The income-adjusted cost of living in New York, Andrew Schiff edition

By Felix Salmon
March 7, 2012
wrote about Andrew Schiff on Monday, he called me up, and we talked about his statement that New York's middle class is dimishing, and that it's becoming increasingly difficult to afford a middle-class lifestyle here.

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After I wrote about Andrew Schiff on Monday, he called me up, and we talked about his statement that New York’s middle class is diminishing, and that it’s becoming increasingly difficult to afford a middle-class* lifestyle here. Pretty quickly, we managed to put our finger on an empirical question which, if it could be answered, would determine which of us is right and which is wrong.

First, take the top 5% of the New York population by income, then cream off the top 0.1%. So you’re going from the 99.9th percentile down to the 95th percentile. The question is, how has that group’s income compared to their cost of living over the past 25 years?

Schiff’s thesis is that 25 years ago, in 1987, the cost of living was lower, in income-adjusted terms, than it is now. Whereas my thesis is that income for that group has outpaced their cost of living, even after taking into account the fact that lots of things in New York have gotten more expensive.

I asked Ben Walsh to look into this, and sadly it isn’t very easy; it seems that we’re going to have to make a few kludgy adjustments to the original question. For one thing, getting detailed information for historical New York City income distribution is not easy. Here’s a CBO paper which says that nationally, income at the 96th percentile rose 42% in real terms from $96,583 in 1987 to $137,578 in 2007 — that’s in 2007 dollars. Which means that nominal incomes rose 160% from $52,916 to $137,578 over the course of 20 years.

And here’s a paper looking at New York State, showing real income for the top 5% of the population growing 70% from $154,567 between 1987 and 1989, to $262,679 between 2004 and 2006. That’s in 2005 dollars. In nominal terms, we’re talking a 180% rise in 25 years.

It’s certain that the income of the top 5% in New York City has been growing faster than the income of the top 5% in New York State or the country as a whole; a reasonable estimate is that it has doubled, in real terms, over the past 25 years. In nominal terms, that means someone earning $100,000 in 1987 would be earning $400,000 today. (Conveniently, nominal prices nationwide, according to the CPI Inflation Calculator, have almost exactly doubled over the past 25 years as well.)

So what has happened to the cost of living a middle-class lifestyle in New York City over that time? If prices have more than quadrupled in nominal terms, or more than doubled in real terms, then Schiff is right. If they haven’t, then I’m right.

This is harder to determine. Schiff talks a lot about the cost of health insurance, which has certainly been increasing in real terms; nationwide, healthcare costs have been increasing at 5.6% per year over the long term. That means they’ve trebled, in nominal terms, over the past 25 years — a very large increase, but not one which has outpaced income gains for the rich. The cost of private insurance might have gone up faster, but I don’t think that it’s going to make a huge difference.

What about house prices? They’re up too: the nominal median house price in the New York metropolitan area was $196,765 in 1987, and had risen to $387,429 by 2010. That means houses basically doubled in price, in nominal terms, over 23 years; in real terms, they went up by just 14%. Again, house prices for the top 5% might have gone up faster. But remember, first, that mortgage rates have come down a lot during this period, so the cost of buying has actually come down. More generally, at these levels, virtually everybody is buying rather than renting, and there’s a significant forced-savings component to mortgage payments. As Walsh notes, the cost of living, when you’re talking about a mortgage, blurs into savings, investment, and wealth creation.

As for private schools, there you see a much bigger increase. Again, reliable statistics are hard to find, but this NYT story from 1987 cites a cost of $4,500 to send a third-grader to private school, compared to the $32,000 that Andrew Schiff is paying for his ten-year-old’s tuition*. That means private-school fees have increased roughly sevenfold, in nominal terms, over the past 25 years — more than incomes have, even for the top 5%.

I’d very much welcome any empirical help here: if you have numbers on the cost of living in New York over the past 25 years, or better numbers for how much the income of New York City’s top 5% has increased over that time, do let me know and I’ll revisit. But my gut feeling is that insofar as things like house prices and private schools have increased in price, that’s a function of demand: the rich are getting so much richer that they’re increasingly able to compete to pay enormous sums for such things. In other words, any increase in the cost of living in New York is evidence — albeit circumstantial evidence — for the thesis that disposable incomes have been going up rather than down, and that the rich are richer now than they used to be. Even by New York City standards.

