Defining Who’s Rich

Looking south from Top of the Rock, New York CityImage via Wikipedia

John Avlon of The Daily Beast suggests that it is unfair to compare people making $250,000 a year to Warren Buffet. I agree.

He suggests that when raising taxes on the rich we make the split at $500,000 per year or even $1 million. I also agree. I think a lot of people agree, except the rich who feel like we are stealing their money. We are all people who will work hard if given the chance, but our chances for remunerative work are dwindling through no fault of our own. You were happy to “subsidize” us when you needed us. We helped you get where you are. We can’t help believing that you should contribute a bit more since your business shenanigans could be seen as the causes of America’s current financial condition.

It would definitely be easier to talk about raising taxes on the rich if we made decisions about what “rich” means. I do not think having an income of $250,000 per year can be considered rich in 2011.

I did a little number crunching:

Given a 15% flat tax rate the numbers look like this:
$30,000 pays 4500 which leaves 25,500
$50,000 pays 7500 which leaves 42,500
$100,000 pays 15,000 which leaves 85,000
$250,000 pays 37,500 which leaves 212,500
$1,000,000 pays 150,000 which leaves 850,000
$1,000,000,000 pays 150,000,000 which leaves 850,000,000

Given a 25% flat tax rate the numbers look like this:
$30.000 pays 7500 which leaves 23,500
$50,000 pays 12,500 which leaves 37,500
$100,000 pays 25,000 which leaves 75,000
$250,000 pays 62,500 which leaves 187,500
$1,000,000 pays 250,000 which leaves 750,000
$1,000,000,000 pays 250,000,000 which leaves 750,000,000

Given a 35% flat tax rate the numbers look like this:
$30,000 pays 10,500 which leaves 19,500
$50,000 pays 17,500 which leaves 32,000
$100,000 pays 35,000 which leaves 65,000
$250,000 pays 87,500 which leaves 162,500
$1,000,000 pays 350,000 which leaves 650,000
$1,000,000,000 pays 350,000,000 which leaves 650,000,000

Given a 39% flat tax rate the numbers look like this:
$30,000 pays 11,700 which leaves 18,300
$50,000 pays 19,500 which leaves 30,500
$100,000 pays 39,000 which leaves 61,000
$250,000 pays 97,500 which leaves 152,500
$1,000,000 pays 390,000 which leaves 610,000
$1,000,000,000 pays 390,000,000 which leaves 610,000,000

One thing that is clear is that we are not at all used to a flat tax. Another is to ask yourself, can I have a comfortable or even affluent life with what I have left? Can I really spend  this amount of money in a year? I remember reading the Kurt Vonnegut book God Bless You Mr. Rosewater in which the main character inherits an obscene sum of money and tries to get rid of it. No matter what he does at the end of each year he has more money left than before.

I have no way to figure out how much money these various tax levels would give the federal government.

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