Last night I watched Barack Obama’s acceptance speech of the Democratic Party Nomination. Of course he was very eloquent and moving. Obama is an excellent speaker and orator. Will I vote for him? I don’t know, I initially voted for Hillary Clinton because she is much more liberal than Obama.
But this past week Obama has been embroiled with controversy over his comments on who the “RICH” are. He demurred and said a family making $250k is rich. Sounds good right? I mean $250k is a lot of money. But as CNBC points out it also depends on where you live. $250k in NY or CA isn’t going as far as Kentucky.
And in his acceptance speech last night Obama alluded to this again. But let’s break it down. According to Wikipedia 15% of US households earn over $100k. Broken down further 9.9% earn $100-$150k/year, 3.2% earn between $150-$200k, 1.1% earn between $200-250k and 1.5% earn more than $250k. We’re in at 10% bracket of earners between $100-150k, I won’t lie but we live in one of the top 5 cities in the US for cost of living.
Obama last night said he would cut taxes for 95% of the US people, does that mean everyone earning less than $150k/year? Sounds good to me. But will my DH and I as we earn more be hit with the tax increases? And is it wrong that we are since we’ll be in the top 5% of earners? No. However if he limited it to people earning above $250k or the top 1% of earners, as well as repealing all of Bush’s tax cuts for the really wealthy, we’d have more tax revenue.
Why? Because though my DH and I make a good income, right now as DINKs we are pretty heavily taxed. We will not receive the child tax credit if we have children. Also we see really very little benefit to President Bush’s tax cuts???? What?
Because we don’t earn enough. His major tax cuts for the rich are 15% taxes on Long Term Capital Gains, Dividents, and Interest. Did I mention my DH and I are mostly only saving in retirement accounts? That we don’t have enough money to be investing in taxable accounts so this “tax break” doesn’t help us at all? And in order to generate $100k in dividends, do you know how large a portfolio you’d need? At least $5m, and then would you be able to pay the 15% dividend tax.
Why do you think Warren Buffet made the Bet???? He guaranteed the multi-millionairees in the room were paying less taxes, probably 15%, than their middle managers and general employees. I pay more taxes than Warren Buffet. How is that possible? The “tax cuts” Bush gave were for those people rich enough to use them. If my DH and I make over $100k/year and see no benefit from his tax cuts, who is his cuts helping? Certainly not the middle class and anyone earning less. I’d like to see people earning less using this new 15% tax bracket. Imagine if Warren Buffet had to pay normal 38% taxes on his capital gains, dividends, interest instead of 15%? That is about a 20% gain in tax revenue right there!
But back to Obama, I firmly believe that we need to raise taxes. And perhaps dovetailing with his plan to raise the “rich” personal income taxes we need to examine business taxes. I’m sorry but why are companies getting tax breaks to outsource jobs? And oil companies have had record revenue years and we’re all struggling? Are we in debt to big business? We need to look at tax breaks for companies.
I don’t know if Obama will be able to really tax the rich, because the “rich” are in power. But it’s worth examining. Plus for everyone whose complaining about the potential tax hikes, stop it. Realize that yes we are financially responsible for our own actions, but unfortunately ABSYMAL leadership has lead our country into debt. And we all need to contribute to get out of it.
We need to cut spending and raise taxes, like a normal family balancing a budget, something we haven’t done in 8 years. We’ve spent like money grows on trees and pretended that we can afford anything we WANT. There is little accountability in our current government. And people wonder why we are in a housing crisis, credit crisis? I have to wonder if it’s not from the example our government has set saying that it’s okay to spend whatever we want, who cares? That spending is better than saving and realizing debt is BAD?
Was it so bad under Clinton? I was too young to full understand taxes, but was higher taxes awful? Or was it okay because our economy was booming? I realize that the growth of the internet contributed to the explosive growth of the 1990s and will likely never be replicated but why did times feel easier then than now?
But I still believe $250k isn’t the “rich”. It’s a family earning a great living, but “rich”? Well maybe if that $250k is only from dividends and they are worth $10 million+.
53 responses so far ↓
1 No Debt Plan // Aug 29, 2008 at 12:15 pm
I agree with most of what you said. I was rooting for Ron Paul — I’m a conservative at heart.
I also think taxes have to go up. And yes, $250k per year is rich as you alluded to with the % statistics. Sure in California or NY it isn’t AS much but it is still a huge amount of money.
It’s just like personal finances. Taxes (income) have to go up and spending has to go down. Have you see the deficit lately? Good grief..
2 waldo // Aug 29, 2008 at 1:17 pm
The Washington Post breaks down how each candidate’s tax plan breaks down by income bracket. It’s nice to see Senator Obama has a truly progressive tax plan…
http://www.washingtonpost.com/wp-dyn/content/story/2008/06/09/ST2008060900950.html
3 Meg // Aug 29, 2008 at 2:09 pm
No tax cuts - or increases - can be made to JUST affect a certain group of people. Obama wants to increase the capital gains and dividend taxes, for instance - this will affect everyone who owns stocks, bonds, homes, coins or anything else they might ever sell for a gain. Obama wants to increase estate taxes; this will affect everyone who stands to inherit money. Et al.
The republicans and democrats alike keep taxes on the poor at basically ZERO; that is unlikely to change. The unique thing is Obama also wants to cut taxes for those making arounf $75K - that’s great; and it will help me. But not for long. I plan to be a high earner, and as soon as I hit some magic benchmark (or, more accurately, probably as soon as I get married), I will lose any tax breaks he implements and be slammed with a whole host of new increases.
4 Meg // Aug 29, 2008 at 2:11 pm
@ no Debt Plan - taxes don’t HAVE to go up. What needs to happen is that reckless spending on ridiulous programs by our government should go DOWN. Or else we’re going to all end up paying 50% of our income in taxes and have every single major industry socialized.
5 JB // Aug 29, 2008 at 2:17 pm
Of course rich is relative… but a family making 250K a year has a lot more opportunity to become rich than a family making 50K a year. Most people would consider the top 1% to be rich… I would.
