If thesePoverty Thresholds for 2007 by Size of Family and Number of Related Children Under 18 Years are used, I think that would border on homeless due to not making enought to cover the rent and basic living expenses.

 

Your cost of living must be very low in Florida, and I believe in your state you don't need to pay any income taxes.

Let's take your example of $250K combined income on Long Island, New York.

Federal income taxes paid - around $77K (assuming AMT is paid)
State income taxes paid - around $15K (going up shortly)
Other taxes and deductions - around $10K

So, right off the bat the $250K is closer to $150K. Definitely still a decent income.

Average price of a home on Long Island in an acceptable school district - around $500,000 (previously this was higher). This would get you a 30 year old, 2000 square foot house on 1/3 to 1/2 an acre. Let's assume a 30 year mortgage @ 5.5%, with 20% down (the safe, responsible choice).

Add in an average amount of property tax for Long Island in this range of house - let's say around $7,000 per year.

So let's drop that $150K down to $116K when you factor in mortgage + property taxes.

Now both parents are working so they'll need daycare for their two children. Deduct another $1K per month (the Long Island average) per child.

We're now down to $92K. Suddenly that $250,000 "rich" salary doesn't sound as rich. Also, down the road, if your kids want to go to Harvard they'll probably get a free ride. I'll be footing the whole bill. No complaints, just an observation.

The reality is that "middle class" is whatever you make of it, and is very much dependent on where you live. Middle class, for example, in India, means workers earn on average considerably less than what you make. On the other hand, if you live in Silicon Valley, you get a tiny house on a postage stamp for $1M. You NEED to earn more in order to be able to afford it.

My philosophy of the definition between rich/wealthy/affluent and middle class (upper/lower/whatever) is that in the former example people can live off their assets. In the latter, people need to earn a living in order to survive. Not working isn't an option.

 

I think I can keep this simple. Middle Class should be defined as:

With prudent living and expectations, not prone to extremes of either being cheap or affluent living, one can live without immediate fear of ones ability to provide essential needs and reasonable levels of wants.

Essential needs would be necessary for survival and a basic and sensible level say for a easy standard for housing a family of four living in a nice, well-built home with proper appliances and systems with maybe 1500 square feet of living space. Roughly a large post-WW II home by the standards of the day. Same for clothing, food and other things deemed necessary.

 

Can you use the Hollywood standards of "not prone to extremes" That would mean I need $10K a month for a clothing shopping budget!

 

Who gets to decide what is "cheap" or what is "affluent"?

Should the prices be set the prices equally across the country according to a defined "housing standard"?

What are "proper" appliances?

What defines "necessary" clothing and "necessary" food?

You get my point. I'll now bring it back to a more civil footing.

Your lifestyle sounds a lot like what I grew up with - my father worked, my mother didn't have to work, and we lived in a nice house in a nice neighborhood. I had food, clothing and shelter. Definitely within your definition of "middle class".

Coming back to your point - by your implication, if someone is higher than "middle class", what does this mean? Should they be taxed more? I argue that I use the same services that you use (perhaps more, perhaps less) but pay considerably more in taxes than you do - I pay more in federal tax than your combined family income. Why should I pay still more? I'm fortunate that my wife and I have careers that pay well, but feel that I pay enough - especially once NY implements its tax increase this year, and when my Federal taxes go up after 2010.

 

Back to the question - I found the answer here - Senate Tax Chair Wants Vote This Year to Raise Taxes on People Making as Little as $104,425 .

 

Actually, affluent is not the same as rich/wealthy. Rich/wealthy can live off its assets; affluent makes a lot of money, but still must work for a living.

 

And why a family of four in particular?

 

why am i so poor?

 

I'll buy into that definition, but neither the media nor Congress makes such a distinction.

 

That is because neither Congress nor the media knows what the (bleep!) it is talking about.

 

Don't forget to include college loans. If two people are making $100,000+ out of college, they probably have advanced degrees, which were paid for in part or totally through loans. Then there are car and healthcare costs...