As for inflation, it's threatening to price people under your $150k/yr cut-off for "hardship" out of decent housing even in mediocre cities, ever, and may eventually hurt creditors some (which, I mean, that's a fine outcome according to most people, I'd think). Those with $150k+ salaries had damn well better have some assets to their name, including maybe a (mortgaged) house, and so will ride the inflationary wave alright. Those with little or nothing, on the other hand, may now never be able to afford anything. Young workers just starting out, who have high-ish income but only because they live in a place with insane housing prices, are getting screwed, too, sure, but established professionals will be fine, unless they've somehow managed not to acquire assets over the years.
Pity the normal couple with $60,000/yr household income. Believe it or not, they raise kids on that income. Go figure.
I wouldn't trade places with someone getting by on unemployment for their $12/hr job they were laid off from, certainly. I don't think they're "looting". We're clearly top-heavy on capital, given how the markets are behaving, so I think I've got a better idea of where the looting's happening.
As for mortgage cost, rates are the lowest they've ever been. I just refinanced to cut my payoff time in half keeping the payments almost exactly the same. The property values are shooting up, but I already own the property, so how does that hurt me? It's wealth, not an expense. 401k and IRA are doing fine. What do I care if the real value of the couple grand I keep in checking as bare dollars is going to be nothing in 50 years? That's a tiny portion of holdings and I'll be dead by then anyway.
I don't understand complaints like this. If anyone is getting hosed, it's people in the 40-60K salary range. Just enough to not qualify for any kind of public assistance, but not enough to not be living paycheck to paycheck and forced to rent forever at perpetually increasing prices so property owners like us can get rich.
As for other people are doing, I guess looting and rioting happened somewhere since it was on the news. But again, I live downtown smack dab in the middle of a major metro. I'm watching what these people are doing in full public view every day. Mostly, they're either living in tents next to the highway or they're out in the sun for 12 hours every single day hauling wood and stone to put up new condo developments all over the place for the benefit of homebuilders and people like me with enough money to buy downtown condos. As far as I know, the bulk of protesters in any activist movement are well-off suburbanites who can afford to take time off work or college students.
https://taxfoundation.org/summary-of-the-latest-federal-inco...
Median income tax is about 10k on 65k of income so people in the bottom 50% pay between 0 and 10k on between 0 and 65k of income.
If you’re earning 200k or so you pay a similar amount of tax on the first 65k of your income.
But yes, you pay more tax on the extra 135k you’re making. But that’s okay, because you’re making an extra 135k. You can afford it.
$65K is an average household income, but there's no way that the average household is paying $10K in federal income tax, that's laugh-out-loud far of the mark.
Let's just say that's a couple married-filing-jointly.
In 2020, you'd take first of all a $24,800 basic deduction. Then you'd pay $4,429 in income tax on the $40,200 taxable income.
If you had two kids, you'd take two Child Tax Credits for $2,000 each and pay $429 in federal income tax.
An average household with two kids pays essentially no federal income tax in 2020.
Even in the absolute worst-case, a single filer pays no more than ~$7,400 on $65,000 of income.
In 2021, thanks to the increase in the Child Tax Credit ($3000 per child or more younger children), the bipartisan Joint Committee on Taxation estimates that the average household will pay no federal income tax at all on income under $75,000 per year.
Also as grandparent mentioned, you pay exactly the same amount of taxes on your first $65K as the person making $65K does.
https://www.taxpolicycenter.org/sites/default/files/styles/o...
My turn: do you expect more than half of all households in America to be paying no federal income tax at all?
Seems like instead of collecting $x amount of tax from them in order to give it back in benefits, we could just not have them pay tax (which is the case currently).
The real answer is - raise their wages, and then they will be paying more in federal taxes (just like the upper quartiles are).
USA lower tier professionals (Doctors, Lawyers, Programmers, have a anticompetitive racket - they should all get a 20-30% net haircut in salary, tech should be regulated, we should increase admission to med-school and allow nurse practitioners to serve as doctors, etc.). I say this as someone who benefits greatly from the current system, but also realizes how fucked up it is.
