Monday, April 20, 2009

My bleeding heart has dried up


I must be a masochist, but let’s see what bullshit this article throws at us.

From the Wall Street Journal:

Ellen Parnell and her husband, Donald Parnell Jr., seem like the kind of well-off couple President Barack Obama has in mind when he suggests raising taxes on families earning more than $250,000 a year. A surgeon at Fort Sanders Sevier Medical Center in Sevierville, Tenn., he drives an Infiniti. They vacation at a beach resort every year.

Yet, right now he is working seven days a week. The car is more than a decade old, the vacation home in Sandestin, Fla., comes at a moderate weekly rate because members of Ms. Parnell's extended family own it. Her family of five would like more room than they have in their 2,500-square-foot home, yet they can't afford anything larger. The downturn has them skittish about paying for renovations.

"I'm not complaining, but the reality is Obama may call me wealthy, but I thought we were just good old middle class," says Ms. Parnell. "Our needs are being met, but we don't have a load of cash to cover wants."

First of all, is anyone else having trouble feeling sorry for these people?

Yes it sucks that he has to work 7 days a week, but I’m sorry if I don’t fall over to help a family because their car is “more then a decade old.” (My bucket is a 1989 Honda Accord with a bad axel and a leaky sunroof. I would be happy to trade.)

I also don’t like the fact that they consider themselves middle class even though they make more then 98% of Americans. It may be factually correct (I have no idea), but it just rubs me the wrong way.
It is a tricky situation in which some Americans find themselves after a long boom: They are by no means struggling, compared with the 98% of Americans who make far less, but depending on where they live and the lifestyle choices they have made, they don't necessarily feel rich, either. Worse, in their view, they are facing the same tax rates as those making millions. Some of the expenses are self-inflicted -- like private-school costs and conspicuous consumption. Others, though, are unavoidable, like child-care costs, larger health-care deductibles and education expenses, especially college.

Lifestyle choices have an impact on money matters? What a novel idea.

And I love how they try to sneak this “conspicuous consumption” right by us by mixing it in with the “unavoidable expenses.”

What this article fails to recognize is the fact that the 98% making less then $250,000 dollars a year generally can’t afford these “unavoidable expenses.”
Under Mr. Obama's budget proposal, two of the highest tax brackets would see rates rise, and deductions would be reduced for households earning more than $250,000 annually. President Obama said Wednesday, "We've made a clear promise that families that earn less than $250,000 will not see their taxes increase by a single dime."

By any statistical measure, that income level is at the top of the bracket. But for those closest to the line, the money might be less a sign of affluence than it is of the industry of dual-income couples. It is possible, say observers, that veteran civil servants could fall into the higher tax bracket.

The political calculation is dicey. The White House needs the additional revenue to cover some of its ambitious policy agenda, especially a health-care revamp. But some polling data suggest households that earn above $200,000 went heavily for Mr. Obama in November.

Until more details of the tax changes are disclosed, it is unclear whether people making big six-figure sums will be affected at all. They may, for example, be able to avoid tax increases if any number of deductions pull them below the threshold. But that isn't stopping those who earn near the threshold from worrying about it.

Already, many members of Congress are seeking to scale back some of the proposed tax increases, which call for raising the top federal tax rates to 36% from 33% on households earning $250,000 or above.

First off, I’m sorry that some couples near the threshold are worrying about how the new tax increase will affect their family.

But no one is exempt from having to stress about money.

And while they may be stressed about cutting their beach vacation down to only a week, many families are cutting out a meal a day or going without medical treatment when sick.

And I also like the way the writer tried to sneak in “many members of Congress are seeking to scale back some of the proposed tax increases” without specifying anyone or what political party they’re with.

