Wed 7 May 2008
Can We Please Index “Richness” To Inflation?
Posted by RichSlick under The Fed
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Politicians can’t decide if someone earning 100k is “rich” or if someone earning 250k is “rich” and I have a simple request once the right answer is determined: Can we please index “rich” to inflation!
People seem to be caught in a time warp because I don’t think that for many Americans a 100k salary is enough to make you rich, particularly if you live in a high cost city like New York, Washington D.C. or Los Angeles. It’s not uncommon for a school teacher and say nurse to make over 100k in these areas and that doesn’t make them rich in my opinion.
A salary of 100k might have made someone rich back in the 1980’s but that was nearly 30 years ago. I’ve written about this before on how a 100k in 1980’s dollar is only worth about $44,000 in today’s dollars here. If we had decided that 100k was a “rich” man’s salary in 1980 then the appropriate salary to be “rich” today is somewhere in excess of $225,000 per year.
So please write your congress representative and senator and ask them to create a bill to index “richness” to inflation otherwise in about 12 years, everyone in America will be “rich” and pay 40 pct tax rates at the current rate of inflation.
May 7th, 2008 at 9:59 am
Same problem with “wealth”. Lots of people still bandy around “millionaire” as though it means something. A million bucks today isn’t the same as a million bucks in the 80s.
May 7th, 2008 at 7:51 pm
I’m not sure what prompted this post, but it’s my observation that when I hear politicians talking about the “rich”, the only income level they ever talk about is 200K plus. Which happens to be pretty close to what you would accept.
May 8th, 2008 at 5:46 am
I watched Obama v Clinton debate and they were going back and forth about whether 100k or 200k was considered “rich.”
May 9th, 2008 at 4:55 pm
I work in higher education and there is a big debate going on among the academics in the bunch about what is “rich” or really “middle class.” The issue arose because some of the Ivies (Yale, for one) have stated that they will offer a tuition “scholarship” to students whose parents make between $120,000 and $200,000 per year that will make the cost of attendance around 10% of their salary. Families making $100k, may end up paying only 10% of TUITION! This is one look: http://www.washingtonpost.com/wp-dyn/content/article/2008/01/18/AR2008011803043.html
Needless to say, the academic world now has to define what middle class is or isn’t; what upper-middle class is or isn’t; etc.
All I know is that there are a LOT of students who saw the May 1 deadline to commit to college come and go without an offer from Harvard or Yale and without a scholarship to make $40k/yr tuition palatable. Maybe these Ivies need to spend some of their money to send kids to schools that they can get into!
May 9th, 2008 at 6:46 pm
How would that work exactly? If I have 2 million earning 5% interest I’d have 100k of income. So millionaires get to send their kids to yale for free?
In the long run I don’t think it matters much. Places like India graduate more MIT experts in one year than the US does in 10 years. It’s simply a matter of time before it all changes.