Video about wealth inequality

[StephanieZ]

Most are investing in other ways, with their after tax dollars, so they have a hope of living and eating in retirement. Taxing their capital gains at an even higher rate just puts them further behind. But hey, who cares. We got a contract. Those pensions gotta be paid off their backs.

 

This makes little sense to me. 

 

 

We just started a SIMPLE IRA at our business so we (and our staff) can save substantially pre-tax for retirement. Under 50, the annual cap is 12,500 in employee contributions. Over 50, it's 15,500 or something around that. The 3% match from the employer is on top of that, so you're looking at around 13-19k/yr MAX in contributions depending on earnings. When I run the numbers, with a 20 year time horizon, dh and I should accumulate around 1 million dollars in that account assuming a rough 30k/yr contributions and 6% return. If we had 40 years, it'd be over 4 million. We've never had a 401k or other plan where you could save substantial amounts, so this is new to us, but from what I understand, 401k and other plan limits are even higher, like 18k/yr. That's a good amount of money . . .

 

And, yes, our family made the choice to keep ME working so that I could use the SIMPLE IRA plan. That's the only reason I work, so I can contribute to my own SIMPLE IRA in order to maximize the pre-tax retirement savings we can do. My entire paycheck goes to the SIMPLE and to taxes. 

 

Everyone I've known who was high earners (over 100k/family) had some sort of 401k at work or, if self-employed, set up a SIMPLE IRA (as we did) or similar plan(s) to save for retirement. That's a pretty decent amount of pre-tax savings. 

 

Those I knew who had more available to save than they could put away pre-tax either invest it in after-tax regular accounts or buy investment real estate, etc. One does not HAVE to have tax advantaged ways to save to save. In fact, all those pre-tax accounts are ultimately taxed at withdrawal, so it's not like you get away without ever paying any taxes on those monies. (It's a big advantage, don't get me wrong, but it's not like you never pay ANY taxes . . . ) Having some non-tax-advantaged investments is helpful in numerous ways, actually. 

 

Honestly, my long term retirement strategy does hope for/expect low cap gains rate . . . and if the cap gains rate goes up a lot for us when we sell our business (near retirement age), we'll be bummed to pay a higher rate . . . But, TBH, is it fair that a working family pays income tax on their entire earnings but a wealthy family pays so much less on cap. gains? I don't think it's fair, really. . . . And, TBH, I don't think we'd have done anything differently if we'd known at the outset that our cap gains rate would ultimately be higher. The benefits to us of owning the business for decades would  not be negated by a lower profit at sale. Likewise the other non-retirement investments we make . . . You can *never* count on future tax laws. Doing so is just foolish.

[StephanieZ]

This is interesting and instructive.  A person who considers herself well-off (and who is indeed in a very very high %ile by world standards) is accumulating wealth because of insecurity, in a country which in fact does have a social security and medicare system.

 

Personally I trust that the system designed for all Americans will probably be "good enough" for me, as long as I have a paid-off home.  I choose not to make decisions based on fears of what might happen.  Yes, I know things "could" happen and life could get hard in many ways, financial and otherwise.  But I believe that no amount of wealth can really protect us from the unknown future.  I don't try to control things I can't control.

 

Of course our tax-funded elder support / elder care system is not perfect, and I am certain that is the case in every other country too.

 

But if the elder care system is the problem, IMO the elder care system should be the target.  If taxpayer-funded disabled care is the problem, disabled care should be the target.  Targeting wealthy people just on the basis that they have built wealth is counterproductive.  Especially since, as you pointed out, some people are building wealth primarily because they are insecure about what the government is going to do with our tax money.  A focus on bringing down their wealth is only going to make them more insecure, without fixing anyone else's insecurity problem.

 

And yet, this real insecurity is solved by nearing 2-3 million assets per person (when, by my calculations, you can indeed be confident that in all likelihood, you can hire all the reasonable help needed and buy all the stuff needed, to live indefinitely without burdening family or being institutionalized).

 

But, that top 1% that has, what, 40% of the total wealth of the nation?? That kind of wealth is not about security, IMHO, but power and greed. 

 

That said, I think it is really cool that you don't have that sort of fear or need to accumulate wealth. That you can enjoy and spend your family's earnings without worrying about accumulating large wealth. I suppose that is perhaps a personality or psychological trait. I am generally a high anxiety worrier and compulsive planner. Always have been. Always will be. I deal with it in lots of ways, and planning for worst-case scenarios is part of it. I totally think it's awesome that you don't have that worry. Way to go. :) Sincerely, not being snarky! 

[Pam in CT]

Nick Kristof of the NYT is once again lurking on our threads.  Always nice to have a little affirmation, lol.

 

 

 

He snips from yet another data set on inequality from the Institute for Policy Studies (full underlying text here).  Among the opening sound bytes:

 

 

America’s 20 wealthiest people — a group that could fit comfortably in one single Gulfstream G650 luxury jet –­ now own more wealth than the bottom half of the American population combined, a total of 152 million people in 57 million households.

(the top 20 are personally named in the report, for the prurient curious)

 

 

Both the Kristoff op ed and more so the underlying IPS analysis do start to foray, tentatively, into some possible approaches to addressing inequality through public policy.