Probably because people would be less sympathetic when they learned it’s the same Republicans who always want tax breaks for the rich.
Wealth and comfort "depends on where you're coming from," said Lois Avitt, a sociologist and founding director of the Institute for Socio-Financial Studies in Charlottesville, Va. To a family earning $50,000, $250,000 is well off, but for the family earning $250,000, rising college and medical costs and dropping home values make the perception debatable.

The reasons for the insecurity are that net worth is declining at the same time that expenses like education and health care, two of the biggest concerns cited by members of that income group, are going up faster than wages and income, says Heidi Shierholz, an economist at the Economic Policy Institute in Washington. "Those are the biggies. They are huge parts of the set of middle-class aspirations, and the prices of those have increased way faster than income." The bursting of the housing bubble makes that more stark.

Mark Zandi, chief economist at Moody's, says data show that over the last 10 years, education costs have risen 5.91% annually, and health- care expenses have gone up 4.16% annually, while wages and income have risen only 3.7% over the same time span. That means many families are seeing a greater percentage of their income going toward those two areas.

Education costs, which are far outstripping wages and income, are especially worrisome for this income bracket because upper-income earners are much less likely to receive the kind of financial aid that lower income levels can expect.

The drop in net worth has been staggering. The Federal Reserve, in a recent report, found that U.S. households' net worth dropped by $11 trillion, a decline of nearly 18%, during 2008. That wealth includes everything from home values to mutual funds and life insurance, college and pension funds. The decline equaled the combined output of Germany, Japan and the U.K.

I want to point out that these rising costs and drops in household worth affect everyone across the board and are harder for the lower class to deal with because they have less savings and disposable income then these “middle class” families.
Changes to the tax code don't generally make adjustments for high costs of living in particular areas of the country.

San Jose, Calif., Mayor Chuck Reed calls a family living in Silicon Valley earning $250,000 "upper working class." That is about what two engineers working at a technology firm can expect to make, but "a family earning $250,000 a year can't buy a home in Silicon Valley," he said.

James Duran owns a human-resources company in Silicon Valley and is president of the Hispanic Chamber of Commerce in California. He supported Mr. Obama, but is worried about the tax proposals. He has laid off some employees in recent months and has been wondering how he can fund an extension of those workers' health-care benefits.
Mr. Duran said he and his wife earn about $400,000 annually, but "I'm barely getting by." They have high property and state taxes, as well as college tuition and savings to cover. "I'm an Obama man, but this side of him is a difficult pill for me," he said.

I can actually understand where this guy is coming from.

I doubt that I’ll ever be able to afford a house in San Diego. And knowing that is difficult and upsetting. But sometimes you got to suck it up and do what needs to be done for your family.

Why in the fuck do you think I’m Utah?

Because it’s more affordable.
For the Parnells, their perception of themselves is based on the math. The value of their house is down $60,000. Ms. Parnell says the couple's gross income last year was about $260,000. Taxes, premiums for medical care and deductions for Social Security and their 401(k) contributions cut the gross to about $12,000 per month. The family tithes $1,300 a month at their church. Their mortgage, second mortgage and payment on land they bought is nearly $4,000 a month. Other expenses, including their family car payment, insurance and college funds, as well as basics like food, utilities and donations to charities, leave them with about $1,200 left over each month.

"I'm not after sympathy. We are blessed. What I want is a reality check on what rich means," Ms. Parnell says. "I can pay my mortgage and I can buy some clothes. I'm not going without, but I'm not living a life of luxury."

I’m glad they’re not after sympathy cause it would be a cold day in hell before they got any from me.

This second to last paragraph really bothers me because it highlights the differences between classes.

They may have to pay a lot for healthcare, their 401(k)s, and college tuition, but many people would be overjoyed to have the money to cover these so called “unavoidable expenses.”

It’s just ridiculous.

This article is essentially propaganda against the tax rises. It may not be as heavy handed and ridiculous as most, but it’s aiming for the same goal.

The fact is, the American upper class pays the lowest amount of taxes out of all western countries for their tax bracket and yet benefit the most from the government.

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