Update: First, apologies for using the term “middle-class” without snark quotes. Of course if you’re looking at the top 5% of the population, they’re not really in the middle of anything. I was simply adopting Schiff’s terms of debate, without (for these purposes) challenging them. But to be clear: as far as I’m concerned, anybody in the top 5% is rich.

And thanks to commenter TFF, who discovered that the school charging $4,500 a year in 1987 is charging $18,000 a year now. Conveniently, that’s exactly a 4X multiplier, which is also what I think has happened to nominal incomes — for the rich — during that time.

Update 2: Yves Smith has a smart take on how useful the comparison is that Schiff is making.

36 comments

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Wait, we’re defining “middle class” as the 95th through 99.9th percentile?

Posted by jfruh | Report as abusive

“it’s becoming increasingly difficult to afford a middle-class lifestyle here”.

ok, still reading…

“First, take the top 5% of the New York population by income, then cream off the top 0.1%. So you’re going from the 99.9th percentile down to the 95th percentile. The question is, how has that group’s income compared to their cost of living over the past 25 years?”

>screech>Huh what? Are we talking about the middle class? Or are we talking about “not the middle class”, because the top 5%, by pretty much all standards, does *not* comprise the middle class, right?

Posted by dieswaytoofast | Report as abusive

I wonder though whether the are simply more wealthy New Yorkers. I imagine in 1987, they were a much smaller group of people.

Posted by atcrane | Report as abusive

What you are not factoring in is that NYC is a much different place to live today than it was in 1987. My quick google showed that the murder rate in NYC was highest in 1990:
http://en.wikipedia.org/wiki/File:NYC_mu rders.PNG
. Whatever it was exactly, the sharp downward trend from 1990-2000 made the city an altogether different place to live. I think just the fact that Schiff is living in the city instead of Westchester or somewhere else shows a dramatic shift.

He also does understand why NYC is more expensive than it was in the 70′s…

Posted by winstongator | Report as abusive

St. Thomas’s Day School charged $4500 in 1987-1988 and $18k in 2011-2012. The CPI has roughly doubled over that period of time, while the cost of tuition at that school has quadrupled. Note also that this school is in New Haven, CT, not in New York City. The dynamics are arguably quite different.

I’m willing to bet that Andrew Schiff can find cheaper private schools, even in NYC.

Posted by TFF | Report as abusive

I’m reminded of the 1976 financial book How to Feel Poor on $100,000 a Year, by Andrew Tobias (back when $100K was real money). There will always be a contingent of New Yorkers who are a step below the top rung and simply resent that they can’t have what they think their incomes should buy.

Posted by Curmudgeon | Report as abusive

I worry that these efforts are doomed to fail because of New York microneighborhood dynamics. The cost of living in any surveyed part of New York is not going to translate well into the “cost of living a middle-class lifestyle in New York” for people who talk like that to the Times.

But here’s a data point on housing. My building in Park Slope (arguably a comparable market to Schiff’s Brooklyn Heights, and a top-10%-but-not-top-0.1% kind of building) went condo in 1986; my unit was offered at a price of x. I bought it in 2010 for 7.25x, and other nearby sales suggest a similar overall multiple. There’s noise there because of, again, individual neighborhood dynamics (25 years ago the Andrew Schiffs of the world wouldn’t have lived in Park Slope), but I offer it for whatever it’s worth. I suspect “more than quadrupled in nominal terms” for Manhattan-and-brownstone-Brooklyn housing is about right. I’m underwhelmed by the mortgage rates argument; if you’re Schiff you’re at least part rentier.

Posted by MattL | Report as abusive

Yes, it does hurt when you are wrong, at least I hope you guys had a nice chat. The mortgage cost calculation in your current post is incorrect. Mortgage cost has two components (as any debt service) – interest and principal. While the interest (as you rightly observe) has come down, the principal has gone way up. The reduction in disposable income is compaounded by the reduction of the tax shield on lower interest component.

Posted by Tseko | Report as abusive

I’m with Curmudgeon yesterday. Never mind the real estate principal/interest calculation, never mind the cost of private schools, Schiff is trying to live in an expensive part of New York and pay for private schools on an upper middle class salary. That requires making choices.

