Yes, making $500,000 a year makes you rich. Why do you ask?

bethesda maryland

Summary List Placement

Once again, the “who’s really rich?” conversation has reared its head.

It was kicked off over the weekend by MSNBC’s Stephanie Ruhle, who said many people who make $500,000 or more in income don’t consider themselves rich — a claim that is true, in my experience. After all, a few hundred thousand dollars isn’t a lot of money after you’ve spent it.

Journalist Matt Zeitlin can’t believe we’re still doing this, arguing over whether making a half-million dollars — higher than 98% of American families’ incomes — makes you rich, as President Biden proposes to raise taxes on families at this high point on the income spectrum.

The reason the “are these high income earners really rich?” argument is a perennial because it’s so easy. Unlike thornier economics questions everybody is qualified to have an opinion and these views vary because everyone seems to define “rich” as starting at an income somewhat higher than their own.

I think the issue is that people define “rich” as meaning your choices are not constrained by financial concerns, but of course, everybody’s choices are constrained by financial concerns. There’s always a bigger, more expensive thing you could buy if only you had more money. Even if you’re a billionaire with a private island, there’s always a bigger island.

This conversation is fun but it’s a little divorced from why we talk about what it means to be rich. In the context of politics, we have this conversation when people are talking about raising taxes, and the real question is: Who should we collect more taxes from? The idea is that someone needs to pay more in tax, because there are important things the government should be doing and someone needs to pay for them.

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So who is it fair to collect that money from?

Back in my day, we argued over whether $250,000 made you rich

As I pointed out to Matt on Twitter, we’re not actually continuing the same conversation we’ve been having for years. Back in 2015, I wrote an article for The New York Times exploring the question of whether a family income of $200,000 a year made you rich. The context at the time was a moribund Obama administration proposal to curtail the tax-advantaged 529 college savings account program, which is mostly useful to higher earners, in favor of a program aimed at families with low or moderate incomes.

Obama abandoned this proposal within days of announcing it because hell hath no fury like a parent with a $200,000 income told they’re getting an unwarranted tax break. One thing I noted in that Times article was that parents who complain they don’t feel rich on $250,000 a year in Bethesda, Maryland should be aware that Washington has other, less-expensive suburbs where they could live — a comment that prompted one senior news staffer to take rather rude exception to my writing during an awkward elevator ride at the Times’ Washington bureau.

But that was then, and now President Biden is pledging to …read more

Source:: Businessinsider – Politics

      

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