6 Meg // Aug 29, 2008 at 2:20 pm
Hmmm… it’s hard for me not to think of $250k as not pretty darn well off. And maybe it’s time that we all realize how rich we are as a country.
I agree that housing can be an issue, but I do wonder what sort of houses and what sort of neighborhoods most people making that much are living in.
My husband makes a very good salary for our area, but it’s not close to that (plus we have a lot of financial baggage from the days when he wasn’t make that much). Still, we feel pretty rich, even in our 1800 square foot money pit that we share with a roommate and her daughter. (Would be nicer if more than about 1300 square feet of that was actually usable living space, but that’s part of the money pit).
When I visit extended family and a few friends, it’s easy to be a little jealous of what they have and think we must be doing something wrong if they can afford stuff we can’t. But we are careful not to lose perspective. In our closer circle, we’re doing way better than most. A lot of our friends and family members are making $20k or less. Some are making less than we put towards our debt each month. And while I finally splurged on a bread machine I’d been drooling over for a few years in order to ’save money’ on bread, some people I know are wondering how to buy bread at all now that gas prices have risen.
Still, to me, those people seem well enough off. The people I’ve known who I actually consider poor are those that didn’t have running water and who had huge holes in their floors exposing the dirt underneath. I grew up knowing families like that, here in America. The kids got teased at school because they smelled. They smelled because they couldn’t take baths. When I think of struggling families, I think of people like that — not families being portrayed in stories where the mom ’struggles’ over whether her kids will feel neglected if they eat generic lunch meat.
7 Kristy // Aug 29, 2008 at 3:00 pm
I think $250K is alot of money but not necessarily “rich”. I don’t think its right to just tax the “rich”. If taxes are going to be increased, it should be across the board. Why should someone that is considered to be rich pay for the tax cuts of everyone else?
If the government would decrease spending we might not be as worried about increasing the taxes so much.
8 LivingAlmostLarge // Aug 29, 2008 at 4:01 pm
First, I don’t think we can cut spending enough to get out of debt fast enough. So it’s gotta be a combination of taxes increased and decreased spending. Think typical family budget…Debt Snowball!
Second, Meg, you have a lot of money in stocks because you inherited it. How much have you saved in taxable accounts by your own $75k? If you had to save it how much would you really be paying in capital gains, dividends, and interest otherwise? What would you have saved to generate that sort of income?
Third, we should absolutely increase estate taxes. I don’t think it should go untaxed. It’s ridiculous, most middle class people do not have my estates anyway and surely won’t in the next 50 years as pensions go away and people have saved less.
Fourth, Kristy, currently the top 5% pay the 95% of the tax burden. It’s like that everywhere. And if we expect to succeed as a society we can’t have people slipping back into poverty. We’ll just end up having to solve worse problems.
Example, no health insurance = no preventative care. Then something happens and the bills are not covered nor are they manageable by a family unable to have afforded the insurance in the first place. So what happens? Bankruptcy. about 60% of BK are from medical bills. I think reform is in order.
If you are for smaller government and less taxes, be ready if something should happen when you give birth, lets say you have a handicapped child. Be ready to pay throught he eye teeth. Or if you have complications, let’s all pay our own way. So only the rich can afford the best care.
9 Meg // Aug 29, 2008 at 4:49 pm
So long as minimum wage is so ridiculously low, I’m fine with the truly poor not paying income tax and getting benefits in the way of healthcare. To me, that’s the trade-off we make as a society considering how we all benefit from their low-wage work.
But on the other hand, I think we should all appreciate what we do get from our taxes. Sure, a lot of money isn’t spent how we’d want it used, and there’s plenty to complain about. However, we can’t expect something for nothing. And I’d definitely willing to pay more taxes if it meant better healthcare for everyone. After all, we’re already having to absorb the cost of people who end up at the ER without health care for things that could be prevented or even just treated elsewhere.
Where I live the taxes are higher than the surrounding areas — remarkably so. I grew up half an hour from here and my mom pays a tiny fraction of what we pay here. Still, I don’t complain about the taxes. My mom thinks the taxes we pay are outrageous, but then I remind her how much appreciate living on a paved road with sidewalks and street lights, whereas I can’t tell you how often people get stuck going down the dirt road to her place — which is traveled a lot more than our street. Plus she and my mother-in-law have both said they’d rather die on the way to the hospital here than go to the one in their county.
Of course, being able to afford the taxes is another issue, but again, I think people take too much for granted and think too many luxuries are necessities.
11 Tim // Aug 30, 2008 at 11:38 am
this is hogwash. you really have to look at who’s doing the analysis of the tax cut. tax cuts for 95% of the people who pay less than 5% of the tax burden doesn’t amount to much and sells well on the political campaign.
The real problem is that if this were really true, the people getting the tax cuts would simply spend the money. Most of the 95% of the people have the ability to save, invest, whatever, but they choose not to. You want to take advantage of the 15% long term capital gains, then invest in the market.
what we want to do is increase the 95% of the taxes the 5% people pay and call it fair. Here’s fair, those 95% of the people paying less than 5% of the taxes stop buying crap they can’t afford and start saving money.
people are willing to pay higher taxes in a good economy. right now, blaming the rich for the majority’s ills sells well, when it was the majority who didn’t set themselves up for success in the first place.
my wife and I are DINKs and we are in the 3.2% group and will be in the 1.1% group next year. We have no kids. We rely on the standard deduction because we do not have a home, because we feel that we cannot afford a home in the market that we live in where the median house is over $500k. we do not have any debt, and can only put so much into retirement accts so most of our savings must go into taxable accts. What do we get for our hard efforts, word and success, talk about increasing our tax burden because people who make less than us, who have more kids than they can afford, who have a house they cannot afford, who have 2.2 cars, and a huge flat panel tv, can pay less taxes than me? Screw them.
12 Kristy // Aug 30, 2008 at 8:02 pm
LAL, I understand that the top 5% pay 95% in taxes, that’s why I disagree with increasing the taxes for the just the rich. So what you’re saying is that the rich should pay for everything while the poor and middle class get a free ride? I don’t agree with that.
By the way, I have climbed my way out of the poorhouse if you will, paid my own way through college and everything that I have saved is from me. I don’t think its fair to increase taxes on investments either, that is going to hurt not only the poor but the middle class who actually do save money.
