The Washington Independent
The Washington Independent

Who’s Really Rich, Ctd.

Last updated: 07/31/2020 08:00 | 09/20/2010 07:08
news
Darren Mcpherson

Pop quiz. Say you make a steady $250,001, every year. How many dollars of additional income tax will you pay if the Obama administration’s tax plan goes through? A thousand dollars? A few thousand? Nope. Three cents.

Here’s how it works. Your taxes below $250,000 remain the same. And on that excess $1, your income tax rate increases from 33 percent to 36 percent. For most earners making between $250,000 and $500,000 a year, the Obama plan would increase income tax liability by just a few hundred dollars — an average of $600, according to the Center for Economic and Policy Research’s Dean Baker.

But those few hundred dollars proved the straw that broke the camel’s back for Todd Henderson, a professor at the University of Chicago. He and his wife, apparently a pediatric oncologist, pull in about $400,000 a year — or, at least, somewhat more than $300,000, a sum that puts them comfortably in the top 2 percent of American wage earners. They are rich. But, Henderson writes, they aren’t *really *rich. They are “just getting by.”

The rhetoric in Washington about taxes is about millionaires and the super rich, but the relevant dividing line between millionaires and the middle class is pegged at family income of $250,000. (I’m not a math professor, but last time I checked $250,000 is less than $1 million.) That makes me super rich and subject to a big tax hike if the president has his way.

I’m the president’s neighbor in Chicago, but we’ve never met. I wish we could, because I would introduce him to my family and our lifestyle, one he believes is capable of financing the vast expansion of government he is planning. A quick look at our family budget, which I will happily share with the White House, will show him that like many Americans, we are just getting by despite seeming to be rich. We aren’t. …

[T]he president plans on raising my taxes. After all, we can afford it, and the world we are now living in has that familiar Marxian tone of those who need take and those who can afford it pay. The problem is, we can’t afford it. Here is why.

The biggest expense for us is financing government. Last year, my wife and I paid nearly $100,000 in federal and state taxes, not even including sales and other taxes. This amount is so high because we can’t afford fancy accountants and lawyers to help us evade taxes and we are penalized by the tax code because we choose to be married and we both work outside the home.

He then runs through his expenses: Income taxes, a mortgage on a million-dollar home, property taxes, private school for three kids, payments on a $250,000 education loan for his wife’s medical-school education, retirement savings in a 401K savings plan and the stock market, and then “insurance, doctors’ bills, utilities, two cars, daycare, groceries, gasoline, cell phones, and cable TV (no movie channels).” He says he and his wife have just a few hundred dollars left over after that.

Of course, this family’s taxes actually won’t increase by that much. As I wrote above, they can expect a tax hit of just a few hundred dollars — and if they hired an accountant (it is not that expensive), I am sure he or she would help the couple actually save more than that.

Nevertheless, Henderson still might not *feel *rich. And the Obama tax hike has nothing to do with it. Henderson does not conceive of himself as rich because his fixed costs are too high, meaning he has little leftover cash and little say over where his remaining few hundred dollars go. But Henderson’s *actual *richness means he has hundreds of decisions he could make to free up more money for leisure and random spending. Here’s a quick list I drew together:

  • Put his children in public schools.
  • Move his children into less-expensive private schools.
  • Sell both of the family’s cars, and buy one cheaper car and take public transportation and cabs.
  • Sell one of the family’s cars and buy a bicycle. Also cancel gym membership, since biking is great exercise.
  • Seal his basement or garage and rent it out.
  • Sell his and his wife’s wedding or engagement rings.
  • Sell any artwork, decorative rugs, or useless, expensive wedding gifts collected.
  • Cancel gym memberships and take up jogging or use exercise tapes.
  • Demand a lower APR and higher interest rate from the family’s credit card and bank.
  • Switch the family to a vegetarian diet.
  • Draw down on the 401K.
  • Save less.
  • Teach an extra class.
  • Sell three pieces of pricey furniture and replace them with cheaper furniture.
  • Find a cheaper babysitter.
  • Go through the closet and remove clothes the family does not wear. Consign them.
  • Sell his house and move somewhere cheaper.
  • Refinance the mortgage.
  • Do his own lawn work — or, better yet, do no lawn work at all.
  • Paint his roof white to cut down on heating and cooling costs.

Were Henderson *not *actually rich, this list would be much shorter. One way or another, $600 in taxes — $50 a month — is neither here nor there for determining this family’s wealth.

Darren Mcpherson | Darren's gift and passion for seeing great potential and acting on it have helped him to develop his career and perform to audiences all over the world, stemming from a childhood obsession with magic and visualization. He now partners with leading brands to help their workers manage the high-stress, rapid change, and fast-paced world that has become the norm. Darren demonstrates how to reconnect with what matters most in life so that they can accomplish every goal while having the time of their lives.

Related

Rep. Paul Ryan to deliver SOTU response

Chairman of the House Budget Committee Rep. Paul Ryan (R-Wis.) will deliver the Republican response to the State of the Union Tuesday, according to Mike Allen

Rep. Parker Griffith (R-Ala.)

One of the most conservative Democrats in the House -- a freshman who said he couldn’t support Nancy Pelosi again -- is going to switch over to the GOP. Josh

Rep. Patrick McHenry: Please, Conservatives, Fill Out Your Census Forms!

The conservative congressman from North Carolina, a constant critic of the census -- one of the people who sounded the alarm about politicization when the

Rep. Perlmutter criticizes House measure that would eliminate 800K federal jobs

Congressman Ed Perlmutter today issued a scathing statement criticizing the House of Representatives for passing a spending bill that could put nearly a million federal employees out of work. The Colorado delegation voted strictly on party lines, with all four Republicans voting in favor of the bill and the three Democrats voting in opposition. Perlmutter’s statement: “My number one priority is to get people back to work because that’s the best thing we can do to pay our debt and move forward toward economic stability

Rep. Paulsen touts balanced budget constitutional amendment

In a post for the conservative blog True North , U.S. Rep

Rep. Pete Hoekstra Bashes Global Currency

I was just talking to Rep. Pete Hoekstra (R-Mich.), who’s leaving Congress to run for governor of Michigan, about his proposed Parental Rights Amendment—a

Rep. Perlmutter to hold constituent meet-up in grocery store

Colorado Congressman Ed Perlmutter will hold a Government in the Grocery constituent meet-up this evening from 5-7 at the Safeway at 38th and Wadsworth in Wheat Ridge. The address is 3900 Wadsworth. The meeting, where Perlmutter typically sits at a folding table and talks to whomever shows up, is free and open to the public

Rep. Paulsen, Karl Rove the latest to get ‘glittered’

Rep. Erik Paulsen and former Bush staffer Karl Rove were both showered with glitter at the Midwest Leadership Conference Friday

Rep. Pete Hoekstra Surging in Michigan Gubernatorial Bid

The ranking member of the House Intelligence Committee -- you couldn’t flip on a TV without seeing him in the aftermath of Umar Farouk Abdulmutallab’s botched

School of Hock

A growing number of college grads are defaulting on their student loans as the economy worsens.

© Copyright 2021 The Washington Independent All Rights Reserved

Terms & Privacy | twi.news@washingtonindependent.com