Post: #1

Quote:Spare a thought for the millionaires this week. The bill from last year's tax increases has come due.

The rich aren't poor, of course, whatever their tax burden. An adjusted gross income of $389,000 puts you in the top 1 percent of earners in 2011, according to the latest IRS data. No telethons have been organized. No TV ads have been narrated by Sarah McLachlan. Even the House Republicans have been silent lately on taxes on top earners, as Bloomberg's Richard Rubin notes.

But put aside the tone-deaf rich and their caricatures in pop culture. Hold the class warfare. High-earning Americans who haven't found the right dodge, or who live in high-tax states, get socked. They contribute more or less like their compatriots in other developed nations, with few of the perks.

What this chart doesn't show is, first, how much Americans end up paying in state and local taxes. For that, check out this slideshow.

Second, and more important, it doesn't demonstrate how little wealthy Americans get for their tax dollars. Sure, the rich benefit from the court system, national defense and everything else that maintains the society that underpinned their success. But when it comes to their personal finances, wealthy Americans must save a huge portion of their earnings before they are fully protected from future risks and costs. Blame the nation's financial safety net. It doesn't meet the needs of the poor, and it largely leaves out the wealthy.

Consider a married couple living in New York with newborn twins and earning $450,000 a year. Here's roughly what they need to save:

Our hypothetical couple has a $2 million savings goal to hit just to meet expenses that would be mostly or entirely covered in other developed countries. For example, while university is cheap or free in many parts of the world, full tuition and expenses at a private college in the U.S. can run $60,000 a year or more. For a newborn matriculating in 18 years, the four-year bill could be almost $500,000, assuming a 4 percent annual rise in costs and no financial aid. Double that for two children if neither can get a merit or athletic scholarship. In addition, many high-earning doctors, lawyers and other professionals may still be paying off their own student loans.

U.S. unemployment benefits are little help to high earners. They're capped at $405 a week in New York, for example, the annual equivalent of $21,060. If one or both top earners lose a job, the chart shows, they'll need an emergency fund that covers at least three months' salary.

The wealthy do get Medicare insurance at age 65. Unlike universal health care programs abroad, however, Medicare coverage has big gaps. Fidelity Benefits Consulting says retirement health care costs outside Medicare can total $220,000, not including long-term care. And while countries like Germany and Japan have universal long-term care programs, the U.S. covers nursing home care only for Medicaid's low-income population. Genworth Financial's Cost of Care Survey, released this month, found the average cost of three years in a private nursing home room now total $260,000 per person.

A high-earning couple in New York City must save for all these expenses even after paying a 39.6 percent federal tax rate on income above $450,000 and a top marginal local tax rate of 12.7 percent. They should also be saving 15 percent of their income for general retirement expenses, Fidelity says -- a larger share than lower-income households that will rely more on Social Security.

So take a moment to recognize the sacrifice of high-paid professionals. They can pay an effective tax rate approaching 50 percent -- far more than an idle heir pays on his investment income -- and still must worry about a job loss or health emergency leaving them strapped.

But also remember that the rest of the country must save for most of these very expenses. And while a few well-deployed tax techniques can make all the difference for wealthier folks -- deduct home interest, take up residence in Florida -- the rest of us must prepare for the future with far less room for error.

http://finance.yahoo.com/news/why-rich-p...18578.html

Post: #2

Hide your income, fuck the man

Post: #3

That is crazy . I always tought the rich get tax break while the middle class paid the most . What is a rich person ' s expenses and is it hard to cut down ?

Post: #4

Only way of securing your future today is becoming an entrepreneur.

Being a high paid professional (what the article is referring to as 'rich' people) is incredibly over-rated.

Post: #5

So rich people feel poor because they spend too much?

I don't understand why the kid has to go to a $ 60 000 a year private college just because his parents are high earners. Is someone holding a gun to their head? What's holding them back from choosing a less elite option, like a college that costs $ 35 000 a year?

Post: #6

I thought some rich people are addicted to making money.. like they always will feel like they are in a state where they don't have enough.