I have to say I agree with Tim here. I don’t want to pay for people that choose not to save money.
13 LivingAlmostLarge // Aug 30, 2008 at 10:28 pm
Kristy and Tim, considering I’m in the same bracket as both of you AND I was raised by a single I think I’m okay with saying I was poor and now I’m “rich”. AND I’m a DINK. So yes I have been hit by taxes.
By the way Tim, I don’t get hit by the capital gains because we own a home, but we are not investing very much right now. Sure we save but give us 5 years and I’m sure we’ll be there.
But why pay more taxes? So that society as a whole gets better. Just trying to improve yourself as an island isn’t going to work.
Uninsured people are why we pay so much for health insurance. We pay more for our “private” insurance than socialized systems because we have to pay for everyone who can’t afford insurance or get insurance and then get sick!
60% of BK are from lack of adequate insurance. W here would we be as a society if we had less BK solely because people could afford insurance?
As for taxes, it pays for people who never made much. My grandmother lives on SS about $800/month. Think it’s a good life? No, but heck with 4 kids kicking in to help out it is.
And yes we need to have more taxes to dig our way out of debt. Plus it will pay for college loans and grants. Research in science.
Here’s the thing will you really only look at yourself and your savings? Cutting your nose off to spite your face? That you don’t care if more people run to the ER and run up bills they can’t pay?
What if we were all covered and those ER bills were prevented by having “preventative care?” Or if we had set fees for doctor visits because everyone had medical insurance? Hmm…
Or if we all had the opportunity to go to college? Everything my DH and I have we saved. His parents were immigrants who drove a cab and worked as barber to get started.
But they are Canadians and are paying for others. They improved themselves with help and so will others.
My mom washed dishes for a long time and recycled for food money. She also went to jail and child services for my grandfather’s gambling.
But without help where would we all be today? There is more to life than your money. And looking only after your own money is not the way to do it.
You’ll prosper if the US prospers. And the US won’t prosper if we keep creating a wider divide between the haves and have nots.
14 Kristy // Aug 31, 2008 at 6:42 am
We obviously have a difference in opinion. While I don’t mind paying a higher amount in taxes, I don’t think its fair to raise taxes on “only” the rich. As far as universal health care, I don’t believe in that either. There are millions of Americans who don’t have health care insurance not because they can’t afford it, but because they think its a waste of money. So why should I pay for someone like that when they go to the ER?? They have made their own choices and I don’t think its right for the responsible people to pay for the irresponsible. Not to mention that in the countries that have universal health care, while they don’t pay alot, they don’t have the best care either. Is that what I want for my family? No.
Social Security is not meant to be someone’s entire retirement income. While I feel sorry for someone like your grandmother, she is very fortunate to have family to help her. If the government had not raided it in the first place, there would be plenty of money in Social Security to last for many more years.
As far as college, where there’s a will there’s a way. I paid my own way, worked 40 hours a week while going to school full-time and graduated after 4 1/2 years. I don’t think everyone should be able to go to college either. Then everyone will need a graduate degree or PHD in order to be promoted or make more money.
The US will prosper when Americans decide that its important to take care of themselves and not spend everything they have. If most people had an emergency fund and some savings, then they would be able to help themselves.
And I help other people in other ways, not just by paying taxes. I donate food, money and othre items year round. There are other ways to help the unfortunate other than taxes.
15 LivingAlmostLarge // Aug 31, 2008 at 9:39 pm
Wait until someone breaks into your house because they are desperate for money for drugs. Or how people broke into a food bank? http://www.boston.com/news/local/breaking_news/2008/08/waltham_food_pa.html
How is people struggling going to help society as a whole? We will prosper if and when we learn to help not only ourselves but each other.
Sure not everyone needs to go to college. But nowadays it’s like a high school diploma.
Second, not everyone goes to the ER for no reason. Where else can we go to if they have no insurance? I broke my foot and went to the ER. Thankfully I have insurance.
Did I mention, I was a graduate student who didn’t have insurance if not for California’s domestic partnership law and my DH (then BF) didn’t cover me. I would have had what? Nothing but campus based insurance.
So yes there should be coverage. I couldn’t afford real insurance making $20k/year gross. And I didn’t expect to break my foot.
I have many friends currently in graduate school in the same situation. It’s ridiculous. Their parents have bailed a few out, one who had to have her wisdom teeth out, another who had a car accident and needed knee surgery. So yes a lot of people don’t have insurance who know better, want insurance and can’t afford it.
So there are changes coming. And if you think socialized medicine is poor, I hate to break it to you Kristy, but you realize that NIH funding has been cut by more than 75% since GWB has gotten in?
So we aren’t even the leaders in stem cell research? That we’re falling behind in translational medical research? That other countries are rapidly gaining because of lack of funding and rules against research? So how much longer if we continue on this route will our medical treatment be the best if we can’t be cutting edge?
Many new drugs are tested out of country because there are less rules. So the trials are run outside the US because it’s faster. Then once they are proven they can come back and fast track for testing…hmm. Not condusive to cutting edge care.
We have to look at the bigger picture. It’s not just about taxes.
16 obsolete29 // Sep 1, 2008 at 8:06 am
Another Ron Paul geek here.
LAL, it’s interesting to me that your perception is that Clinton is more liberal than Obama. I had the exact opposite perception. With the possible exception of healthcare, Obama and Clinton seemed very close on policy issues to me.
18 LivingAlmostLarge // Sep 1, 2008 at 11:15 am
She is. Clinton is a lot more liberal than Obama who is more a free market Democrat. He’s more for opening the free market and letting competition determine price making it cheaper because of competition.
Clinton is more regulating programs and making it cheaper because government says so. Smaller differences hoping for the same ending than differences with the other party.
Unfortunately I think if we moved to a libertarian government or Ron Paul, many people would sink. Sure it sounds good, but when you realize how much the government actually pays for, it becomes a different story.
Imagine retiring and not having medicare? So you have to buy medical insurance but even an HDHP at age 65 is $1k/month premium and you max out the deductible every year! Plus many preventative care measures aren’t covered. It’s not as fun as you think.