If your priority is the very best schools, then stay on Manhattan but rent. If your priority is a nice living situation, move out to Long Island. Just make some choices. $350k/year is not enough to pretend you live in a choice-free world.

Posted by Dollared | Report as abusive

However, he’d very rich in Omaha….

Posted by Dollared | Report as abusive

Why are you using the 96th – 99.9th percentiles as “middle class”?

Posted by kungpow9960 | Report as abusive

Sorry, 95th to 99.9th percentile. Original question remains.

Posted by kungpow9960 | Report as abusive

Anecdote: I grew up in Manhattan in the real middle class by income — 40-60th percentile, not 95th. My parents had multiple kids, an apartment with separate bedrooms, a summer house 7 hours away, and even a dishwasher. They sent us to a mix of public and private schools and universities — because of attitudes towards critical thinking, not for any desire to hang out with the wealthy, who then as now were not desirable classmates. Most of my private school and private university classmates came from somewhat more affluent but fundamentally similar backgrounds: top half, not top 1%.

Schiff is quite right that he barely makes enough money to duplicate my parents’ middle-class life. In his neighborhood, which is (and was) cheaper than where I grew up, rents are up 10-15x since I was a kid. But family sized units are hard to rent, and sales prices are up 50x. Private school tuition, then and now, closely tracks private college tuition and is up 10-12x. Employer-funded retirement and reasonably priced medical care are long gone.

Schiff has no business feeling sorry for himself. He’s done much better than most of us, even if he is being outcompeted by the even richer who’ve done even better, who, in turn, have been pushed out of the best neighborhoods but the still wealthier who’ve done still better.

But he’s right about this: The housing bubble and the vast increase in inequality at the very top did enormous damage to the prospects of the bottom of the upper class: it dashed their hopes of living the middle class lives of their parents. Glitzy toys are easy, but to have the security the median family had 30 years ago, 95th percentile income isn’t enough today.

For those in the real middle class, the loss of a stable retirement, affordable health care, and reasonably priced higher education is far more tragic than exile from the formerly middle-class areas of NYC.

Posted by MiddleClassNY | Report as abusive

ditto everyone else in this thread who questioned 95% – 99.9% as middle class. the entire premise is massively flawed…

Posted by KidDynamite | Report as abusive

25 years ago inflation was a good bit higher. This was bad for home buyers in the short term, as the inflation rate added fairly directly to the interest rate. It was good for buyers in the long term, as over a decade or two the fixed mortgage payments would come to be increasingly affordable. I think the first year of a mortgage might be about the same now as then, but the gradual easing of the mortgage burden via inflation is much less pronounced.

Posted by JayCM | Report as abusive

@KidDynamite and others, the concept of “middle class” has lost all meaning… At the one end, the strong social safety net lifts the “working poor” into a lifestyle that isn’t noticeably different from the median. At the other hand, you have Ivy-educated bankers/lawyers/doctors who see themselves as “middle class” despite making six figures.

Perhaps OWS has it right? Are we now a nation of the 99% and the 1%? I doubt anybody in that 99% sees themselves as “upper class”.

Posted by TFF | Report as abusive

I think the fact that so many people have moved to Brooklyn proves the point that Manhattan has become too expensive for the middle class, otherwise they wouldn’t have moved there.

In any case, middle class is a relative term. The media likes to throw absolute dollar income numbers out there because it inflames people, but you can’t partition people into classes with just income, as the cost of living is very dependent on location. Otherwise, even sub-minimum wage earners in the US would be considered wealthy in the third world.

Posted by KenG_CA | Report as abusive

I think TFF is right on the money. The middle class is a construct of our collective imagination. A family on the lower end say 40,000 is far removed from a family on the upper end say 100,000.

Both groups are far removed from those in the 99th percentile earning ballpark 400k. There is a ton of empathy for middle class people from those in 98th/99th percent. Greg Schiff’s whole point is that he feels like he is not providing the lifestyle he wishes for his family.

This seperation between the 99% and the .001% is the big split that OWS and Obama are trying to draw into sharp focus. Their are a few thousand people in the U.S. who earn in one year more than they will spend in a lifetime.

