I'm saying that "rich" varies from place to place. If I lived in South Dakota I would be very well off with my current salary. Here, I'm just a few notches above entry level.
I also never said that New York "should" be the financial capital. But in many respects it is, or at least is a major center of the financial industry. Ditto with media.
NYC should be considered the financial capital of the world because it IS the financial capital of the world. That won't last forever *plenty argue that it's not true now* but it's certainly been the case for the last 60 or so years.Originally Posted by GGT
Last edited by LittleFuzzy; 03-06-2010 at 04:42 AM.
Last night as I lay in bed, looking up at the stars, I thought, “Where the hell is my ceiling?"
Only because you're comparing yourself to people who live in Midtown.The median income in NYC is about $45k.
Hope is the denial of reality
I was going to say. There's no way $250k makes a dual-income, 2.5kids and a pet middle-middle class rather than at least clearly upper-middle class, even in NYC.Only because you're comparing yourself to people who live in Midtown.
Last night as I lay in bed, looking up at the stars, I thought, “Where the hell is my ceiling?"
As if people who aren't significantly richer than that 250k aren't going to be liviing in the same agglomerations. People live in those places because they are attracted to them. If that weren't the case nobody would be as crazy as to pay Manhattan prices where they have Queens or Jersey City as viable alternatives.
Congratulations America
Have you been to Jersey?
Nah..not a viable alternative.
I liked living in Queens though.
Only because you're comparing yourself to people who live in Midtown.Of course there are other places. My point is that real people do live in Manhattan and don't live in swanky multi-million dollar loft apartments. The living costs are higher and the regional salaries usually are adjusted accordingly. But if suddenly someone spending 50% of their income on a two-bedroom apartment in Manhattan is told by the IRS that they are "rich", it really changes the game. Suddenly living in Manhattan is no longer an option and the whole place can really only be inhabited by the super-rich (or, according to the government, "fat cat rich").
Actually, if we go back to basics, that person who's living in that 2 bedroom appartment in Manhattan, using up half his income just to have a roof over his head (btw, 2-bedrooms doesn't really sound like standard Manhattan to me) would not be living there had the government not chosen to distort the market by making to do so affordable (somewhat) for that person.
If the government hadn't gotten into the game by offering tax-cuts for home owners, which are effectively a subsidy to those home owners, these people would have looked into finding a dwelling in the above mentioned Queens or Jersey City rather than on the island which if the markets would have it indeed would be the playground of the rich.
Or maybe, just maybe, without rent-control on the one hand and no subsidies for home owners on the other hand you would get a real estate market in NYC that reflects the underlying value of real estate there. What comes to mind here is how it's excessively difficult or expensive to find a reasonably priced place in Amsterdam, which does have 'rent-controlled' appartments and subsidies for home owners and how much easier it is to get a nice and affordable place in Antwerp where they don't have a meddling government.
I still use the deductability of the interest of my loan for my flat (I'd be crazy not to), but am in principle against it. It is not the governments business if I rent or buy, and I don't want them to take my money only to give it back to me if I behave in a particular way. That is also the reason why I don't want to let that loan unpaid any longer than absolutely needed.
Congratulations America
If you lived in SD your salary would be regionally indexed to their COL. Your company would still hire/place you a few notches above entry level, main differences being fewer people there would be much above average income (and lifestyle, culture, etc). But if you're in Manhattan, surrounded by movers and shakers with incomes higher than NYC average--let alone national average--you don't want "wealth" to move out by taxing them too much, but do want them to stay and pay some taxes that feed the local environment.
Can't have it both ways tho, if demand is high for property but supply is limited, there'll be higher prices. To attract those high-end workers (as in financial district) they get higher pay, to afford a relatively high standard of living. If everyone treats home as purchase investment, the inflated prices will never come down.
Can't choose living in the Financial Capital of the World, where guys in their 30s make millions, and their money makes Manhattan ritzy....then turn around to complain how you have to "compete" with them for that 2BR townhouse.
NYC and Wall St got a pretty good deal from the stimulus and TARP and TALF and all that. It bailed out the bankers, brokers, traders, speculators. Fewer got laid off in financial industry than expected, most still got their bonii, they can play IRS tricks with salaries below $250k but stock options and capital gains taxed at lower rates that keep them rich.
Hazir put it nicely.
Even if you're referring to net income, are you really claiming that the cheapest 2-bedroom apartments in Manhattan are $5,000 a month (assuming that someone who earns $250,000 ends up with half that money)? From what I've seen, apartments in Manhattan cost $500-1000 more a month than ones in decent (not great) parts of Brooklyn. Food costs don't really change much as long as you go to a supermarket and cook most of the time, and other expenses don't really change all that much either (again, assuming you don't go out of your way to "look" like the finance people).
Hope is the denial of reality
I think to make that relevant to the debate you'd have to translate this into the costs of financing a 2BR in Manhattan (coz that's the place we're really talking about).
Congratulations America
Why? The costs of renting are dependent on the cost of the mortgage.
Hope is the denial of reality
Not necessarily in NYC, there are way too many people who don't pay market prices down there. It just complicates talking about the issue if you don't limit your scope. And we are just talking about should people get a (higher) subsidy on buying a house in Manhattan than on buying a house in West Virginia?