Go spend one day with a hospital social worker,and ask them what would happen if you retired at 60 without medical insurance or medicare? And you make too much for medicaid (welfare)?
Ask and be afraid. People are only think they are fine when they are in their 20s and 30s and 40s. BUT suddenly they are older and insurance cost more. Things change.
Libertarian government looks great when your young and healthy. Be old or have a preexisiting condition and you’ll change your mind overnight.
19 Tim // Sep 1, 2008 at 3:00 pm
LAL, we only live on $35k, which means we save well over 80% of our income. So yes, we pay lots of taxes. Not having a house is a choice we made, because we simply cannot afford a house in our area. We need to save at least $200k in cash, for 20% down payment and have reserves for home ownership, while still paying lots of taxes and saving for retirement and everything else. You know what? A house isn’t an end all, though. We aren’t going to jeoparadize our other financial goals because we are stretching ourselves thin just to afford a mortgage. Could we get a mortgage now, probably, but we would stretch ourselves thinner than we’d like and it would compromise our other financial goals.
here’s the issue, you can give free handouts all you want, but people do not want to endure what it takes to pay for those expenses. It is easy to say oh, people like us can afford more taxes to subsidize people who choose big flat pannels or new cars over health insurance. That’s not fair. Why reward bad behavior, that’s not helping society as a whole.
My parents do not make very much about $40k, but you know what? they made a conscious decision to pay a sizeable portion of their income on health insurance. They balance their budget, they didn’t take out a mortgage that they couldn’t afford.
it isn’t that there isn’t enough money already in the social welfare system, because there tons. When you have people who simply will not lift a finger to better themselves and free ride it out, or do not take personal responsibility and pay their way out of their own situation, you aren’t helping society. The problem is that the system is broken. You don’t throw more money at a broken system, because that won’t fix the system.
Are there people who are in debt because of extenuating circumstances? You betcha, but that is such a tiny fraction of our society. There are far more people who choose not to buy insurance, because they either are gambling that nothing will happen, or they rather spend money on want items.
You are right, the bigger picture isn’t taxes, the bigger picture is people need to start taking some personal responsibility and make grown up choices.
20 Scott @ The Passive Dad // Sep 1, 2008 at 5:51 pm
$250k does seem like a lot of money and if you are only making $30-40k a year, then yes $250k is rich. But, I agree with some other comments that $250k comes in many different shapes and sizes. I wonder how many families that make $250k in income have taxable income? If you are a husband and wife making $125k a year without children or substantial write-offs, you probably don’t feel rich. But, if you have $250k from municipal bonds, well you’re just plain wealthy.
22 Livingalmostlarge // Sep 1, 2008 at 10:55 pm
Tim we made $40k gross in Southern California and managed to buy a condo. I don’t know where you are, or what you are buying but I guess it must be Manhattan. Because if we can afford it, so can you! LOL. But heck people don’t want to live in a tiny 1 bedroom like we did right?
And no people are taking responsibility. I bet you think most people who declare bankruptcy are wasteful spendthrifts? Not true. 60% are from overwhelming medical bills. Some even had insurance but it wasn’t fully covered. Others just didn’t have insurance or were between insurance or were uninurable.
So if 60% of BK are from medical bills wouldn’t you think that people are trying? If we had a socialized program what if we cut that 60% of BK to 0? What would happen if we had that much less people able to meet their bills?
We lead the Westernized world in BK because of a lack of a comprehensive health system. We leave people at the edge of financial ruin because we don’t care about them.
Perhaps we’d be in better shape we just acknowledge spreading the risk and cost of medical insurance. And then we’d feel more secure, and perhaps not live paycheck to paycheck.
My DH and I are one paycheck away from ruin. How so? We are young, but anything could happen? My friend at 31 had breast cancer. She was working, thankfully her company held her job and allowed her to buy Cobra during her 1 year leave of absence. Do you know what her bills were for treatment? She reached her annual OOP maximum in 1 week of treatment of $5k. She will reach this 3 years in a row. Thank god for long term disability insurance, but it’s only 60% of her income.
Between her chemotherapy, radiation, HER-2 treatments, surgeries, etc the bills while not working and being SINGLE are up. She’s financially responsible but she gave up her apartment, moved cross country and lived with her brother so she could have help driving to surgery, chemo, radiation. And you feel ill so someone has to care for you. And her parents are living in another country.
Gee, I suppose you’d say she should be more responsible. She’s trying, but she knows many other Breast Cancer survivors who don’t have HER-2 covered. They have to pay OOP. Gee do you know what that costs? And who doesn’t want the cutting edge care?
Like I said, everyone wants to pay for only themselves when they are young, healthy, and fine. When they are old, sick or need help suddenly it’s looking towards everyone else. I hope you never face a debilitating disease or face a preexisting condition which makes it impossible to insure.
By the way my cousin is 22 and has Lupus. She is uninsurable outside of a company policy and will be for life. Luckily she has a job, but she was looking for insurance just in case she didn’t get a job immediately after graduating college. Well NO ONE would insure her. Directly from my aunt’s mouth. My aunt was willing to pay for ANY insurance for my cousin. Yet no one would insure her, since she was diagnosed with Lupus at 16. What would you like her to do? She was looking and fortunately found a job, but with her condition, she might be forced into disability before 65 and medicare. I hope she gets disability or is married and covered by her spouse, because otherwise she won’t get insurance.
But heck maybe I’m wrong for believing that lot of people want insurance but can’t get it. And it’s certainly not affordable.
23 Meg // Sep 2, 2008 at 12:56 am
Tim, we must know very different people. I know A LOT of people who are struggling, but not because they bought expensive televisions or new cars. I can think of maybe one person I know that has a big flat t.v., but she can afford it.
I’d bet that of those that are truly struggling, more is due to health issues and other issues like that than buying too many televisions. In the case of a lot of people I know, they’re trying to get through college without the help of their parents, but they can hardly afford their rent let alone tuition on the sort of jobs they can get around here without a college degree. Some have had to quit college with the hopes that they’ll eventually be able to go back, but things seem to only get worse for them with each year. For people where I grew up, there just aren’t many jobs anymore available for those without college degree except for teaching (for really awful pay), and trying to go to college is even harder since it means traveling longer distances and often juggling work and family, too.