 

 

It also sent me down a bit of a bunny trail on the subject of charitable giving/behavior and its correlation =/- to wealth.  Kristof mentioned an image that to me succinctly captures the immense difficulties -- not the impossibility, but improbability -- of clawing to a more financially secure position than your birth lottery position points you to:

 

Paul Piff, a social psychologist, has conducted experiments in which Monopoly games are rigged so that one player has more money to start with and is almost predestined to win. It turns out that the wealthy player lords it over others and even grabs more pretzels from the communal bowl.

 

and that in turn prompted me to chase down Piff....

 

 

 

...The beginning is funny, but it gets quite insightful around 4:30 when it moves to how the "rigged" winner explained/constructed how and why they won, and the link between (in this case wholly rigged) resource allocation and sense of entitlement... and then works by the end to intriguingly redemptive research-based interventions that counteract this apparent wiring.  

 

 

 

 

[SKL]

 

Those I knew who had more available to save than they could put away pre-tax either invest it in after-tax regular accounts or buy investment real estate, etc. One does not HAVE to have tax advantaged ways to save to save. In fact, all those pre-tax accounts are ultimately taxed at withdrawal, so it's not like you get away without ever paying any taxes on those monies. (It's a big advantage, don't get me wrong, but it's not like you never pay ANY taxes . . . ) Having some non-tax-advantaged investments is helpful in numerous ways, actually. 

 

Honestly, my long term retirement strategy does hope for/expect low cap gains rate . . . and if the cap gains rate goes up a lot for us when we sell our business (near retirement age), we'll be bummed to pay a higher rate . . . But, TBH, is it fair that a working family pays income tax on their entire earnings but a wealthy family pays so much less on cap. gains? I don't think it's fair, really. . . . And, TBH, I don't think we'd have done anything differently if we'd known at the outset that our cap gains rate would ultimately be higher. The benefits to us of owning the business for decades would  not be negated by a lower profit at sale. Likewise the other non-retirement investments we make . . . You can *never* count on future tax laws. Doing so is just foolish.

 

The average working joe pays little to no income taxes.  They do not "pay income tax on their entire earnings."  Those in the middle who do pay are paying a reasonable amount, considering that we all benefit from taxpayer-funded infrastructure and amenities.

 

The purpose of the lower capital gains rate is to encourage investment which creates jobs, and to encourage savings which reduces the risk of catastrophe after people are too old to work.

 

Most tax benefits phase out above a fairly modest income level.  People who make high incomes pay a lot of taxes, as I'm sure you've noticed.  I don't agree that punishing them more will make the US a better place for us all to live.

[Entropymama]

I took two things away from this video. One, I understand a little better how we can be making such good money (my husband is a pastor, so take that with a grain of salt, but he makes much more than I ever thought he would) and still struggle to pay off student loans or go on vacation. We have six kids, so our expenses may be higher than the average family, but I genuinely have no idea how a family making $32,000 per  year makes it. 

 

Two, what can we do? There are no answers given in the video, nor have I ever heard anyone propose a solution that makes sense. 

[idnib]

One random thought . . . 

 

One of my primary reasons for wanting to amass a large amount of wealth (3-4 million for a married couple) is for "retirement". The reason I have determined that we need THAT much is to ensure that we could pay the massive costs for in-home nursing assistance if one of us needed it. Essentially, my drive to amass large wealth is driven by fear of our insecure elder care. Since we have to self-fund our late life care, we need massive wealth to do that without risking being institutionalized (which I DO NOT want and would gladly pre-authorize physician assisted suicide if I could, but that is not generally assured or even legal, and I don't want my children or spouse in legal jeopardy for helping me) and I don't want to be a burden to my kids. 

 

Likewise, we invest *many* thousands of (after tax) dollars per year in personal disability insurance to again insure against catastrophe should dh become disabled during his working years. If we spend 10k/yr for disability insurance, that's about 18k pre-tax . . . So an ENTIRE ADDITIONAL 8-9/hr  staff person could be employed if we didn't need to spend that on disability insurance . . . 

 

So, truly, if we had a better safety net for aging and disability . . . then I'd have much less need or desire to amass great wealth. I make all the major strategic financial decisions in my family, and I guarantee you that if I trusted any degree of a reasonable safety net for those needs (as many other countries do indeed provide), I would need *much* less wealth. As it is, one is driven to accumulate massive wealth to insure against the disaster of needing extensive lengthy medical/nursing care. If I did not have to worry about THAT need, then our need for retirement savings would be vastly less.

 

Honestly, our life-time adult major financial needs have been 1) paying back our own educational debts 2) paying for our kids to get through school with as little educational debt as possible so they aren't bound by it for decades as we have been and 3) making sure our late-life nursing/care needs are met without burdening our kids or ending up in an institution where we never wish to be. Those things, and only those, things are what drives our particular family to truly maximize our earnings and savings. 

 

Another driver for wealth accumulation is often the need to secure a fragile family member's well being (special needs children, etc.) . . . fortunately, we have not faced that challenge, although I certainly keep in the back of my mind the need to be able to take care of any of our children should some disaster strike . . . 

 

:iagree:

 

We also save most of our savings out of fear for retirement, medical expenses, needing extended senior care, colleges, and disability insurance. I'm not saying we would not save or buy those things, but if we had a better safety net we would decrease our accumulation in those areas and spend and donate more.

[SKL]

:iagree:

 

We also save most of our savings out of fear for retirement, medical expenses, needing extended senior care, colleges, and disability insurance. I'm not saying we would not save or buy those things, but if we had a better safety net we would decrease our accumulation in those areas and spend and donate more.