Post: #7

Truly rich people don't get most of their income reported on a W2, hell they don't even really have much income...it's dividends, capital gains, stock grants, etc. Anyone who has income on a W2 is basically fucked, because there are precious few ways to hide/reduce your taxable income. They generally are: 401(k) contributions, mortgage and property tax deductions (itemized deductions), child care, children, investment property, home office. There are far more ways to creatively use the tax code to shelter income and earnings if you're a corporation or run a business.

And Prophylaxis is right...these people are not really rich. In fact, the whole article has an agenda in labeling upper middle class or lower upper class people as rich, when people who are really rich are not even in the same ball park as the couple who earns $500K jointly. However, this couple is easier for certain people to relate to and hate, therefore they are used as an example. This article pretends that it is sympathetic but it really wants people to hate them.

The $60,000 price for college is for tuition AND expenses. Most private schools are going to cost about 35-40K in tuition, regardless of how highly ranked they are. The benefit of elite education (Ivy League) in the US is not the education, which is not going to be significantly better than what you can obtain at a good state school. The primary benefit is the creation of a (hopefully) life-long social network of successful people (and their highly successful parents), that are suitable for either marriage and/or other future networking/employment opportunities. Elite education is about social capital. The name brand is also a benefit, as it is a mark of excellence widely recognized by everyone and an indicator of superior ability (whether actually present or not is irrelevant, that's what it signifies).

Post: #8

Rich =\= Wealthy

Rich means your a well compensated professional. Your still a wage slave though and still subject to getting fucked over by the tax man.

Wealthy folks don't have this issue as they pay little to no taxes.

Last time I read the wealthy have never been doing better. If the rich are complaining then it's more proof the game is rigged.

Post: #9

As it has been said before...

The real rich do not report their income on a W2. This is what needs to be pushed out to people. If you have a salary, you're a wage slave.

Post: #10

Same story.

1. If you must work first go to a performance based job
2. While doing performance based job you will pick up more skills necessary to start a business on the side or straight quit your job
3. Continue on your performance based career so less and less of your income comes from your salary until you have a real good business idea
4. Business becomes profitable quit and leave

Rich and wealth are not the same. When you have wealth which means income producing assets that is when you start shifting into the elite. I put a chart on a different section that shows income inequality and yet income inequality on a salary basis is different (ie: major cities have lower income inequality from a. Salary perspective because more money is generated for equity/debt, CEOs with $1 salaries).

If you're making a salary for a non-performance related job, you are slowly drowning and falling off the planet.

Go find a performance based job and eat what you kill. After that continue to find what you are good at and use that to build a business.

Nothing new to see here.

As kosko said, rich is not wealthy. W2 =/= well off.

Post: #11

(04-16-2014 12:30 AM)aphelion Wrote:  Hide your income, fuck the man

I would go with Menace's "use the tax code to shelter your income" more than that. Hiding your income will fuck you. Lets say you run a cash business...

1. Cash businesses are automatic audit targets
2. Lets say you have done a poor job of documenting your income, the auditors say "well Mr. aphelion...if you don't have any documents we are just going to use the averages of similar cash businesses in your area"
3. You get to pay tax on their calculations plus penalties
4. game over.

Post: #12

I can tell you precisely why they do not 'feel' rich. There are two interrelated issues: wealth and social status.

Their high power jobs are unable to accumulate 'wealth.' Wealth is traditionally an accumulation of your time and labor *stored* in investments and money. At some point, you trade that wealth in for time and freedom from labor...

They are turning their income around right back into paying bills, hence there is no accumulation of wealth.

However, they want to feel that their efforts are productive (aka: they would like to be accumulating wealth), so they try to spend their little wealth on things that imply high status: go to SWPL festivals, buy Kors, drive Audi, etc. They pressure themselves to be 'on' 99% of the time, never actually taking a break to vacation, be with the kids, etc. They spend all that time servicing their own social status and see no other way.

Yet a person who is loaded with debt and obligations to nameless people is indeed 'poor.' Poor in wealth and poor in spirit.