True, people do make poor money choices. However, it can be hard to not buy things we really want and just about all of us splurge from time to time. The difference is, some people can afford to make mistakes but don’t give enough credit to those who can’t.
24 Kristy // Sep 2, 2008 at 5:18 am
I must know more people like Tim. I know a guy that doesn’t have insurance, works in construction, has two little kids and who doesn’t have insurance. But guess what, he just redid his basement with a new flat screen tv, has the most expensive cable program and spend lots of money on toys. Should I feel bad when he does have an accident and can’t work? They live paycheck to paycheck and don’t have enough insurance….and he can afford it. I know lots of people like this which is why I feel the way I do.
And don’t tell me how expensive insurance is! I have worked for companies that didn’t pay for insurance. I had to pay directly out of pocket. The most expensive year was the year I was pregnant with DD, I spent $1,100 every MONTH for our insurance. DH and I were not making the amount of money 3 years ago when I gave birth, so the insurance was very expensive. I guess I could of gone without and used everyone elses tax dollars though, right? But there are other types of insurances that are not as expensive as that, you would think that people would at least purchase something.
I agree that the system needs to be changed, but again I agree with Tim when he says that you can fix a system by pouring more money into it.
Take a look at the site I am going to post, 21% of the uninsured are not even citizens. Should we pay for illegal immigrants too? Where does paying for health insurance begin and end?
http://aspe.hhs.gov/health/reports/05/uninsured-cps/index.htm
25 Tim // Sep 2, 2008 at 8:20 am
LAL, I think you grossly exaggerate the link between taxes, medical costs/insurance, and bankruptcy.
1. Out of a little over 100k people (although there was a spike due to the tightening up of bankruptcy laws) who filed bankruptcy, using your figure of 60% filing for medical reasons is only 60k people, which is very small number overall compared to the population of the US.
2. The 60%, who you continue to cite as an example, who list medical as one of the reasons for filing, medical debt amounts to only 5% of their debt. 95% of their debt is credit cards and other debts not related to medical.
3. People who file BK have 1.5 times their income worth of debt, the vast majority being consumer debt not related to medical.
4. BK filers in general are more educated than the national average.
The latter two indicate to me that you have life style inflation. If you are spending 1.5 times more on consumer debt than you make, you
aren’t making the right decisions. Medical debt isn’t the straw breaking the camel’s back, it is the other debt that people took on. That is a choice they make to get into debt. The whole medical costs/insurance issue is a nice thing to blame, but the reality is, people are making poor choices.
Do the math and tell me if there is a systematic problem that we need to reduce middle class taxes and raise upper middle class taxes or the rich? I think not, not for less than 60k people of which only 5% of their debt is medical expenses. there is plenty of social welfare money to cover the 5% of those 60k people/year; moreover, over 90% of those 60k won’t have to pay a dime back on medical expenses and the remainder will have to pay a small fraction.
LAL, I also don’t understand how if you and DH only gross $40k/yr that you are in the same boat as me since I’m in the 3.2% category of earners. How much did you and DH put down on the house and how much is the house cost? Your DH was smart and got disability insurance, most people do not, regardless of if it only provides 60% of income. The issue is that people simply make a decision not to have insurance of any form and do not save in any form.
I know all about health insurance, my mother had to have a $60k procedure which wasn’t covered by her health insurane provider. However, my parents didn’t live beyond their means and were able to cover, although as I stated, they do not make very much between $40k-$60k/yr. If my parents can do it, and they raised 4 kids, I have no sympathy for people who say woe as me. I know it is possible from first hand experience.
MEG, the vast majority of people will not tell you their financial situation regardless of how close they are to you. I might be wrong, but you may not know the entire picture of the people who you know. How many of those people do you know what they spend on (ok you might not see a large flat panel in all their houses)? One of my wife’s or my salary is more than my brother, sister, and parents make combined, so I’m not talking to different people. Are they having to watch what they spend, of course they are; however, they aren’t running up credit card bills to fund a lifestyle they cannot sustain. The vast plurality of people have made lifestyle choices from having more kids than they can afford, to buying more crap than they can afford, to not saving money for a rainy day, etc. How many of those people who say they are struggling are working two jobs? Very few. My father worked three jobs when he was raising us, so I could care less about people who simply aren’t willing to make the right financial decisions or not willing to better their situations. There isn’t this widespread situation where people are struggling because of medical costs. That is simply untrue. Peopl are struggling because of living beyond their means, not saving for a rainy day, having more kids than they can afford, not buying insurance, etc., etc.
Are there exceptions? Yes, there are, but that is such a small fraction. Should we fix the social system? Yes, in order to divert resources to people who really need the assistance, rather than to people who make the wrong lifestyle choices. That does not require throwing more money at a broken system.
I believe that we promote heavily for people to succeed, and at this point people making over $100k-$250k get heavily penalized for doing nothing more than that. I didn’t come from means, I also got caught up in the lifestyle inflation and racked up serious debt but paid it off (when I was making lower middle to middle class income), so I know people can do it if they wanted to do it. People want to increase my taxes when they aren’t willing to bust their asses when my wife and I have been? Again, screw them.
26 LivingAlmostLarge // Sep 2, 2008 at 10:05 am
http://www.consumeraffairs.com/news04/2005/bankruptcy_study.html
Tim there’s the link about Bankrupties. I think there are more people struggling than you imagine. But you refuse to look at the bigger picture.
My DH and I make six figure now in 2008. In 2002 when we bought a condo in Southern California we made $42k/year gross! So it CAN be done! Take that! And it was a one bedroom condo $150k and we put down 10%. Tiny 1 bedroom condo did I mention?
Again you say you can’t afford to buy, NO TIM, you CANNOT AFFORD TO BUY A HOME YOU WANT!!!!!!! You can afford something! It’s just not up to your Standard! I hate people who think just because you live in a HCOLA (which I do) that you can’t afford a home.