 

If your personal safety net costs millions of dollars in order to make you fee secure (in addition to what the government promises you), then does that mean it would cost millions of dollars x 300 million Americans (in addition to the current system costs) to make Americans all feel secure about their retirement?  If not, what would make Americans feel secure enough to not feel the need to accumulate significant wealth?  And why is it different for some people?

[idnib]

If your personal safety net costs millions of dollars in order to make you fee secure (in addition to what the government promises you), then does that mean it would cost millions of dollars x 300 million Americans (in addition to the current system costs) to make Americans all feel secure about their retirement?  If not, what would make Americans feel secure enough to not feel the need to accumulate significant wealth?  And why is it different for some people?

 

I don't know that it would cost what I personally find I need x 300  million people. There are many factors, such as cost of living, family support, and economies of scale. That last one is a very important one.

 

I have no idea why it's different for different people. I am very risk averse so I may be too cautious. My parents are immigrants to the U.S. and we are better off than any of the people in my extended family, so I don't feel that safety net I might feel if I had aunts, cousins, etc who were not thousands of miles away, living on less than $10k/year.

[SKL]

I'm glad you mentioned economies of scale, because that is also one argument in support of accumulating wealth (from a business perspective).  While concentration of wealth has its issues, there are also benefits, including less duplication of costs and the ability to afford to do something big (such as spend a lot on an experiment to ultimately improve lives or cut costs).  It isn't a perfect balance, but the value of economies of scale should not be discounted in the wealth discussion.  Now someone is going to argue that spreading it out is still possible via ESOPs etc., but still, you will have the insecurity and risk aversion of a small-time shareholder vs. the deep pockets of a rich decision-maker.

[Carrie12345]

If your personal safety net costs millions of dollars in order to make you fee secure (in addition to what the government promises you), then does that mean it would cost millions of dollars x 300 million Americans (in addition to the current system costs) to make Americans all feel secure about their retirement?  If not, what would make Americans feel secure enough to not feel the need to accumulate significant wealth?  And why is it different for some people?

 

As a start, shoring up Social Security would be an enormous relief in my house.  The last time I looked at our statements, they printed right on there that may be something like 50% less (I forget if the exact number was given) at our given retirement ages.  If we thought we'd receive the full amount, we could theoretically get by with zero extra dollars and no kids in the house!

 

That is, if we also had the comfort of "free" or easily affordable comprehensive health care.  Which we don't believe we will.

 

Just those two things alone would probably make me feel more comfortable spending almost all our money.

[MSNative]

Is it really charity if you supply the bandage to fix the wound you created? There are those who do good work no doubt, but it can't make up for underlying systemic problems.

Wow. The wealthy caused poverty? Bill Gates, Steve Jobs and the others all plotted to cause poverty? I assume you have data to back this up.

Systemic problems- I agree there are many though I'm sure we would disagree on what those are.

[MSNative]

I think there are two areas that really show how the powerful and connected can use their clout and cash to tip the scales: subsidies and regulation. I support getting rid of govt subsidies that pick winners and losers. We don't need govt making sugar subsidies or solar subsidies. Reducing regulations that make entry into certain industries expensive would also help. A NYC cab medallion can cost $1million just to be a cab driver there! Ridiculous. Certainly some regulations are useful but we have so many with so many associated fees and costs that it's out of control.

Edited February 18, 2016 by MSNative

[frogger]

Liking your post wasn't enough. And although I don't believe politics or any human can solve these problems, I do appreciate the gut wrenching real look inside the poorest and weakest among us.

 

My Dh has need to hire day laborers for the jobs he oversees. One, a man near 60, is a good worker that Dh asks for by name. His life is much like what you described except he is much older. He is a felon, an addict, has kids he can't care for etc. Recently, this man showed up to a job site drunk....the temp agency called Dh and told him if she saw the man she would have no choice to have him pee in a cup.....Dh went to the job site where the man was hiding from view....and he drove him home to save the man his $10 per hour/no benefits/temp job. Dh said he was so drunk he could barely walk and he cried all the way home. That haunts me. It haunts Dh.

 

And I have a distant cousin who is on FB sharing every horrible thing about her life and her choices. She has no clue how to navigate life, how to help herself, how to curb her own behavior to avoid much of the pain she suffers.

 

These are two stories out of 1000s. Can barely stand to think about it because I can do so little to help. But I do have compassion for them. And I have to say compassion feels much better than condemnation.

And to give addicts and others "wealth" won't make a difference. They will spend it on their addictions. The really poor, especially those with mental problems, can't have wealth. I watched one go through close to half a million inheritance and be ready for government assistance with in a year. Parties, drugs, and living it up makes money disappear fast. There is no way you can make someone like that "have" wealth. So I think videos like that are pointless.

 

Now social services are a different thing entirely. Providing basic services to people who can't care for themselves is not the same thing as trying to make people equally wealthy but it seems a much more attainable goal. Do some social services create faulty incentives? Of course, but some also add a lot of benefits especially for children who might have a chance of escaping. I would think a discussion about targeting helping people with the neccessaties of life and education would be more beneficial then the wealth argument.

 

Sadly, the lobbyist are ahead of CPS in making sure the connected get their bailouts and subsidies and CPS or OCS or whatever it is called in your state doesn't have those advocates. I think general videos like this would be less helpful then finding someone to advocate for needed resources in specific areas like the very needed rehab beds in my city or volunteering to help with foster care.