Congratulations America
Anyone who spends half of their income on housing has some "problems". Whether they're making $250,000 or $25,000. If anyone needs some help with that in the form of tax breaks or government intervention, it's not the higher earner, IMO.
http://www.nytimes.com/2008/04/02/ny.../02prices.html
Presumably the prices in Manhattan aren't substantially higher now than in 2008. The median price of a one-bedroom apartment in Manhattan is $750,000. Assuming a decent down payment, I believe the mortgage payment would end up around $9-10,000 a month. Since half of that would be in interest, the person can already write it off, meaning the actual cost is maybe a quarter lower (since someone making $250,000 would otherwise be paying a ~45% tax rate). Unless my math is wildly off, that would still leave the person something like $50-60,000 to spend on other things, which happens to be higher than the median income of the city.
Hope is the denial of reality
I'm wondering if Dread is really complaining about gentrification, not the proposed tax hike. ??
I doubt it, he's bought a place of his own, gentrification works in his favor.
Congratulations America
I can't tell if I'm not making myself clear or if everyone is missing the point.
First off, forget about rent control. I think 2-3% of apartments in NY are rent controlled. Rent stabilization exists for a chunk of housing stock, but it's not as distorting. And not relevant to my point.
The mortgage interest deduction is essentially the same for everyone in every place. And you can deduct no more than 35 cents on every dollar of mortgage interest. If you pay a higher mortgage, you can deduct more...but you can only deduct 35% of it so it's still money out the window. Which means you need to make more to support the debt.
Circling back to the larger point, everyone seems to agree that certain places are more expensive to live in. Which requires making more money. The problem is that the federal government sets brackets that assume that everyone above that bracket is "wealthy", when the costs of living in that particular area can totally negate the elevated salary.
We can argue about the vagaries and costs of living all day -- that's the point, if we can't agree on what's "reasonable", why is it reasonable for the government to impose universal tax brackets on areas with disparate wages and costs-of-living? This does actually make a case for flat taxes...
Maybe I need more coffee
COL does matter, tho. Flat taxes would treat all areas the same, which (I thought) is what you were criticizing.
Unless there's some exemption for lower income folks, if we all pay say 25% of our income in taxes---that leaves less for living expenses for poor or even middle class. Still gets back to defining what's rich or poor or middle.
Flat taxes treat all income groups the same. The set-up now dictates that living in an expensive area with a higher salary means I pay higher taxes on absolute and relative basis, as I fall into higher tax brackets for "the wealthy" when I'm just not. IE not only do I pay a greater dollar amount than someone in a lower-cost area, but I pay a higher proportion of my income, even though my expenses are higher.
Assuming a flat tax of 15%, it would mean 15% of my salary goes to the US Treasury, and 15% of the income of someone in South Dakota gets the same deal. If I live in an expensive area that justifies a higher salary, so be it -- the Treasury gets more money from me (yay!), but not a higher proportion of my income.
Also remember that part of the "deal" of theoretical flat taxes is a lot of loopholes, exceptions and deductions are eliminated. That way I spend more time making money for the Treasury instead of rapidly ramping-up my 401k contributions to prevent myself from bleeding into another tax bracket when I still stock my cupboard with bulk packages of Velveeta Shells and Cheese.
What about those making 50k or under? Everyone pays same rates, 15% on income, 20% on health care, 20% on housing, add in food and misc, sounds great? Until you figure middle class and lower has less to actually live on....
Either they'll drop health care or stop saving for retirement, now there's more needing a safety net, which would require more taxes. Instead of shells and cheese, maybe live in a less expensive area. Everyone has to live within their means, I don't have much sympathy if anyone makes over $250,000 and spend half on housing.
Flat taxes generally don't tax apply to earnings below a certain amount. In the US, that would probably be $15-25k.
Hope is the denial of reality
...that's why I said there would have to be some exemption, but that still gets us back to what's rich/poor/middle.
People making 50k and under pay 25% federal at the moment.
And those who make 30k and under pay 15%. But with deductions, exemptions, etc. we've now found ourselves at a point where almost a majority of Americans will pay no income tax, and happily vote to keep the status quo until it blows up in our faces.
Flat tax may sound "equitable" on paper. Just not sure how you make it work in reality so it doesn't just benefit the rich who're left with more discretionary income.....and everyone else living on the edge.
I made nearly 50k last year and paid negative % taxes. Granted a chunk of my check goes to 401k/health insurance (your taxed on the amount after that) but still its pretty crazy. My wife and son helped me out in that regard but still.
People making 50k and under pay 25% federal at the moment
Still Dread, the reason why you pay a bigger chunk of your income for housing is because you made the choice to live in an area that is too expensive for you. And tax deductability enabled you to make that choice.
Congratulations America
I acknowledge that problem exists. I don't feel it's a big enough problem to be concerned about, much less justify a systemic redesign of the tax structure.
Last night as I lay in bed, looking up at the stars, I thought, “Where the hell is my ceiling?"
Poor dready; everybody telling him he should have traded downI can imagine you didn't want to do that. When I moved to Amsterdam we had a look at houses outside the beltway, in the end we went for a flat inside the canal belt because we didn't think it would feel like really living in Amsterdam out there in the fields. Despite the fact that we'd have a bigger space for less money. But being able to walk to 3 cinema's in less than 10 minutes really is something that makes it worth it.
Congratulations America
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