The massive disconnect between perception and reality is that increased taxation on the .1, .01, or .001 can solve our budget problems. The top 1% earned 1.5 trillion in TOTAL… the U.S. budget is 3.6 trillion.

Taxes will surely go up… but spending will still need to come down. The math on that is simply unchallangable.

Posted by y2kurtus | Report as abusive

Health insurance, especially on the individual market, has gone up a lot faster in NY in the past 25 years than it has nationally.

Posted by dWj | Report as abusive

Back in 1939, Fortune Magazine did an article on life in NYC (for the World’s Fair issue) comparing the lifestyles of well paid business sorts on the Upper East Side and Upper West Side. The salary they chose was $18,000, which was well good money back then. Some of the numbers were fascination. Private school cost from $500 to $800 a year on the UES, but the real killer was the cost of having a child: $750 for the obstetrician, $200 for two weeks in a hospital room (including tips for the maids and bellboys), $25 for the delivery room, $153 for nursing, $50 for meals for visitors and $50 for miscellaneous. That’s a total of $1,228, so it almost pays to go back in time to give birth to your children, though you don’t get all those little extras like epidurals or fetal heart monitors.

I know the Upper West Side has been changing, but the Manhattanite Budget chart was true to stereotype:

Rent – E $3,000 – W $2,000 (W isn’t as cheap as it was.)
Food – E $1,800 – W $2,100 (W people are still the foodies.)
Nurse – E $900 – W $0 (W side moms raised their own kids.)
Maid – E $900 – W $720
Utilities – E $350 – W $265 (The W side was probably still DC.)
Laundry – E $500 – W $500
Liquor – E $350 – W $300 (Surprised the gap is so small.)
Flowers – E $100 – W $100 (Here’s a cultural difference with now.)
Clothes & sundries – E $2,000 – W $1,500
Work related, lunches – E $1,200 – W $1,000
Wife’s pocket money – E $300 – W $300 (She didn’t work.)
Gifts, tips, Christmas – E $200 – W $250 (We know where Ebenezer lived.)
Private school – E $400 – W $250
Extra education – E $100 – W $200
Life insurance, savings – E $1,800 – W $1,800 (She didn’t work.)
Federal & state taxes – E $1,800 – W $1,800
Medical & dental – E $300 – W $200 (Cheaper doctors? Better food?)
Charity – E $100 – W $400 (See gifts, tips, Christmas)
Summer – E $1,500 – W $1,000
Entertainment – E $400 – W $600

The UES types spent the whole $18,000, but the UWS types had a $2,390 surplus even after splurging $75 and having a $250 hobby budget which might mean one of those new minicameras, like a Leica. Other possible expenses included a car for $300/year, major illness $1,200, or a winter trip $500.

It might be interesting to search for articles like these in various business magazines. I know Fortune had one in the 60s, for their World’s Fair issue, but I’m going to hit Proquest and see what I can find.

Yes, I know this is a bit off topic, but I’ve always found it fascinating and it’s obvious some New Yorkers are reading your blog.

Posted by spiffy76 | Report as abusive

@KenG_CA:

you wrote: “In any case, middle class is a relative term”

yes – of course, but we cannot possibly find/discuss/evaluate the middle class by taking the 95% – 99.9% of the distribution! that’s the entire point of the multitude of questions in the comments.

That’s like taking the part of the curve that is 3 sigmas out on a normal distribution and saying “so we’ll look at the 2nd and 3rd quartiles.”

Posted by KidDynamite | Report as abusive

KD, even if you eliminate the top and bottom 5%, the middle 90% still has a different cost of living. $100K in NYC does not get you in the top 5%, or maybe even 10%, and wouldn’t allow you to live a middle class lifestyle in Manhattan, but it would in the middle of the country.

You can have a comfortable middle class existence in much of the country (by area, not population distribution) on $50K/yr, but not in NYC.

Posted by KenG_CA | Report as abusive

Ken_G, you do realize that $100k is merely the 80th percentile nationally? Did you mean $200k?

