Thoughts, essays, and writings on Liberty. Written by the heirs of Patrick Henry.

April 13, 2009

You are “The Rich”, and you didn’t even know it

by Chris Byrne

Video From Reason.TV:

A lot of folks hear numbers like “the top 5%” of income earners, and they think that means Bill Gates, and fortune 500 CEOs etc…

No, although that’s exactly what the government, and the media, would love for you to believe.

It’s how they pit us against one another. It is a very deliberate divide and conquer strategy for class warfare; and the fact that 52 million people voted for it shows just how well it’s working.

It works, because “The Rich” is always the other guy. You aren’t “The Rich” after all, you’re “working class” or “middle class” whatever those mean (and who exactly says the “middle class” don’t work?).

Nobody wants to pay more taxes (well, except some of the extreme left), and very few people would vote to increase their own taxes; so they employ this class warfare rhetoric to get you to support tax increases on “The Rich”, which will supposedly favor you, and “the less fortunate”.

The only problem is, according to the government, there’s a pretty good chance that You (yes You, with a capital “Y”) ARE “The Rich”.

How can that be? They’re always talking about the “top 1%” or the “top 5%”, and again people start thinking about Bill Gates, and bank CEOs, and Wall Street traders…

Actually, the top 5% likely includes a lot of folks you know. Theres a fair chance it includes you. It almost certainly includes people you interact with every day.

When we get down to as low as say, the top 15%, most folks would think that got to be people making like $250,000 a year right?

No, actually people who make $250,000 a year are the top 1% (in fact, anyone over about $180,000 a year is in the top 1%. $250,000 puts you into the top .8% or so).

Wait a sec… the top 1% is just $180,000 a year?

Yes, yes it is.

The estimated individual income numbers for 2008 (actuals wont be available for another two years. Also don’t confuse these with household numbers, which account for multiple incomes) look like this:

The “top 1%” of earners in this country, is everyone who makes over about $180,000 a year.

The top 5% is everyone who makes over about $152,000 a year

In case you were interested, $100,000 is the top 5.63%

The top 10% is everyone who makes over $76,000 per year.

The top 15% is everyone who makes over about $64,000 a year.

The top 25% is everyone who makes over about $46,000 a year.

The top 50% is everyone who makes over about $32,000 a year.

So when somebody says “we’re going to tax the richest 15% to pay for the other 85%” what they’re really saying is anyone who makes more than $32 an hour.

Ayup, if you make more than $32 an hour, guess what, YOU are “The Rich”.

If they say “we’re going to tax the richest 25%” that means anyone who makes more than $23 an hour.

So, let me ask you, are you rich?

The top 15% pay more than 85% of all income taxes.

The top 50% pay more than 96% of all income taxes.

The bottom 50%, pay less than 4%.

The bottom 40% pay nothing at all.

The bottom 30% are actually PAID BY THE GOVERNMENT (and I don’t mean civil servants).

Plumbers, carpenters, electricians, mechanics, pretty much anyone with more than 10 years experience in any mid-level or higher job, in any professional career field or trade; that most likely puts you into the top 15% or so. Are you rich?

If you own your own business, the government ALMOST CERTAINLY classifies you as earning in the top 10% or higher… of course how much of that you actually KEEP is another story. Are you rich?

If you’re reading this right now, demographically speaking, it’s very likely you are in the top 15%. Are you rich?

If you have a college degree, live in or near a major city, and have more than 10 years experience in your career field, you are very likely to be in the top 5%, and almost certainly in the top 15%. Are you rich?

I’ll tell you right now, I’m in the top 5% of income earners, and with my wifes income we’re in the top 5% of household earners (in fact, the top 3%); and we are very definitely not rich.

We don’t live an extravagant lifestyle. We have a 1600 square foot house in an old neighborhood in Scottsdale (not one of the McMansion areas), two used cars that were both under $30,000 each when we bought them, and we send our two kids to Catholic school that’s subsidized by the parish, or else we couldn’t afford it. We don’t have a vacation home; no RV, no boat, no vacations to Switzerland every six months…

We’re not rich.

As far as the government is concerned though, we are “The Rich”.

In fact, it’s very likely that you are “The Rich” too.

What they’re really saying when they talk about “taxing the rich”, is taxing you. Because as far as the government is concerned, unless you’re taking money from them, hey, YOU’RE RICH.