You can! It’s just not in the best neighborhood (ours wasn’t), it’s just large (ours wasn’t) and it just wasn’t “Worthy” in most people’s cases. I bet with your income Tim you can afford a 2 bedroom condo! But you are a whiner and don’t want to.
All you do is whine and blame others. Then you justify and say it will take $500k for a home. Well who said you deserve a home???? I don’t have a home and I would love to own one, but it’s not my RIGHT to get one. I can only buy what I can afford!
And what I can afford is a townhouse. Gee, tough luck and hard knocks that I have to go from a condo to townhouse and maybe one day a home.
All I hear living in a HCOLA is “I can’t afford a home.” You can. Currently a 1 bedroom in Boston is $250k, on a $100k+ salary it’s affordable. But is it desirable? Probably not.
People always want things now. And I’m tired of hearing excuses. I’m tired of people being so whiny.
I actually hope you go out and meet the middle class. Most of my friens are struggling and do not own flat screen tvs. Many are driving normal cars. Sure some do drive fancy cars, but the average don’t.
The norm is $48k median salary in this country. They are struggling because of the rising costs of healthcare, food, utilities. Why do you think they are wondering where their money’s gone? And their jobs are being outsourced? And many are being driven to BK?
Yes I agree responsibility is important. But did every PF blogger in debt really buy big screen tvs? Or were some truly just not making ends meet?
27 Funny about Money // Sep 2, 2008 at 10:08 am
In my book, a $250,ooo annual income qualifies as “rich.” It’s more than four times what I make, and my salary is exactly at the median income for a family of four in my state.
If I earned $250k, I could live comfortably in San Francisco or Portland, both venues where I would rather be than in my 115-degrees-in-the-summer hometown. I could live pretty nicely on $150,000, too: probably could get by in a coastal city, but here in the Valley of the We-Do-Mean-Sun an income like that would take me away from the constant cop helicopter buzzovers, the repeated home invasions, the thugs in the local grocery store parking lots, the dying infrastructure, the train track construction, and neighbors like Biker Boob (a Hell’s Angel who runs a shade-tree car mechanic’s business, fully equipped with LOUD industrial machinery, in his garage) and Dave’s Used Car Lot, Marina, and Weed Arboretum.
I would not feel bad at-tall to pay a few more taxes on an income exceeding $150,000.
Raise taxes on dividends and interest? Well, I’m sure that won’t do much harm to the superrich we imagine we’re swatting. But it sure won’t help those of us who think we’re going to live off income from 401(k)’s and 403(b)’s in retirement. My GROSS combined investment and Social Security income will be about the same as my present NET salary, on a gross salary that’s 1/4 of a “not rich” rich figure. Then I’ll have to pay taxes on it. Since that’s probably the case for most about-to-retire Boomers, increasing taxes on dividend income is by and large regressive.
28 LivingAlmostLarge // Sep 2, 2008 at 10:09 am
One thing, I forgot, many people in financial trouble with BK and medical bills, I noticed are single income families. They have a mom usually staying at home with a lot of children. They choose to live on less with say 3-5 kids. Problem? They are trying to live a lifestyle without enough income.
Is it wrong? Or would you say it’s okay because they are morally choosing to raise their children?
Go to a dave ramsey forum and read how many people in debt have 1 income, no big screen tvs, etc but are hit by medical bills, layoffs, etc. And they still have more kids and more bills. It’s tough to get ahead. I know many following the plan have declared BK. But where do you draw the line?
Oh you have TVs so you are bad. But you choose to stay at home with 5 kids so it’s okay?
29 Kristy // Sep 2, 2008 at 10:47 am
LAL, per your post
“People always want things now. And I’m tired of hearing excuses. I’m tired of people being so whiny.”
Me too. If it wasn’t for American’s wanting everything right now, there wouldn’t be so many people in bankruptcy. A medical problem/illness may have pushed them over the edge but that is not what got them there in the first place. Its lack of planning and taking responsibility for their own actions.
30 LAL // Sep 2, 2008 at 11:17 am
I think the problem is I’ve seen tons of people with want. And so has my mom. SW who deal with people going BK daily and they don’t have fancy tvs, cars, homes.
Most are struggling. Whiners I think are more those who complain like Tim about their money. They don’t appreciate what they have and they have so much more than everyone else.
Me I happy I have so much. I appreciate it. And paying taxes will help in the long run. If it doesn’t then perhaps we should turn into a society where every man is for himself.
It’s when you don’t have a choice that makes it tough. My family worked hard for very little money. Nothing fancy, but fortunately no major illness every struck. But families around them and around me and my Mom were devestated with illness.
By the way I had my first grand mal seizure at age 18 months and my mom was a single parent. So we meet tons of other kids with cancer, diseases, etc in pediatrics. Most families had 2 parents, and were still struggling financially. We struggled hard during those years, but were fortunate my mom always had medical insurace. But she spent all our money on medical care for me and we had no savings. I have all my medical bills/records now of all the EKGs, Catscans, etc I had growing up 2x year. Plus daily medications which were not cheap.
So tell me, how everyone we were surrounded by, struggling with devestating medical bills weren’t trying to live better than I do now? I live a life of “riley” as my mom puts it. I am “rich”, I’m in the top 5% of earners. Geez a lou, you’d have thunk?
31 Tim // Sep 2, 2008 at 3:25 pm
LAL, that study has more holes than my underwear. It was designed to be an argument that medical costs were causing BK and used people’s statements rather than hard facts. There are plenty of counter reports to their study that argue that the number is far less than 54%, and even then there was no direct causal relationship. Again, people want to focus on medical costs as the straw that is breaking the camel’s back, when it is the aggregate. The number of people where medical costs is the determining factor is far lower, and I stick by the testimony in 2007 that 5% of debt was medical for BK filers.
regarding our home: The homes in our area are median $500k. So it isn’t a choice of a home that we “want”, because all homes are “wants” regardless of how you make it sound. The cost of a home in our area simply is not affordable in our eyes, and it is indeed a “want”, because you can live in an apartment which we do. I do not think buying a $150k house on $42k with only 10% down is financially sound, so I would not do it even if that were an option for us. If there were houses in the $150k range, in our area, then I would buy it, along with everyone else and their mother, in a heartbeat. However, the key point is that home ownership is a “want” and not a necessity. So you are right, we cannot afford a house that we want, because there are no affordable houses. We could stretch and put ourselves in financial limbo, but we are not willing to do so. That is a choice on a want purchase that many people failed to do. I also think you are misreading what I wrote, because I wrote from the start that a house is not an end all, and I continued to write the same. However, people seem to think that home ownership is a right so they will put themselves in a situation where they really can’t afford the house. I also wrote there are exceptions to every case, however, we have to understand that they are exceptions and not the norm.