As for “middle class lifestyle”, there is no such thing. As previously noted, 99% of the country is “middle class” despite a 5:1 difference in income between the top and the bottom of that group. *YOUR* idea of a middle class lifestyle is almost certainly twice as expensive as mine (no jealousy there, I’m sure you’ve earned it). And mine is twice as expensive as that of somebody who actually works for a living. Yet we all consider ourselves “middle class”…

Posted by TFF | Report as abusive

TFF, your stat just reinforces my point. $100K may be the 80th percentile nationally, but not in Manhattan. It won’t allow the same lifestyle it affords people in Kansas (and I’ll bet $100K is not the 80th percentile in Kansas).

I am not delusional enough to consider myself middle class. I realize a lot of people earning $250K in NYC do, but that’s the middle of the class that they consider themselves part of, not the middle of the national class.

So I guess I’m with you that there is no middle class, but the media sure likes to write about it.

As far as me earning my current economic status, that’s debatable. I worked long hours for many years, and invested those hours in the right business at the right time, and that worked out for me, but I didn’t add the same value to society that I received from it (the company that I sold was sold two times downstream and later shut down). Yeah, I played by the rules, but does that mean I “earned” it? A philosophical question no doubt, but who better to ask than you? :-)

Posted by KenG_CA | Report as abusive

“It won’t allow the same lifestyle it affords people in Kansas.”

Depends what you mean by “lifestyle”? You get far more space for the money in Kansas, but that space is in Kansas! I strongly dislike NYC — and cities in general — but they definitely offer lifestyle opportunities that aren’t available elsewhere. I figure somebody must like living there, or it wouldn’t be nearly so expensive.

“that’s the middle of the class that they consider themselves part of, not the middle of the national class”

I think there is a nugget of essential truth buried in there somewhere?

“Yeah, I played by the rules, but does that mean I “earned” it?”

Would bet that your payroll over the years (including those years after you sold it) came to a heck of a lot more than the money you got from the sale. I respect people who build something, creating jobs and feeding families.

In contrast, a Wall Street trading desk employs few and creates nothing of lasting value.

Posted by TFF | Report as abusive

TFF, I don’t know the exact costs of living in NYC, but I’m guessing if you make $100K/yr there, you won’t be able to afford more than a 1BR apartment, if that. While you might be able to own a car, you wouldn’t be able to afford the rent on a garage or parking space for it, and the insurance would probably be astronomical. Food would be very expensive, and your tax bill would be much higher than in Kansas, where you could probably afford a 4BR house and a couple cars. Maybe using the subway and busses would be less expensive than owning a car, but it would not provide an equivalent standard of living, as you would be consuming more time getting around.

It’s possible that the person who chooses to live in NYC on that income is just as happy as the person in Kansas, but that’s not the middle class lifestyle that we have been led to believe is typical. So maybe it’s changed, and that’s o.k., but we shouldn’t have political discussions about taxing the “wealthy” based solely on income, as that doesn’t work any more.

If I add up the payroll, and add the amount I have invested in start-ups since then, then yes, it’s probably more than what was extracted from the people who bought my shares of the company that acquired mine. Thanks for lessening my guilt.

The Wall St trading desks extract wealth from the economy and let a fraction of it trickle back into circulation, while hoarding most of it. You’re setting the bar low for me.

Posted by KenG_CA | Report as abusive

KenG, I agree, to a point…

The family making $100k in Kansas lives in a large house with a spacious yard, owns a pair of $20k-$30k vehicles, perhaps sends their kids to a church school.

The family making $100k in NYC is crammed into an apartment half the size, probably does not own a car, and almost certainly sends their kids to public school.

“that’s not the middle class lifestyle that we have been led to believe is typical.”

The more I read, the more I hear, the less I believe in the concept a “typical” middle class lifestyle. There are myriad different middle class lifestyles, at income points from $50k to $250k and in locations across the country.

If you choose to live in an expensive area, then you presumably have good reasons to do so. This is a free country, and you don’t need a relocation permit to move to Detroit (where $50k will buy you a large house) or Kansas. Presumably everybody in NYC or San Francisco is aware that there are cheaper places they could live.

So look at the employment situation in a given location. Look at the money you might make and the lifestyle that you might live with that money. If you don’t like the answer, then consider another location.

We choose to live in an expensive metro area because the concentration of universities (research universities literally next door to teaching colleges) offers unique opportunities. The concentration of wealth (communities with a median household income in the mid six-figures) offers other opportunities. A diverse culture into which people of color blend, where there are thriving communities of people whose ancestors did not come from Northern Europe. Established nature preserves with active educational programs for kids.