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  • Miko

    Actually, the top 5% likely includes a lot of folks you know. Theres a fair chance it includes you.

    In fact, there’s about a 5% chance that it includes you…

  • Akston

    I would hazard a guess (unsupported by fact of course) that very few of the bottom 40% have regular access to the internet, and a minority of those would use such a thing to peruse The Liberty Papers (no offense, Brad).

    So it’s probably better than an 8.3% it includes you. :-)

    But Chris’ point remains. Using the term “The Rich” or “The Poor” is almost always a divisive attempt at class warfare.

    I’ve always contended that the definition of “rich” is: “people who have more than I do”. And, of course, “Poor” is people who have less. The definitions of these words cannot help but be subjective. Compared to most of the rest of the world, Americans are all pretty “rich”. Define the terms for yourself if you like. If you want to be dissatisfied or self-effacing, define yourself as “poor”. If you want to feel successful or powerful, define yourself as “rich”. In either case, you’ll still have just as much as you do now.

    I used to have a poster of Albert Einstein in my office. The caption read: “Great spirits have always encountered violent opposition from mediocre minds.” I found it fascinating that everyone who entered self identified without a word from me. People who saw themselves as mediocre minds were offended. People who saw themselves as great spirits would smile and say “isn’t that the truth?”

    Self identify however you like; it’s your life. But no matter what definition you or I come to, I’ll still never accept it as a valid excuse for theft.

  • http://anarchangel.blogspot.com Chris Byrne

    Actually Miko, the demographics of this web site very strongly skew towards higher educated people with careers in technology, media, law, or finance; to small business owners; to linux and mac users; and to gun owners.

    That group as a whole skews well towards the top of the income spectrum.

    I would wager that at least half the regular readers of this web site made more than $64,000 per year (the top 15%); and at least half of those were in at least the top 5.63% or better.

    In fact, my gut, and my personal knowledge of a number of the readers, writers, and commenters on this site suggest to me that it’s even higher.

    So yeah, I’ll stand by my assessment that there’s a fair chance that someone reading this makes more than $150,000 a year.

  • http://thelibertypapers.org/ Brad Warbiany

    Miko,

    From what I know purely of the contributors of this blog, I’d say at least 2-3 meet that 5% number.

    I don’t intend to ever discuss the specifics of my own income on this blog (or even whether I’m part of that 5% group above), but suffice it to say that my individual income is a pretty nice number but at the same time I certainly don’t feel rich. My rented condo and my Ford Ranger don’t exactly suggest that I’m living in opulence. Of course, my wife and I make the sacrifice of a single-income family in order for her to stay home with our son (soon to be our sons), but even my individual income would put us in a decent area when it comes to household income, and yet we still don’t feel very “rich”.

    I firmly agree with Chris on this one, and even moreso given that I live in California — when you talk about taxing “the rich”, that’s a lot more of your own personal friends than you likely realize.

  • Akston

    Clarification: All instances of the word “you” in my post above were the “general you”, not specific to anyone.

  • Justin Bowen

    You know, I’ve always wondered whether the top 1%-5% actually mind being taxed at a higher rate. These are the people who are generally making the rules. These are the government workers in and around Washington. These are the rent-seeking upper management-types who are crafting public policy in their favor (and rightfully so if others are trying to do the opposite). These are the people who vote.

    People are constantly talking about the Golden Rule. Treat others this way and that way…blah, blah, blah. Well, there’s more than one Golden Rule. Let’s not forget about Jafar’s Golden Rule: whoever has the gold makes the rules.

  • Peter

    I am a graduate student in college, so I fall in that bottom 30% that is actually paid by the government (two kids and the earned income credit gives a big refund). But my father and my father-in-law are both at least in the to 10%, and as soon as I graduate and get a “real job” I might jump up to the top 15%. So although right now I fall in the bottom whatever percentile, I am not likely to stay there.

    Even though I am “poor”, I have two (used) cars, own a home and live comfortably.

  • http://thelibertypapers.org/ Brad Warbiany

    Justin,

    I know a lot of people in that top 1-5%. I know a lot of them are NOT happy with the level of taxes that they pay. Whether some of those in that top 1% are that worried about it might be another story, but I don’t know nearly as many in that group.

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