The US has had a near zero savings rate followed by a negative savings rate far before oil shot up and prices increased. This to me means people were buying more than they could afford when times were good. Starbucks wasn’t making a huge profit because no one was buying $5 lattes. No one was complaining about high prices a year ago, when people were spending heavily. Maybe your friends are all truthful and don’t spend on crap or extraneous stuff like going out to eat a lot, getting $5 lattes every day, I would say that your friends are the exception then, because I sure the heck saw a lot of huge SUVs, shiny new things, big tv’s in poor to lower middle class neighborhoods when I visited my friends. Sales of SUVs didn’t expand exponentially because people were saving.
Health care costs wasn’t the cause for the current financial situation where people are having to hold back discretionary spending. It was fueled by people taking out more house than they can afford and buying everything on credit. the current situation has nothing to do with health care costs, and it has nothing to do with me making a sound financial choice of not wanting to buy a $500k house, because I cannot afford to do so, even if we make close to $200k. I don’t care if I own a home.
I’m not complaining about my money, because it is exactly that and what it should be “my money”. I don’t need to pay more taxes for other people’s disillusioned notiones of financial behavior. What I pay and what many pay is suitable for the tiny minority who need social welfare. You make it seem that everyone and their mothers are contracting disabaling diseases and injuries. Perhaps your myoptic view of the world, because of your personal situation, biases you this why. That is simply not the case. I never stated that society qua government should not help. It should, but it needs to fix the system not throw money at a problem.
As far as dave ramsey’s forum or anything else like the MSNBC Gut Check America, etc. as you suggested…people lie when it comes to money especially when it comes to voicing it in public, because they do not want to face the fact that the vast majority of them have and had poor financial behavior. Most of them are blaming the government, or blaiming the credit industry, or blaming the mortgage industry for all their woes. No one forced them to sign the dotted line. The media is fueling the sentiment as well and you will hear very few people talk about personal responsibility in this mess.
Kids: i never said tv was bad and choosing to stay at home was bad. They are both bad if you cannot afford them. They are both wants and they are both choices. Yes, having kids in most instances is a choice. If you choose to have 5 kids and only have one source of income, and that income is going to stretch you like buying more house than you can afford, then yes, it is bad. There are plenty of people out there who choose to have more kids than they can afford. God forbid that anyone says hey idiot, if you only make so much money, why don’t you stop having kids. The problem is people have kids without thinking about the cost of raising kids. Again, if you are popping out kids left and right on accident because you aren’t willing to tie it up or keep it in your pants, then that is another personal choice. It shouldn’t be one that the rest of us has to pay for. Oh, yeah the kids are innocent, the parents sure the hell aren’t.
so although I’m truly sympathetic to your family’s situation (and I’ve seen plenty of chronic and terminal medical conditions in my family), I am not sympathetic to the vast majority who say they are being pushed to the edge now, when up to a year ago, they did absolutely nothing to create a safety net. Even when oil doubled in price, people simply did not start curbing their behavior. I should not have to pay for the bad behavior of others, because there are exceptions to the rules as you stated and that money could be better used to help them out.
32 Livingalmostlarge // Sep 2, 2008 at 4:02 pm
Tim, who said you need a $500k house? Is a one bedroom condo or studio $500k? If it’s not then why are you complaining? I’ve bought a tiny condo and it’s a home. I don’t own a home so your argument doesn’t hold weight. You can buy something, but maybe not a single family home. In your area there are places you can afford but choose not too. That means you are making a judgement that it’s “unaffordable” well to you yes. But others who live in your area and own condos, townhouses, and smaller homes than obviously you want. So there is affordable housing, but you turn your nose up at it!
And I have no issues with renting, but I think that many people need run the numbers. Also if you want to own, then make your own decision regarding what is acceptable. I admit losing money on owning because the DP we put down 20% could be invested. But the reasons to own are non-financial.
Second the numbers on our condo was such that renting was $1100/month for a 1 bedroom apartment in Southern California and we were going to pay $750/month mortgage, $130/month HOA, and $25/month insurance and $150/month property taxes. Just about the same so what was the big deal? If we couldn’t afford the mortgage, we certainly couldn’t afford renting either.
Nope, I volunteer where a lot of women are struggling at the Women’s Shelter. More people who are not driving fancy cars come to the food bank. And I don’t think they are living large, rather they are trying to live.
Do you volunteer or work somewhere that you can see poor on a regular basis? I gotta wonder what people who do feel? Are most people wasting money or are more people falling behind while still trying?
Oh I agree people have bad financial behavior. But that’s not it at all.
And I don’t know would you ever address to anyone to not have children. Or to wait until they are financially ready. Or they can’t afford to stay at home? Please tell me how to make these necessities?
And many people want lots of kids because it’s a blessing. They are not trying to not have more children. They want children and how can you judge that?
34 fengshui // Sep 5, 2008 at 10:10 am
It appears from Obama’s tax cut plan, in your tax bracket, you’d save about 2%, and with McCain about 4%. But look at the BIG picture. McCain gives huge tax breaks to those who make >2 million per year. WHY???? Obama wants to raise taxes for this group. Good for him.
35 LivingAlmostLarge // Sep 5, 2008 at 10:19 am
Exactly we need to tax the rich. Reagan did it, the first Bush did it to start “righting” their deficits.
And finally Clinton did it. But we were in a surplus when he left. Guess taxing rich isn’t such a bad thing.