[ktgrok]

 

Sadly, the lobbyist are ahead of CPS in making sure the connected get their bailouts and subsidies and CPS or OCS or whatever it is called in your state doesn't have those advocates. I think general videos like this would be less helpful then finding someone to advocate for needed resources in specific areas like the very needed rehab beds in my city or volunteering to help with foster care.

 

But really, the video is less about those at the poverty line, those needing rehab beds or what not, and about the shrinking of the middle class. 

[Ausmumof3]

Wow. The wealthy caused poverty? Bill Gates, Steve Jobs and the others all plotted to cause poverty? I assume you have data to back this up.

Systemic problems- I agree there are many though I'm sure we would disagree on what those are.

I guess it's different in Aus because we don't have these giant tech companies that have made huge money. I actually think those who invent and make amazing stuff deserve their wealth and are often fairly generous with it. The two families I personally know who were wealthy, became wealthy through inventing stuff and are very generous. I do have an issue with the wealthy in our system who inherit wealth and exploit every loophole in our system to consolidate and increase their wealth while paying next to no tax. And use their influence to prevent any kind of change that benefits their workers.

 

I don't have a problem with first generation wealth earned by hard work and creativity.

 

I don't know what the big picture breakup as to which kind of wealth is most common but it would be interesting.

[MotherGoose]

A couple of things I think: first, saying that the "working people" this and that and by implication, those who are wealthy therefore don't work, is both inaccurate and disrespectful of the wealthy. Sure, there are trust fund babies counted in the wealthy, but most of them go to work every day. My husband began work doing blue collar ditch digging sorts of work, and has now passed up the ranks to management, and we are now considered wealthy. There was luck involved in his advancement, but mostly it was a whole lot of hard work. If you met me you'd have no idea we are wealthy. Our friends don't know. We are regular people. We no longer get any tax breaks for children or other things the "working class" gets to reduce our taxes. We pay an insane amount of taxes. And he still goes to work every day. Now they pay him for his knowledge and his people skills, not his ability to dig ditches. But he still works.

 

He makes too much money for us to take advantage of many tax breaks, and unlike the "working " people who get so many breaks, we pay taxes on most of our income (I think mortgage interest and charity are the only things we qualify for).

 

I will never be in favor of any tax increases because the government squanders the money they receive. If I thought it was actually being used efficiently and effectively I might feel differently. As for helping the mentally ill/addicts, if the government would decriminalize many behaviors and put the money they spend on incarceration towards treatment, it would help. Of course there are always going to be a fairly large percentage of the severely mentally ill/addicts who cannot/will not take advantage of treatment. Giving them money directly will hurt them.

[ktgrok]

A couple of things I think: first, saying that the "working people" this and that and by implication, those who are wealthy therefore don't work, is both inaccurate and disrespectful of the wealthy. Sure, there are trust fund babies counted in the wealthy, but most of them go to work every day. My husband began work doing blue collar ditch digging sorts of work, and has now passed up the ranks to management, and we are now considered wealthy.

 

I don't think you are the people we are referring to when talking about the 1%. Even the ranks of the wealthy have shrunk, as the very wealthy have gotten richer. We are talking about the very top top top....who are getting richer and richer while the wealthy and middle class are not. 

[StephanieZ]

If your personal safety net costs millions of dollars in order to make you fee secure (in addition to what the government promises you), then does that mean it would cost millions of dollars x 300 million Americans (in addition to the current system costs) to make Americans all feel secure about their retirement?  If not, what would make Americans feel secure enough to not feel the need to accumulate significant wealth?  And why is it different for some people?

 

What is different is that you have to have huge wealth IN CASE you need long term care (at home, high quality) and IN CASE you live to your maximum possible age. Essentially, our financial plan would be that in 95% of the cases, our kids will inherit a large amount of money. Maybe 60% chance they'd inherit 2+ million (we both die before age 70 and without large health care costs), 30% chance 1-2 million (one of us needs a couple years or less of care and/or we die by age 75ish), and less than 10% chance we'll have less than a million left when we are both dead (one or both of us needs extended assistance (several years or more) and/or very intensive 24/hr in home care for quite a few years and/or we both live to 85+. Near 0% chance we'd have less than half a million left, as our worst case scenarios involve living to 100+ which is highly unlikely. If the risk were spread over a large pool, obviously we'd not need to have all that left over for our kids when we die. 

 

I readily acknowledge that 90% + of Americans can't and don't amass that much wealth. However, because I *can* hope to do so, and I value the security and freedom that wealth would provide, I aim to do so.

[frogger]

But really, the video is less about those at the poverty line, those needing rehab beds or what not, and about the shrinking of the middle class.

I responded to someone who seemed to really care about the poor because I thought they were worth responding to and I can respect them. I wasn't going to respond to the video because it didn't seem worth responding to. Here is why I think that and then I will let you get back to discussing it.

 

He was talking about an ideal distribution of wealth. What is that? In my mind the socialism seemed more fair than his randomly picked nonsense. The reason most people wouldn't want the socialism is because it messes up incentives. I think crony capitalism messes it up also but that I suppose is another discussion. The ideal would be whatever gave enough incentives that everyone, or most everyone was the best off they could be. Of course, no one knows what that is but I am not sure why I should be more worried about some made up distribution than other social justice or economic issues.