Finance people should be taxed out the wazoo - watching stocks tick up and down on the market is a waste of time and most of them defraud people anyway, estate and wealth tax should be a thing, if they try to denounce citizenship to get away, immediate tax of 50% of [unrealized] profits (we currently do 20%).
Even that wouldn't get us back to how things were in the 1960s, but it would at least be closer, and probably makes things better in the mean time.
Programmers get paid a lot because the market is extremely competitive. Doctors get paid a lot because healthcare in the US is essentially one massive cartel and incredibly inefficient as a result. In most countries, doctors and programmers make similar salaries.
I have never seen him produce a working program in any dot net language, or for that matter any procedural language except maybe visual basic for applications (excel macros maybe). I think he tried to learn php but gave it up. He also calls himself a software engineer. He makes some good money tho, he's in management.
I rarely see this with other engineering disciplines. Its always the computer programmers lol
Just 2 cents from the peanut gallery!
I don’t really care what you call me but I will call myself a software engineer because I have a depth of understanding in how to solve problems with software in a consistent way. I’ve always had an engineering mindset, I grew up in a family of engineers. It’s just the term I prefer.
It's banks and REIT's and corporations and foreign investors buying up houses, not poor people.
Chill.
The majority of money printed was loaned out to banks and other institutions, which promptly put that money back into the stock market and other investments.
Think about it this way. Would you rather have your investments crash and pay the same taxes, or take the tax increase and also have your investments go up? If you would prefer the second, you benefited from the government's actions.
In fact, I feel the lower class were the ones that the government took from, in the form of impending inflation.
Those in the Top Quintile (~200k in 2010 and ~250k today, so right in the middle of your proposed hosed bracket) have seen the greatest increases in Mean Income in the last decade [^1 p.8]. Those in the Upper Income bracket (~190k in 2000 to 207k today) have seen a 20% increase in wealth in the last 30 years while lower brackets have declined [^2].
Do you have any data to backup your assertion that "being a hard working professional in this country is losing its allure, and is increasingly a suckers bet"? These jobs seem to have a much greater increase in wages [^3 Fig. F][^4 Fig. 1] (4x in the last 40 years) than those in all other lower income groups. I'm not sure how anyone could come to the conclusion that increasing wealth and top of the pile wage growth are "a suckers bet".
[1] CRS The U.S. Income Distribution: Trends and Issues - https://fas.org/sgp/crs/misc/R44705.pdf
[2] Pew Research "Trends in income and wealth inequality" - https://www.pewresearch.org/social-trends/2020/01/09/trends-...
[3] Economic Policy Institute - "State of Working America Wages 2019" https://www.epi.org/publication/swa-wages-2019/
[4] CRS "Real Wage Trends, 1979 to 2019" - https://fas.org/sgp/crs/misc/R45090.pdf
Actually, not. Your numbers are household, not individual quintiles; the proposed “hosed" bracket bracket is about about 92nd-98th percentile by individual income.
The figures get even worse in this case. The 95th percentile of individual income has far greater wage and wealth growth over the last 40 years.
Anyway, remind yourself of how you couldn't afford that $80-150/mo gym/class. How you didn't go on a real vacation for years because it took 8mo+ to save up for one. How you probably drove a car that constantly broke down because you couldn't get a loan on something decent. How you had to save money from your $6/hr job to eat Burger King on your lunch break across the street. How a huge chunk of your income went into driving yourself to work (gas/maintenance). How you couldn't afford a place without 3-4 roommates. How you went for years without buying a set of 4 tires, instead buying 1 used tire to replace your bald tire before the police/rain gets you.
I'll take the 150k stresses over my previous $6-12/hr stresses where I felt like I was spinning tires and never, ever going to get out of that.
I'm guessing you’ve never lived on welfare. Having done that and had a.personal income that, while short of $150K, is a sizable fraction of it (and been everywhere in between), increasing real income has involved a monotonically increasing quality of life. I’m definitely into the range, even short of $150K, where the marginal difference from each additional $ of income is much smaller than at lower levels, but it is still not negative.