You won’t find that in Kansas. Go ahead and enjoy the 2500 square foot house and the multiple SUVs in the driveway. From my perspective, the $100k buys more here than it would there. Yet perhaps other people, with other priorities, would disagree?

“You’re setting the bar low for me.”

A surprising number of people can’t even make it over THAT bar. In addition to the Wall Street trading desks, consider the professional con artists who skirt the fringes of the law, preying on gullible retirees with “free seminars”? Or contractors who bid one price, demand another, and turn in shoddy work? There are many who contribute nothing (positive) to society.

And the wealth you extracted from the INVESTORS who bought your company was taken directly from the wealthy. As long as you did not misrepresent, I’m not going to feel sympathy for those who might have overpaid for a business they couldn’t operate profitably.

Posted by TFF | Report as abusive

KenG, one additional factor (which perhaps plays back to Andrew Schiff as well)…

Those in Kansas are more likely to own their home than to rent. Those in NYC are more likely to rent than to own (guessing, not verified).

When you invest your capital and rent your housing, your stated income will be higher than when you apply your capital directly towards housing. There isn’t necessarily a real difference in wealth or lifestyle — but it is taxed differently by the IRS.

There are similar choices spotted throughout the household economic picture. Do you get a full time job or stay home with the kids? Do you buy a car? Or lease a car? Or pay $50/day on those rare occasions that you need a car? Some choices generate greater cash flow, some avoid monetizing the lifestyle.

And one of the greatest lifestyle factors is the difference between a two-parent and a one-parent household. If my wife and I were to separate, our combined income would likely *drop* (since we wouldn’t be able to share child care and household duties as effectively and thus would need to cut back on hours). Simultaneously, we would need to spend an additional $20k-$40k to establish a second household. To put it in more tangible terms, that would be the difference between public school and private school for the kids.

So I wholly agree with your point that lifestyle cannot be measured strictly by income. I just feel it is a more complex equation than $100k buys XXX here and YYY there.

Posted by TFF | Report as abusive

o.k.

Posted by KenG_CA | Report as abusive

Mr Schiff works for his brother who owns the firm, so his case is very unusual. This may also explain why he has such a high base salary, and is less dependent on bonuses.

First of all 350k per year working for a Wall related firm in any high cost city (not all Wall Street jobs are in NYC), and could include other east coast cities tied into the same industry -but its not “rich” per se. Rich in most people’s mind (the way Obama spins it) means 2nd homes and the Hamptons and (lol) personal use of private jets, and its more like old high mileage cars, and going camping in the summer. Second the job itself can end at any time. Third, bonuses are very unpredictable. Its not (if lets say you’re in your 40′s) like being a tenured professor at an Ivy League college where you know 10 to 20 yrs down the road you’re going to be making the same amount of money.

As for sending kids to private schools? Unless you got the worst public schools around, not worth it, because when your kids get to college, you WILL have to pay 100% as 350k income means you they will not qualify for assistance or any subsidized loans.

Rich today requires at least 500k to 1,000,000 per year and even then its not going to be 2nd homes in the Hamptons or private jets, not even close

Posted by JET999998 | Report as abusive

100k for a family or 4? assuming honest taxpayers living in NYC,. net of taxes. rent, food, and health insurance premiums- they will live as if they are in poverty – in part because they don’t qualify for the 29 tax free handouts the offical “poverty” classes (often underground cash supplemented types) will qualify for. They cannot afford a car nor a garage to park it in. Nor will they be able to save for their childrens education.

Thus they are new “high income” poverty class.

Now that said, compared to 3rd world persons they are well off, but China figures out the Ponzi and calls in its debts, probably americans across the board will have to reduce their standard of living by an additional one-third – as China no longer lends us money.

Posted by JET999998 | Report as abusive

Does owning a car improve your standard of living in NYC?

You have one of the best public transportation systems there. You can reach tens of thousands of businesses, millions of people, without ever getting behind the wheel. Isn’t that a good thing?