 

The narrator used income and wealth interchangeably which meant he was spouting nonsense. They are often correlated but not always and not always for the same reasons. Regardless, they are certainly not the same thing. Also, neither income or wealth say as much about your well being as many think it does. Zero wealth because housing went down but you are living in a nice home and have an income that lets your kid play soccer or whatever floats your boat, and eating three squares a day with a healthy family versus 6 figure income stressed out, unable to afford a home because your medical bills for a chronic disease eats away at the money you saved. It isn't as easy to compute as people think it is.

 

I didn't hear anything about a middle class other than this narrators "ideal" distribution.

 

Really if he was actually discussing wealth the charts didn't surprise me much for a variety of reasons. Unless your parents dropped money in your lap your net worth is probably close to zero until you are well into your thirties. If you have any addictions your wealth is probably zero. If you have a spending habit regardless of income your net worth is probably zero even if you make good income. Especially if a drop in housing prices has occurred close to the time of this video ( I think I seen the same one a while back) then many of what you would call middle class are going to be underwater with mortgages and yes, have zero "wealth". When you take all these people in one group and throw them at the bottom of a chart, well I'm not surprised.

 

The other groups are saving what they can but saving from labor is slow going when the economy isn't giving you much return for your investment.

 

The top 1% has to do with a variety of things. Does any individual need that much? I have my doubts but my problem with the amount they have only steps into play when they get it by not playing fair. Buy low, sell high. That is fine. Invent something that makes everyone better off, enriches peoples lives, etc. Great. But get your cronies in government to steal peoples homes so you can build a casino. Um, no. Make onerous regulations via congress that drive smaller businesses out of competition. Tax everyone that sells a rival product so you don't have to compete. This has nothing to do with distribution though. It has to do with people who don't make others better off but still want their money. So they get the money, we get the taxes. It's business as usual in Washington.

 

I could care less about distribution. I do care that lower classes are getting a fair shot and not being robbed blind by big government.

[MotherGoose]

 

.

Edited April 3, 2016 by MotherGoose

[ktgrok]

 

I don't think you are the people we are referring to when talking about the 1%. Even the ranks of the wealthy have shrunk, as the very wealthy have gotten richer. We are talking about the very top top top....who are getting richer and richer while the wealthy and middle class are not. [/quote

 

No we don't have private jets and whatnot, but according to the statistical charts we are in the 1-2% we are in the place that would be attacked. Unless they only go after people with money off of investments. But I've not seen that. The want to go after doctors, lawyers, businesspeople who got their money by working. Anyone who earns over X dollars.

 

 

To be in the top 1% of wealth you need a net worth over 8 million dollars. I could be wrong , but I don't think this is you. I lived in Palm Beach most of my life and I've seen the 1%. It's not doctors and lawyers for the most part. 

 

That's the group that is accumulating more while others are (on average, not you specifically) getting a smaller share of the overall economy. That's who the video is talking about. 

 

However, yes, if you make say, $400,000 you are in the top 1% of income and are included in increased taxes, although mostly the stuff I'm hearing is about tax rates on investment income. 

[T'smom]

I don't think you are the people we are referring to when talking about the 1%. Even the ranks of the wealthy have shrunk, as the very wealthy have gotten richer. We are talking about the very top top top....who are getting richer and richer while the wealthy and middle class are not.

I think when we are talking about the wealthy, we are talking about the .01 or even .001 percent. It's a very, very small group of people.

[ktgrok]

It is easier than you think if you make 400,000 or more and have been a saver your entire life.  So if you save 100,000 or more a year for a decade or more and you compound the interest, and invest, etc. ( Plus saving 10,000 when you make 60,000 ealier...)   Plus, you own a house.   It is definitely achievable to have 4 million or so by the time you are 50 if you are a high earner in a low COL if you are a saver.  You do not have to inherit if you save and are a relatively high earner.

 

And we typically give away 100,000 a year as well..  Living on 200,000 isn't hard..  Actually I think we save more than that because we live on 120,000.

 

Just saying. 

 

Which kind of just goes to show that taxes certainly could be higher on that income bracket and it wouldn't hurt them...if you are making $400,000 a year, and can live on half that or less, what is the complaint?

 

But you just showed how to get to 4million, not 8 million. Would have to double that. 

 

Although I do think it is unusual to earn 400K in a low cost of living area. That may be because I come from a pretty high COL area (Palm Beach) and none of the people I know make anywhere near that much. 

[SKL]

$8M isn't that much wealth.  If you built a fairly nice house in a high COL area some years ago, it is probably worth a couple million or more even though you wouldn't have put nearly that much into it.  Then if you invested your professional earnings into a profitable business, you would still have the value of those earnings plus the growth.  It does not take long to amass multiple millions if one is earning a professional level income.  Most people don't because they are afraid of the risks, or they don't want to take the time to make connections and find good investments and work out legalities / financing and hire employees etc.

 

That doesn't mean the people doing this can easily part with their wealth for the purpose of redistribution.  We just bought a run-down historic building which we are going to renovate.  Try taking that and distributing it among the poor and see how much good it does.  If we get taxed some more on the money we invested, it's going to come out of my kids' modest education fund (but what else is new).  Similarly, try taking a big farm out in the boonies and distributing it among the low income population.  Try taking an appreciated big house in the suburbs of New York and see how many benefit when you distribute it among the low income population.  Better to let those people have their properties and continue hiring employees to work on them.

Edited February 19, 2016 by SKL

[Scarlett]

Which kind of just goes to show that taxes certainly could be higher on that income bracket and it wouldn't hurt them...if you are making $400,000 a year, and can live on half that or less, what is the complaint?