Nothing if it's voluntary.
> I grew up upper middle class with parents who paid for college.
I didn't.
> I could have just as easily been born to a family with 0 wealth and had to start working at a young age and do that until I died.
I was and would likely not end up dead with 0 wealth if I can manage to keep some of what I'm now generating.
And evidently your luck, as well.
> evidently your luck, as well.
I worked at a Burger King, a hardware store, an apartment complex (plumbing toilets and whatnot), and finally put my self through college. It was an exhausting climb the whole way and I _worked_. I was never let go, and I hardly (like a $1500 a pell grant once) received assistance because I _made too much_ in my day job when I finally did go to school.
I wasn't terribly lucky other than I `lucked` into a work ethic and I `lucked` into being born in a country that still had enough of a free market that I _could_ work my way up.
And thinking on it now I don't think I was that well served by my schooling. I feel if anything I was held back in an _almost_ deliberate effort to homogenize me.
I should add that I also support local farms and businesses now that I have the funds.
You would choose welfare over a $150K salary?
This is probably 90% of the reason for the crypto boom.
Jeffrey Gundlach had a great recent presentation on these trend reversals that is worth considering:
African Americans do not collect the majority of welfare in this country. Sops to multi billion dollar corporations like WalMart - why is that not welfare?
A trillion dollars of HNW tax evasion happens every year, simply because the IRS is underfunded and understaffed - why is that not the problem?
And isn't asset price inflation a direct outcome of inequality? Lower money velocity leads to asset bubbles - this is something we know of since the French Revolution now.
There is a lot of confusion here to unpack, but the central idea, that taxes pay for the government is the key confusion. Taxes are a means of wealth redistribution and method to curb inflation. Taxes don't fund the federal government - it can print money just fine.
They...aren’t. It’s true that that group, the 92nd-98th percentile by income in the US, are bearing a somewhat heavier burden than they probably ought to in order to support the illusion of tax progressivity while hyperrich capitalists skate by relatively untaxed, but that’s very much not “getting hosed”, especially compared to the at-least-equally hardworking people much lower on the economic scale
Spend it, which creates new jobs.
Invest it, so businesses can create new jobs.
Lend it, so borrowers can spend it on your behalf.
Do nothing and let people stay unemployed.
Considering the lack of demand for credit indicated by low interest rates, lending is almost the same as doing nothing.
The last option causes deflation which requires the Fed to step in and increase the money supply until inflation hits the target inflation rate of 2%. Right now it is around 2.6% which is pretty much as perfect as it gets. Not too low, not too high.
Highly simplified: People are stealing USD and the Fed has to compensate for the loss except the Fed is distributing the new money very inefficiently which causes collateral damage in the asset markets.
At that level of income and likely technological knowledge, nothing prevents you from moving somewhere else cheap, buy a house with your savings and use your professional knowledge to start a remote business.
Sure, a lot of factors to consider but I think you can find a better bang for your buck.
Go where you're treated best!
If I were American I would have renounced my citizenship long ago (mainly for the taxes on worldwide income when not resident in the USA).
Most of Europe is not much better though, it's actually pretty comparable to the USA (more expensive housing, lower salaries, cheaper healthcare).
Its a “tax” (a reduction in real value held) on holders of dollar denominated assets, transferring value to holders of dollar-denominated liability.
> More so on the poor, who have fewer assets that inflate along with the money printing.
The poor tend to have most of their gross assets in tangible non-financial assets (like a car and other durable goods), which do tend to inflate with general inflation (they may depreciate independent of inflation.)
In terms of dollar denominated items, the poor tend to be net debtors, and inflation reduces the real value of that debt.
And also, of course, recipients of the new dollars.
Sometimes even the beasts of burden rebel. Though it may seen they should be grateful for getting their guaranteed hay at the end of the day.
“ Work hard! Don’t worry if we print money and triple the cost of your house and new mortgage! You are in the top 15%! Look your class only pays 20% of the taxes, never mind all that money we printed! It’s not a tax!”
There’s a serious level of subversion about what’s going on economically in this country.