The New Rich

[Lsbcal]

And especially, why we like to rank ourselves in terms of dollars income! I consider myself to be rich, in a sense, but my idea of what it takes to be rich has almost nothing to do with income. Having oceans of free time, more than the bare necessities, and feeling completely content with every aspect of life is where it's at IMO. I have that, and let the Donald Trumps of the world eat their hearts out.

I know I have a complicated relationship with my money. As I get older I find the ranking is less important but the "I" in FIRE is the most important to me. Of course, the $'s really do help to give me a good feeling of independence. And let's not forget about the security aspect of having enough money. It can be a cold world out there.

Then there are the "Whee! ..." moments.

 

[Birchwood]

250K compared to 60K is a lot of disparity.
250K vs 200K vs 150K, there is not much difference, and who has more wealth depends on how any of them save and invest.

 

[marko]

I find it interesting that the article refers to these people as "barriers" to income inequality as if these are somehow bad people.

What interests me even more is how the phrase "income inequality" has come into the lexicon over only the past few months. Another boogeyman?

 

[Danmar]

Income inequality is getting bigger in the US over time, I think. Certainly the amount of money I made in my career was much higher than my predecessor in the same job. CEO's make way more today in the US than they do anywhere else or in the past. Maybe globalization? I don't know. As a beneficiary of the trend who achieved FI sooner and bigger than I ever thought, I say the craziness has to stop now that I have "made it".

 

[Midpack]

What interests me even more is how the phrase "income inequality" has come into the lexicon over only the past few months. Another boogeyman?

It's not a new phrase, see the 1920's, where it played out like this.

Of course it's not that simple and I don't expect it to play out in the same way at all, but I also wouldn't assume we'll maintain the current status quo either...

 

[imoldernu]

It's not a new phrase, see the 1920's, where it played out like this. Of course it's not that simple and I don't expect it to play out in the same way at all, but I also wouldn't assume we'll maintain the current status quo either...

Thanks for the charts... It brings into focus (for me) some of the reasons why my generation may have a different view of the retirement planning process. One of the obvious disparities was that the tax rates...up to 90+% in the upper brackets, kept the ratio of pay for the CEO's and top level management (to the average pay) in single digits, rather than the "500 times" that we hear about today.
Not to make a judgement here, just an observation. for most of my career, the pay for top management (large corporation) was about 5 or 6 times my own pay... not hundreds of times.

 

[haha]

W2R,

Well said. Being rich is a state of mind that has little to do with annual income. Maybe we need a satisfaction index rather than an income scale to compare ourselves to others.

This post is priceless!

 

[samclem]

Most people reading this post is rich.
-- Wanna really sock it to those evil 1%ers? You are one if your income was $34,000 last year (Source)
-- The global median annual income per person is $1,225 (Source: UK Daily Mail)
-- The worldwide average annual income per person is approximately $10,000. (Source: BBC)

And that's looking at today, when the world is wealthier than it has ever been. If we look back across even recent history, the "richness" we all have is even more apparent. Royalty did not live as long or enjoy the products and services that a person living below the poverty line has available in the US today. A king could not save his child from the plague, have an ice cream in July, or have a home that was warm in all corners in the winter.

And, viewed from a global or historical level, the US has effectively zero poverty.

It is a positive sign that we keep raising the bar, we should not be content with the status quo. But neither should we lose sight of the world as it is and as it has been in the past. Our progress has been absolutely tremendous.

 

[Midpack]

Thanks for the charts... It brings into focus (for me) some of the reasons why my generation may have a different view of the retirement planning process. One of the obvious disparities was that the tax rates...up to 90+% in the upper brackets, kept the ratio of pay for the CEO's and top level management (to the average pay) in single digits, rather than the "500 times" that we hear about today.
Not to make a judgement here, just an observation. for most of my career, the pay for top management (large corporation) was about 5 or 6 times my own pay... not hundreds of times.

You might think so, but again it's not that simple. Top marginal rates assuage the masses, but almost no one pays them, then or now...

 

[Theduckguru]

Stanley Druckenmiller: An Unsustainable Financial Situation | Video | RealClearPolitics

mod edit

The link contains a video explaining the basic economics of funding retiree entitlements and the effect on future workers. Enjoy.

 

[samclem]

One of the obvious disparities was that the tax rates...up to 90+% in the upper brackets, kept the ratio of pay for the CEO's and top level management (to the average pay) in single digits, rather than the "500 times" that we hear about today.
.

Not so much, really. The early higher marginal tax rates are not very meaningful because almost no one paid them. There were many ways to shield income from taxes, and you can bet they were heavily used. With the reductions in the top tax rate came reforms that closed these loopholes.

Here's the picture since 1980:

Note that this is FIT, it doesn't include payroll taxes, sales taxes, etc.

Edited to add: Oops, I cross-posted with Midpack

 

[aim-high]

Speaking of taxes . . .

