Posted on 10/28/2008 3:39:41 PM PDT by quesney
The American dream - on hold Meet the HENRYs (high earners, not rich yet). They make $250,000-plus and get taxed to high heaven. And they're about to be socked again.
Aspiring HENRYs played by the rules: They won the best grades in high school, got accepted at good colleges and grad schools, and worked daunting schedules as medical interns or associates in law firms.
Now this group of superachievers is being targeted as a cash machine. Barack Obama has pledged to pay for middle-class tax cuts and credits by raising taxes on the HENRYs. Obama and the congressional Democrats frequently refer to households earning over $250,000 as the "rich." But whether the HENRYs are truly "rich," or ever will be, is debatable.
The reason the HENRYs are strapped for both lifestyle and nest egg is twofold: First, they already face a large and rising burden for federal, state, and property taxes plus the knife of the AMT. Second, they invest heavily in their kids: saving for private colleges, paying for day care - and providing dance, tennis, or gymnastics lessons. They have little left over for either extravagant living or, in many cases, saving for an affluent retirement.
More (case studies):
http://money.cnn.com/galleries/2008/fortune/0810/gallery.tully_henrys.fortune/index.html
(Excerpt) Read more at money.cnn.com ...
Im not poor and have a good life. We go on vacations and eat out on occasion, but I don't have a housekeeper, gardener, pool guy, assitant, trainer, decorator, dog walker, etc....and I don't think I should have to pay for ANYONE'S LIFE BUT MY OWN.
They most definitely did not get rid of the AMT. As a HENRY myself, let me tell you the AMT hurts. Hubby and I are not rich. By the time we get done paying for parochial school for our kids and public school for everyone elses, property and income tax, there is not a lot left over. I’m not complaining, I make a good living, but rich - hardly. Increasing the tax burden will likely lead me to work less and make less to lower the tax bracket. And I’m not the only one in this position.
Add to that the fact that none of their children will be eligible for educational assistance due to the income levels of their parents.......that can be huge $$$$$
The notion that there are three classes is out of date, if not Marxist. Most people who make $250,000/year probably have more in common with those who make $50,000/year than those who make $250,000,000/year.
What if I received $250,000/yr without having to work for it -- but it was from the proceeds of my past labors.
Would I, in your mind, still be rich?
I went looking and found what they did include in the bailout as to the AMT. They upped the threshold by 70,000 for those filing jointly, but only for 2008.
http://www.walletpop.com/blog/2008/10/07/alternative-minimum-tax-and-the-bailout-bill/
Amen Sister Henry! LOL
Every parent of a college student in that $250K+ bracket should make it clear to their offspring that a BO win will severely impact the parent’s ability to pay the obscenely expensive payments to Big Education. If all parents leveled with their liberal kids this way, it might introduce them to the real world where choices have consequences.
Don’t forget that if you live in these areas the schools are so liberal and awful that you need to put them in private school.
I know. We live in California, and we have 3 kids in private school. We do not live a lavish lifestyle. My kids still get most of their clothes from Target. I’ve splurged in recent years on things like Vans shoes and other nice tennis shoes for my kids. When I need nice clothes, it’s Macy’s on sale.
I’ve said it 1000 times.
There is a difference between wealth and high income. It is extremely difficult to become wealthy even with high income. The tax system is setup specifically to keep high income earners from becoming wealthy.
Many of us already pay an effective marginal rate of 50% or more. People always ask: how is that possible since the top rate is in the 30s.
It’s simple. When you make a certain amount of money the government doesn’t allow you to take schedule A itemizations. That means, less mortgage interest deductions, etc.
Now the nightmare scenario comes along. We have congresscritters who are proposing we pay FICA/Medicare on sub-S dividend disbursements **AND** there are critters who want to eliminate the cap on social security taxable income. So, we could end up with ALL of our income, even sub-s dividends, taxed an extra 15%. All of a sudden, we’ll be looking at keep 35 cents on the freaking dollar.
who is John Galt indeed.
Oh one other thing. I’ve been telling my friends for years that they are morons for going into Roth IRAs.
Even 401k plans have issues UNLESS you are getting matching funds (you HAVE to start drawing from them at a certain age).
They all think I’m nuts. But, my philosophy is twofold:
1) at least with after-tax cash, you know they can’t change the rules. It is already “mine” without any gov’t strings. I am convinced that they will change the rules on Roths eventually. The first step will be to “means test” whether or not we get to have the captital gains tax free or not. see the current 401k issue. They are changing rules, and won’t stop until they get the vig.
2) ROTH IRA ARE A SCAM - In general, most people have a lower marginal tax rate in retirement than in their money earning years. If you do the compound math, you are better off in a traditional IRA. The gov’t scammed a bunch of people to convert to Roth specifically to get tax dollars.
This really ticks me off. My family is below $250K now because one of us is is now running a fledgling small business, but for many years we were up there but at the same time had many kids to support plus helping elderly parents. We were comfortable, definitely not rich.
In order to get there, we worked our butts off, put each other through college (state schools as were wrong ethnicity for pass into Harvard) while raising kids and worked long, hard hours at super stressful jobs. But according to the closet-Marxist presidential pretender, families like mine are supposed to hand over more of our hard-earned money so he can give it to the crackhead across town that contributes nothing to society? No way, no how!
I don't believe earning/saving/investing my way to "richness" would, in any way, forestall Obama from confiscating my money. If I had it, that is.
On the other hand, I rather doubt that Obama will have any interest in the income that John F. Kerry/Teresa Heinz or the Kennedys might receive from their trusts.
Under socialism, the rich stay rich. The rest of us are doomed to become the proletariat -- with no hope of advancement.
Would I, in your mind, still be rich?
That's pretty much the point. If you've worked enough and accumulated enough wealth that you can live off the proceeds without doing anything else for that $250,000/year, then you are rich. If that $250K represented %5 percent per year on your wealth, that would mean you had 5 million dollars. I tend to think 5 mil is rich. Another way to think about it is if you have no reasonable reason to fear having to change your current $250K/year lifestyle (losing a job, market crashes, etc.) and you may in fact have to actively work to do so, you're rich.
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