36 fengshui // Sep 5, 2008 at 10:27 am
“You can buy something, but maybe not a single family home. In your area there are places you can afford but choose not too. That means you are making a judgement that it’s “unaffordable” well to you yes. But others who live in your area and own condos, townhouses, and smaller homes than obviously you want. So there is affordable housing, but you turn your nose up at it!”
VERY true. The median home price where I live is $260k. But my hubby and I live in an ugly green little 80 year old house in a mature neighborhood and spent $100k less on it than the median home price in my area. We don’t care that we’re not living in the burbs in McMansions like some of our friends, but we’ll be the ones with money in the bank and not struggling like everyone else.
37 Budgets are Sexy // Sep 5, 2008 at 11:42 am
Brilliant post! It really got me thinking, that’s for sure…enough so that i had to post about it myself today
Enjoy your weekend!
38 deepali // Sep 5, 2008 at 11:59 am
Wow all I gotta say is that some people need to get out more if they think that $250K isn’t rich. my god!
There are 1 billion people in the world who live on less than $1 a day. And before you say cost of living is much less… it’s actually not. Not for the basics. The only thing that is truly more expensive for those of us in the West is housing. Our cost of living is high because we think we can only buy the 500K condo, we *must* have cable, etc.
Great post!
39 Dividend Growth Investor // Sep 5, 2008 at 3:37 pm
Why should we tax the rich more? Most rich people get their income not from salaries, but from business, investment or other sort of income. If I make $250,000 from dividends, the companies that have paid these money have already paid about 30% on the income plus I will pay 15% on my dividend income as well. If we increase the taxes on the rich then the companies will continue shifting their operations abroad to pay less in taxes. And the middle class will lose even more jobs.
40 Livingalmostlarge // Sep 5, 2008 at 7:03 pm
Maybe dividend growth. But currently we’re at the lowest interest rates since 1930s. And I think the 1990s was a good time.
Plus realize Reagan raised taxes 6x after he cut them and 1st Bush began raising taxes after promising not to. Then began the 1994 boom.
I’m not sure jobs will all be lost and things will go wrong. I am guessing that McCain raises taxes as well. He did not promise to not raise it, he said he would try not to.
Likely he’ll have NO choice in order to get the budget in any semblance of order.
42 Meg // Sep 10, 2008 at 6:42 pm
LAL - Just FYI, there are two different Meg’s commenting in this post. I am Meg of The World of Wealth, and the only comments I left were the first two that were by “Meg” on August 29. And this one of course.
PS - I think $250K per year definitely makes you “well off” - unless of course you are living in a HCOL area and/or have a slew of kids and/or you and your spouse are both working 2+ jobs to bring home that much. “Rich” though just has a connotation of being able to afford anything anytime anywhere - Being a millionaire used to qualify you but these days I think you’d need $10-20 million to really be deserve the term.
In other words, if the $250K is passive income than you are definitly rich. If you’re struggling for it and/or it isn’t consistent, then you’re probably not.
43 The other Meg // Sep 10, 2008 at 6:53 pm
Thanks other Meg for the clarification! There seem to be a lot of us Megs out there. When I started blogging about fashion, a lot of people confused me with another well-known Meg.
As if it weren’t confusing enough, I’m the Meg from FruWiki, All About Appearances, and about a half a dozen other sites, so I get around ; ) I should probably just get back in the habit of always mentioning one of those sites in the name space.
44 Livingalmostlarge // Sep 10, 2008 at 6:56 pm
Sorry ladies for the confusion. But thank you for clarifying.
45 factcheckorg // Sep 11, 2008 at 5:43 am
LAL,
“… I hate to break it to you Kristy, but you realize that NIH funding has been cut by more than 75% since GWB has gotten in?”
Not in the world I live in, but I could be corrected …
http://www.politifact.com/truth-o-meter/statements/154/
46 Tim // Sep 11, 2008 at 2:03 pm
factcheckorg, politicafact uses some wierd fuzzy numbers by using non-inflation adjusted figures, although current monies is actually inflation adjusted since it is today’s dollars. nor does the figures represent anything meaningful, perhaps they can do more on less? last time i checked the president wasn’t the holder of the national purse, either.
48 Livingalmostlarge // Sep 11, 2008 at 4:50 pm
How does the numbers work with inflation adjustment? And I know that funding is tighter more recently.
49 LivingAlmostLarge // Sep 16, 2008 at 8:30 pm
Here’s a new article that ER abuse is occurring mostly from people who have insurance. Problem is the inability of people to get to see a primary care physician.
Great huh?
http://www.sciencedirect.com/science?_ob=ArticleURL&_udi=B6WB0-4S8TR7D-2&_user=10&_rdoc=1&_fmt=&_orig=search&_sort=d&view=c&_version=1&_urlVersion=0&_userid=10&md5=e1add283aeae10d17da67f14369d1b5c
51 JoeTaxpayer // Oct 19, 2008 at 4:47 pm
The post article and other charts don’t do much for me. They group $160-$227K but the next group is $227K to $603K. Wow, that’s quite the spread. For the second group, Obama is an average ‘no change’ but I’m sure the high end goes up quite a bit, and the lower end saves some. I’d like to see a graph where the numbers in between are shown more clearly.
Joe
52 LivingAlmostLarge // Oct 21, 2008 at 4:10 pm
Good point. But most ways you cut it $250k income is a lot of money. I acknowledge that even if I ever make that much I’ll consider myself rich. It’s certainly not middle class.
McCain's Choice? - Personal Finance Forums - Aug 29, 2008
Carnival of Personal Finance #168 - Fire Up the Grill, It’s Labor Day | One Caveman's Financial Journey - Sep 1, 2008
Posts That Motivate and Inspire Week #4 | The Passive Dad - Sep 1, 2008
Festival of Frugality and COPF Picks : Tight Fisted Miser - Sep 3, 2008
Where they stand? | LivingAlmostLarge - Sep 10, 2008
Carnival of Net Worth #8 - Sep 11, 2008
My Decade-Long Journey To Five Million » Why Don’t People With 6-Figure Income Live Like Rich People? - Sep 23, 2008
37th Carnival of Money Hacks: Wonders of the World - Nov 5, 2008
Leave a Comment