And on those rare occasions that you want to take a road trip, you can rent at reasonable expense. Owning a car costs roughly $6k/year for most of the country. Your “median household” with $50k income and two adults likely spends 1/4 of its gross income on automobiles. In many locations it is impossible to live without each adult having their own.

NYC has its problems (very small apartments at very high cost), but that isn’t one of them.

Posted by TFF | Report as abusive

JET999998, Brian McFadden had a fantastic strip in the New York Times today that is entirely on point for this and the previous Andrew Schiff, upper class whiner, thread:

http://www.nytimes.com/slideshow/2012/01  /08/opinion/sunday/the-strip.html

Posted by Strych09 | Report as abusive

!!!! Perfect, Strych09, just perfect! :)

Posted by TFF | Report as abusive

This entire war on the top 1% is nothing more than a hate campaign. First all 354k in income per year puts you (just) into the top 1% where many individuals are concentrated. These are primarily wage earners meaning they pay high effective rates and high (35% plus also state,city taxes etc) marginal rates, and generally derive little if any income from low taxed (15%) cap gains or dividends like Warren Buffet does.
As for the so-called “Buffet Rule”, it may not actually apply to Buffet himself because the “taxable income” calculation still deducts out charitable contributions, but we need Buffet and his secretary’s tax return to figure what the exact situation is. You may have heard “Mr I don’t pay enough” Buffet and his NetJets firm is fighting the IRS which claims they owe 300 million plus. Basically the IRS is treating NetJets like a private airline with equity contribution by so-called “owners”, arguably form over substance.

Now if you earn over a certain amount (e.g 354k for sure or less sometimes will do it) and for example you happen to have 2 kids and they’re going to private colleges, forget financial assistance because you’re on your own, as you and your children will not qualify in any way, and you will need to earn min 600k pre tax just to pay the approx 300 to 400k cash you will be paying. Neither you or your children (under the new law) even qualify for subsidized Stafford loans.

Now 354k plus is well off but after taxes its not like you’re super rich. I would argue in NYC its probably somewhere between upper middle class and very low wealthy class. Wall Street bonus types are easy to attack because they’re viewed as paper shufflers, but in fact in terms of numbers you will find many high value professions in this general range including scientists, engineers, MDs and so forth right at this level or thereabouts, particularly those with very high levels of expertise (e.g. 15 to 20 yrs out of medical school) including for example top surgeons or other specialist MDs etc that could well be saving your life down the road or even tomorrow, hardly useless Wall Street types.

Posted by JET999998 | Report as abusive

We know how the left will answer this. They will simply claim as Obama prefers to do, that its because the “rich don’t pay their fair share.” Wall Street bonuses are off more 20% this year and NYC is taking a big hit, but all the concern by Bloomberg seems odd, because Obama puts out the notion they’re all pretty much like Warren Buffet and paying next to nothing anyways.

This entire war on the top 1% is nothing more than a hate campaign. First all approximately 354k or more in income per year puts a taxpayer(just) into this top 1% where many individuals are concentrated. These are primarily wage earners meaning they pay high effective rates and very high (35% to 45% plus including state ,city, medicare etc) marginal rates, and generally derive little if any income from low taxed (15%) cap gains or dividends like Warren Buffet does, who intentionally structures his income with low wage salary to avoid taxes.

As for the so-called “Buffet Rule”, it may not actually apply to Buffet himself because the “taxable income” calculation still deducts out charitable contributions, but we need Buffet and his secretary’s tax return to figure what the exact situation is. You may have heard “Mr I don’t pay enough” Warren Buffet and his NetJets firm is fighting the IRS which claims they owe 300 million plus. Basically the IRS is treating NetJets like a private airline with equity contribution by so-called “owners”, arguably form over substance.

Now 354k plus in NYC is reasonably well off but after taxes its not as if you’re ultra rich. I would argue in NYC its probably somewhere between upper middle class and very low wealthy class. Wall Street bonus types are easy to attack because they’re viewed as paper shufflers, but in fact in terms of numbers you will find many high value professions in this general range including scientists, engineers, MDs and so forth right at this level or thereabouts, particularly those with very high levels of expertise (e.g. 15 to 20 yrs out of medical school) including for example top surgeons or other specialist MDs etc that could well be saving your life down the road or even tomorrow, hardly useless Wall Street types.

Posted by JET999998 | Report as abusive