 

But you just showed how to get to 4million, not 8 million. Would have to double that.

 

Although I do think it is unusual to earn 400K in a low cost of living area. That may be because I come from a pretty high COL area (Palm Beach) and none of the people I know make anywhere near that much.

Yes 400k per year is very unusual in low COL.

[SKL]

Yes 400k per year is very unusual in low COL.

 

It probably is, but then again, do you know how much everyone in your community earns?  Many people don't flash their economic position.

 

[SKL]

...I come from a pretty high COL area (Palm Beach) and none of the people I know make anywhere near that much. 

 

How do you know what they make?  In my circles, we don't exchange that sort of information.

 

[SKL]

Which kind of just goes to show that taxes certainly could be higher on that income bracket and it wouldn't hurt them...if you are making $400,000 a year, and can live on half that or less, what is the complaint?

 

 

People can say this about any income level.  The logic fails.  So what if an economic producer would not starve if he paid $x more in taxes?  Are all dollars not needed for subsistence better spent by Uncle Sam than by the economic producer?

[ktgrok]

How do you know what they make?  In my circles, we don't exchange that sort of information.

 

 

Because some in my circle do, and because I know how much various jobs pay? Some are family, some are lifelong friends.

 

Now, I'm sure I do "know" some people that do make that much or more, as in have met them briefly or something...I did dog training for people that did, but they were all retired and had lived other places before moving there, so couldn't say what they made or where or how much was family money. 

[Scarlett]

$8M isn't that much wealth. If you built a fairly nice house in a high COL area some years ago, it is probably worth a couple million or more even though you wouldn't have put nearly that much into it. Then if you invested your professional earnings into a profitable business, you would still have the value of those earnings plus the growth. It does not take long to amass multiple millions if one is earning a professional level income. Most people don't because they are afraid of the risks, or they don't want to take the time to make connections and find good investments and work out legalities / financing and hire employees etc.

 

That doesn't mean the people doing this can easily part with their wealth for the purpose of redistribution. We just bought a run-down historic building which we are going to renovate. Try taking that and distributing it among the poor and see how much good it does. If we get taxed some more on the money we invested, it's going to come out of my kids' modest education fund (but what else is new). Similarly, try taking a big farm out in the boonies and distributing it among the low income population. Try taking an appreciated big house in the suburbs of New York and see how many benefit when you distribute it among the low income population. Better to let those people have their properties and continue hiring employees to work on them.

Your world is not the average world.

 

I have a lot of friends. Only one of them is wealthy. I am talking private jets, multiple homes, buying very nice homes for their adult children, and their son is going to school to learn how to manage his own money. I can't even imagine how wealthy they are.

 

Most of us though are working hard and barely surviving. .....we all homeschool it seems so the moms try to not have a job but most of us have some part time income to help. One friend has two boys and she has health problems...but they have set up their small 1300 SF ranch so that an adult nephew lives there and the garage was converted for one set of parents to live in. Both of parents--- 70ish, drive a school bus route. Recently her husband was cut to a 4 day work week indefinitely. They don't complain, but they do struggle.

 

I think those friends would be shocked to know how much Dh makes. We live in a paid for fixer, and had no car payments until recently when Dh replaced his truck that had 400k miles on it. But his company is paying for most of that payment. Doctor visits hurt us even though we have insurance. We have minimal cc debt....I get a hefty cs check but most of that goes for dhs cs. I really can't complain about our day to day life, but there is no money for vacations or new furniture or saving for the future. I am a natural worrier....but I know we are doing the best we can, taking care of our kids and ourselves and the future will have to be dealt with in the future.

 

I often think that what is needed is help for poor people to understand all the that is available to them. I have several friends doing without insurance because they claim they can't afford it. They have told me they got on healthcare dot gov and couldn't see how it would help,them. I can attest that it is a maddening system...I consider myself fairly intelligent and I spent HOURS on that mess.

 

I am rambling...but I am still sickened that so many have so little....whether you call it income or wealth.....some people have neither.

[Scarlett]

It probably is, but then again, do you know how much everyone in your community earns? Many people don't flash their economic position.

 

Lol...well....not everyone......but I know plenty of people who share that info with me. And of course I know how much my Xh makes and his income is about 3 times what an average white male makes in this area....yet no where near 400 k

[Scarlett]

Yet many of his partners haven't saved nearly that much because they chose a million dollar house .. Yes I can live on 120000. But is that fair to pay a doctor that went to college, med school and residency. He started earning money at 30. Many docs these days have ton of debt from that schooling.

None of it is fair Seeking. I don't begrudge your family the income you have. But I am sickened in general that there are people who are struggling in ways most of us on this board cant understand..

 

Some of it is from poor choices....and some is not. Either way I can barely stand to think of people who struggle so hard.

[StephanieZ]

But really, the video is less about those at the poverty line, those needing rehab beds or what not, and about the shrinking of the middle class. 

 

It is interesting that we both find the video important, but what we focus on is so different. What most bothers me is the 40% at the bottom that have nearly nothing, and the next 20% who have just a tiny bit. And the 1% that has such a disproportionate huge portion of the nation's wealth. To me, I see that 1% amount and wish it could be spread out towards that bottom 40-60%. 

 

I see the "excess" wealth at the very top that could be used to bring that bottom 40-60% up to a more just and more livable "middle class" level. 