The bottom 40% received money (paid negative taxes.) It's a good thing they have a low rate. ;-)

http://cnsnews.com/news/article/ter...ome-taxes-bottom-40-paid-91-got-average-18950

 

[MichaelB]

Stanley Druckenmiller: An Unsustainable Financial Situation | Video | RealClearPolitics

Please, a short snippet description of or summary from the linked site would be helpful to members.

 

[Theduckguru]

Please, a short snippet description of or summary from the linked site would be helpful to members.

I really wanted to submit this without comment and let the members have some discussion about it. Basically, it could be titled the old making out at expense of the young.

So please watch and weigh in.

 

[MichaelB]

I really wanted to submit this without comment and let the members have some discussion about it. Basically, it could be titled the old making out at expense of the young.

So please watch and weigh in.

It is a courtesy to members, that way they need not click on an unknown link and go to another site. It is also part of our posting guidelines, seen here.

Please do not post “naked” links, defined as links posted without explanation, interpretation or context.

 

[Theduckguru]

It is a courtesy to members, that way they need not click on an unknown link and go to another site. It is also part of our posting guidelines, seen here.

Thx, Not sure I would have known what a naked link was until now, but I can assure you no one is naked in it.

 

[steelyman]

It is a courtesy to members, that way they need not click on an unknown link and go to another site. It is also part of our posting guidelines, seen here.

Yes. In the holiday spirit and to let REW put his feet up, I'll borrow his phrase: you have it backwards. I know I don't open most links, none without an intro/preview.

 

[haha]

Not so much, really. The early higher marginal tax rates are not very meaningful because almost no one paid them. There were many ways to shield income from taxes, and you can bet they were heavily used. With the reductions in the top tax rate came reforms that closed these loopholes.

Here's the picture since 1980:

Note that this is FIT, it doesn't include payroll taxes, sales taxes, etc.

Edited to add: Oops, I cross-posted with Midpack

Hey, this is classified information; too difficult to reconcile with the popular polarity of exploiters and victims!

I long to find away to get into some victim class. It's the only way to live in modern America, and likely much of the rest of the world.

Ha

 

[Theduckguru]

Yes. In the holiday spirit and to let REW put his feet up, I'll borrow his phrase: you have it backwards. I know I don't open most links, none without an intro/preview.

The link contains a video explaining the basic economics of funding retiree entitlements and the effect on future workers. Enjoy.

 

[imoldernu]

About the marginal tax rates... and the point that few paid them...

Because they were so high, there was no incentive for top level execs to receive more pay... @ 90% tax a $1,000,000 salary would equate to $100,000 in the pocket. @67 % tax, a $300,000 salary would equate to $100,000. @ 33% tax a $150,000 salary would equate to $100,000.

Sure... the numbers weren't quite like that, but you get the idea. The "extra money went to the government.

 

[Theduckguru]

W2R,

Well said. Being rich is a state of mind that has little to do with annual income. Maybe we need a satisfaction index rather than an income scale to compare ourselves to others.

"Being rich is more about what you need than what you have".

 

[Elbata]

Read somewhere recently a quote about comparisons leading to a life a misery.

I can't speak for any of you, but I would venture to guess that most of you feel incredibly wealthy.

Yesterday, I'm reading about this great doctor in England who wrote a small tome. Before even finishing the article, I switch to my other monitor, look up the book on Amazon, find it's available used in Ireland. Within one minute I bought the book for under $7 including shipping and will be arriving in my mailbox.

For me, that's just one little thing that's unbelievable that is common stance in today's times.

 

[Malcolm2]

The nerve of those people! Don't they realize they are just making others feel bad? They need to knock off this hard work, planning, and education stuff - it just leads to inequality, and we can't have that!

-ERD50

Yes, it lowers someones self-esteem if they must work and plan for themselves.

It would be interesting to see a comparison to being 'Rich' and being 'Poor' in the rest of the world as compared to the United States. Or, for that matter to the U.S. 100 years ago? I have seen such studies but cannot lay my hands on them at the moment...

I always question the concept that something was better in the past, as that is usually not the case when it comes to economics and poverty in America.
I have seen real poverty elsewhere in the world, trust me it is vastly different than here.

The article quoted by the OP did have a a small redeeming quality. That was the truth of the last sentence:

"A dollar is best in your hand rather than the government's.".

 

[haha]

About the marginal tax rates... and the point that few paid them...

Because they were so high, there was no incentive for top level execs to receive more pay... @ 90% tax a $1,000,000 salary would equate to $100,000 in the pocket. @67 % tax, a $300,000 salary would equate to $100,000. @ 33% tax a $150,000 salary would equate to $100,000.

Sure... the numbers weren't quite like that, but you get the idea. The "extra money went to the government.

You don't get or are ignoring what those two graphs say. I suppose it's OK to have your opinions formed by your politics, but your facts? The actual in practice numbers are not only "not quite like that", they are nothing like that.

 

[Gumby]

This clip seems appropriate here.

Key Largo - Humphrey Bogart & Edward G. Robinson - No Johnny Rocco Scene - YouTube