 

To me, it's that bottom that is my focus. The people at the bottom who have very little resources to get out of the bottom. Those in the middle 50-70% are not totally disenfranchised and without hope, IME. Those at the very bottom are stuck, without the basic resources needed to get themselves out of hopelessness, nor even offer the NEXT generation hope. 

[Sarah CB]

Which kind of just goes to show that taxes certainly could be higher on that income bracket and it wouldn't hurt them...if you are making $400,000 a year, and can live on half that or less, what is the complaint?

 

 

Well, what about people who have a bigger earning potential but won't take it?  

 

I know someone who is a skilled labourer and makes over $100,000.  He's well poised to go into management (it's the next step), but he doesn't want to take it.  Why?  Because he likes going home at 4pm and he likes always getting to take his vacation and he likes going to work and then leaving and not thinking about it anymore.

 

If he's capable of making $150,000 or more - which would allow him to pay even *more* taxes - shouldn't he have to?

 

Or how about people who could easily make more money if they made a personal sacrifice and moved their family across the country - they could increase their income and their taxes - shouldn't they have to do that?

[SKL]

Well, what about people who have a bigger earning potential but won't take it?  

 

I know someone who is a skilled labourer and makes over $100,000.  He's well poised to go into management (it's the next step), but he doesn't want to take it.  Why?  Because he likes going home at 4pm and he likes always getting to take his vacation and he likes going to work and then leaving and not thinking about it anymore.

 

If he's capable of making $150,000 or more - which would allow him to pay even *more* taxes - shouldn't he have to?

 

Or how about people who could easily make more money if they made a personal sacrifice and moved their family across the country - they could increase their income and their taxes - shouldn't they have to do that?

 

Or families who could be dual full-time income and pay more tax?

 

[JeanM]

None of it is fair Seeking.

 

:iagree: None of it is fair. Even within the group of people who have MDs, some specialties pay way, way more than others. Some subspecialties that require lots of extra training pay less than other specialties that don't. The pay is not necessarily proportionate to the amount (or expense) of training required.

 

It is interesting that we both find the video important, but what we focus on is so different.

 

I also thought the video is important, but I'm focusing not on a certain segment, but on the change over time.

 

If you look at the fast food industry, according to the NY Times (http://www.nytimes.com/2015/05/07/opinion/andrew-m-cuomo-fast-food-workers-deserve-a-raise.html), "The average fast-food C.E.O. made $23.8 million in 2013, more than quadruple the average from 2000 (adjusting for inflation)." And "Nationally, wages for fast-food workers have increased 0.3 percent since 2000 (again, adjusting for inflation)."

 

The difference between a 300% increase in pay and a 0.3% increase over the same time period is quite large, in my opinion. If this trend continues, how far can it go?

[Sarah CB]

Or families who could be dual full-time income and pay more tax?

 

 

Absolutely!  Why aren't they sacrificing more for the common good?  Think of how their tax dollars could help the poor.

[Carrie12345]

How do you know what they make?  In my circles, we don't exchange that sort of information.

 

 

I can look up my county's data.  Of course that doesn't tell me WHO makes what (or how much anyone has saved,) but it does give me a fair view of my community.

For the record, 2.37% of local households make $200,000 or more. 24.8% of local households make $30,000 or less.  We do have a flat state tax and flat local tax, which I used to think was awesome.  Now I look at our crumbling infrastructure and I'm less enamored with the concept.

[SKL]

I can look up my county's data.  Of course that doesn't tell me WHO makes what (or how much anyone has saved,) but it does give me a fair view of my community.

For the record, 2.37% of local households make $200,000 or more. 24.8% of local households make $30,000 or less.  We do have a flat state tax and flat local tax, which I used to think was awesome.  Now I look at our crumbling infrastructure and I'm less enamored with the concept.

 

Where do they get the figures for that county data?

 

A lot of income doesn't have to be reported depending on the data source.  I highly doubt that my county has data on what I've earned on my 401K type savings, unrealized appreciation of real property, and other items that are not taxed in the same year they are earned.  They may or may not have information on non-tax-preferred pensions.  Also non-cash employment benefits would probably not be included.

Edited February 19, 2016 by SKL

[Guest]

 

Yet many of his partners haven't saved nearly that much because they chose a million dollar house .. Yes I can live on 120000. But is that fair to pay a doctor that went to college, med school and residency. He started earning money at 30. Many docs these days have ton of debt from that schooling.

 

 

See we are talking here about ppl that have multiple "million dollar houses" and it has not affected their savings at all.

 

There's rich, and there's wealthy. Please refer to the excellent Chris Rock bit about it :lol:

[Carrie12345]

Where do they get the figures for that county data?

 

A lot of income doesn't have to be reported depending on the data source.  I highly doubt that my county has data on what I've earned on my 401K type savings, unrealized appreciation of real property, and other items that are not taxed in the same year they are earned.  They may or may not have information on non-tax-preferred pensions.  Also non-cash employment benefits would probably not be included.

 

It's a general overview, likely from tax returns.  It's a perfectly reasonable (though obviously not necessarily accurate) to assume the bottom quarter is unlikely to be raking it in on large investments.  To seek out specific anomalies is to disregard the bigger, clearer (for most people) picture.

[Guest]

Absolutely!  Why aren't they sacrificing more for the common good?  Think of how their tax dollars could help the poor.

 

I think people have very different ideas about what the word "sacrifice" means.

 

I know you're being farcical to make the point that the tippy tipy top should be allowed to hoard the planet's resources for their own person gain (which includes wealth AND power)....and to be sure you're welcome to support those ppl who assuredly view YOU and your family as disposable plebes but by all means....

 

but to compare the sacrifice of parents to the "sacrifice" of a few percentage points of taxes paid by the unimaginably wealthy....is not nice, if nothing else.

[SKL]

It's a general overview, likely from tax returns.  It's a perfectly reasonable (though obviously not necessarily accurate) to assume the bottom quarter is unlikely to be raking it in on large investments.  To seek out specific anomalies is to disregard the bigger, clearer (for most people) picture.

 

Well, I was actually thinking about the top quartile, but since you mention the bottom:

 

Depending on the jurisdiction, tax returns either don't include any or don't include all income from pensions, 401K payouts, social security, gain on the sale of a home (a one-time benefit if it's still in the code), valuable employment benefits, retirement health benefits, many insurance payouts, tax credits, welfare benefits, and of course "under the table" payments.  This will make it appear that most retirees are very poor, even if they are living comfortably.  And people who are earning off the grid, and people receiving low-income subsidies, are also living more comfortably than their tax returns might suggest.  So when you see those numbers, don't think "how could I live on $30K per year" as if that was the whole picture.

[EmseB]

Absolutely!  Why aren't they sacrificing more for the common good?  Think of how their tax dollars could help the poor.

 

There was actually an article about that recently somewhere that I've been trying to find.  SAHPs are actually costing the economy because if we stay at home we don't hire day care workers, housekeepers, etc  and we don't pay taxes on our earned income.

[MotherGoose]

Which kind of just goes to show that taxes certainly could be higher on that income bracket and it wouldn't hurt them...if you are making $400,000 a year, and can live on half that or less, what is the complaint?

 

But you just showed how to get to 4million, not 8 million. Would have to double that.

 

Although I do think it is unusual to earn 400K in a low cost of living area. That may be because I come from a pretty high COL area (Palm Beach) and none of the people I know make anywhere near that much.

 

.

Edited March 29, 2016 by MotherGoose

[Carrie12345]

Well, I was actually thinking about the top quartile, but since you mention the bottom:

 

Depending on the jurisdiction, tax returns either don't include any or don't include all income from pensions, 401K payouts, social security, gain on the sale of a home (a one-time benefit if it's still in the code), valuable employment benefits, retirement health benefits, many insurance payouts, tax credits, welfare benefits, and of course "under the table" payments.  This will make it appear that most retirees are very poor, even if they are living comfortably.  And people who are earning off the grid, and people receiving low-income subsidies, are also living more comfortably than their tax returns might suggest.  So when you see those numbers, don't think "how could I live on $30K per year" as if that was the whole picture.

 

I'll be sure to let them know.

[SKL]

but to compare the sacrifice of parents to the "sacrifice" of a few percentage points of taxes paid by the unimaginably wealthy....is not nice, if nothing else.

 

Well if it was my "few percentage points," I'd be using it to benefit many needy children, and I'd do it a lot more effectively than I trust the government to do it.  So no, I don't think it's a small thing compared to losing the ability to spend the work day with my own individual well-cared-for children.

[SKL]

We are not one of the super rich, the .001% or whatever. However, most of the time when people complain about the evil wealthy 1%, they are talking about people who make above a certain amount of money a year, and we do fall into that category of the people--they lump everyone together. We save, and one of my husband's fears is that eventually they will change the rules to come and get our money to give it to people who didn't prepare for retirement.

 

I feel similar sometimes.  I tell myself it is paranoia, but stranger things have happened.

 

Basically people tend to think "too rich, need to share more" is whatever income level is roughly 2x whatever the thinker earns.  And "not enough" is whatever the thinker is currently earning plus about 10%.  :P  I had a boss whose family income (dual-earner professional family) was about $1m per year, and he would always complain about "the rich" and how those awful rich people weren't paying enough taxes, but he himself was paying too much.  Seriously.

[Guest]

Literally everyone has qualified their statements to be talking about the ACTUAL 1%.

 

Not you lucky duck savings account superstars.

 

Pro tip: the 1% never EVER worries about "them" changing the rules to come get their money to hand it out to poor folks on street corners. They need not worry because THEY set the rules of the game. They own the whole monopoly board, as it were.

[Murphy101]

The biggest problem I have with this video is that there isn't a limited amount of wealth available. The 1% guy doesn't prevent me from finding ways to generate more wealth for myself.

Actually I didn't like the video but I think you are wrong about this.

 

Truth is there are finite money making opportunities and if 1% of those with the assets/wealth are in control of those opportunities then yes, that absolutely does restrict the ability of others to attain wealth.

 

Yes we can print more money but that's doesn't make more wealth.

Yes we can try to work harder and work more, but obviously that doesn't make more wealth either bc we are staring down the barrel of an entire generation and possibly two of them that are working very hard and have less wealth than the previous generation.

 

I can think of so very ways our government and community policies purposely restrict not only the ability to save resources of various kinds, but make it crazy difficult for someone to make money at it. It often doesn't matter how smart and good and profitable the goal. Because keeping the status quo is more important and those maintaining it aren't looking to allow competition.

 

Now, I'm not saying that it's hopeless and impossible to attain more wealth.

 

But yes, it is finite.

And those in charge of the vast majority of it don't seem particuliarly interested in loosening their control for the benefit of the other 80%

 

What we really should be looking at is whether there are ways we can make it easier for people to generate more wealth.

That I agree with.