What % of working class makes $300,000.00 a year?

Making Ends Meet on $300,000 a Year
BusinessWeek‘s June 16 issue has a story on the “not-so-rich” rich. It asks “Just what does it mean to be wealthy these days? … Many facing higher taxes [if Barack Obama is elected president] don’t consider themselves part of the exalted crowd. They have good incomes, to be sure, particularly compared with the median household income of $48,200. Of the 149 million households filing federal income taxes for 2006, some 3% reported income between $200,000 and $500,000; fewer than 1% claimed income above half a million dollars.” The article goes on to cite comments by a few others in this income range who say they feel “stretched” and “middle class at best.”

It would help to have a sense of what a household budget at this income level might look like. Here’s an attempt at one. I assume two employed adults and two preschool-age children. I use a pretax income of $300,000, which comes to $25,000 a month.

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A lot of this — loan payments, property taxes, savings, child care expenses, and others — will vary depending on household circumstances. But are there any significant errors or omissions here?

Calculations by the Tax Policy Center suggest that Obama’s plan would increase taxes for this type of family by perhaps $6,000 a year, or $500 per month (about 2% of pretax income). Is that too much to ask? You be the judge.

Making Ends Meet on $300,000 a Year

Comments below
This is insanity. $300,000/year income is rich. It is not middle class or poor, it is rich. The budget you display shows that the person makes very poor financial decisions. If the person wants to claim they are only “getting by” on $300,000 a year, why do they have a $600,000 house on loan, $75,000 of autos on loan, $500 a month on gym membership, and a ton of other expenses? “Getting by” in reality means renting a crappy apartment or living in an old house in a neighborhood where audis and bmws are not present.
I suggest the person making $300,000 a year finance a $200,000 house, purchase no more than $30,000 of autos using cash, and do actual physical work that pays $$$$ on the side instead of spending $500/month on a gym. Save all of the money that would otherwise be wasted for 5 years. Then, if you still want to be a douche, buy your fancy $600,000 house and $75,000 in autos using CASH.

People are missing the point. The point is that the $300,000 club is only the upper 3%, which most people would say are wealthy. The truth be told, this is not wealthy. The budget is real. Sure, $600,000 sounds like a lot for a home, but it isn’t that much. If the “wealthy” can’t have nice things, what’s the point? Why work so hard? Why push to go to good schools, get good jobs if we are expected to have to go camping? I am not in this group, but I aspire to..and push myself every day. If the payout is that I can only buy a cheap Hyundai, well then I may as well quit now.

There is some truth to everyone’s comments and they have been fun to read. I think part of the problem with defining “rich” is the perspective and the cost of living in your region of the country. What are the minimum luxuries that a “rich” income should afford? Would a flat screen tv or the latest smart phone qualify? How about driving a BMW or Mercedes? I see many college students and middle class families that have these things. For me, I like Forbe’s magazine’s definition of rich which would be defined by having an income of over $1M/year. I think most people would agree that is rich no matter where you live. But this leaves a huge range from $50k/yr to $1M and the people near these extremes are clearly not in the same class either. So where does that leave people with incomes of $200-$500K? These people should be properly defined as affluent. They are not rich, but they can afford certain luxuries that most middle class families cannot. In this range, buying a nice house (not necessarily a mansion, but nice), driving luxury cars, and perhaps having a small country club membership or private schooling kids may be in reach. But these people still need to shop at Walmart and Macy’s and consider buying used cars like most middle class people do if they don’t want to work their whole live accumulating stuff. The affluent will not typically be driving Ferrari’s and Lambo’s and taking private jets to wherever they please. Rolex? More like Timex, or time to keep the watch you already have.

Clearly this family is living very luxuriously, $500/month for a country club, $1,600/month for food, $9,000 per year for vacations — ever heard of camping, or driving to Six Flags and staying at the Holiday Inn. And a $600,000 house, I know in Orange county California this just buys a very nice middle class house in a nice suburb, but in the vast majority of the country you need less than half as much for such a house.

A key thing though is, it’s not that Obama would be making them pay extra taxes for no benefit in return. Even at their income level, the benefits from Obama’s tax increases would be substantial. These include a great decrease in their health insurance costs, and the health insurance costs of their employers, which should eventually be passed along in higher wages.

The tax increases would partly go to increase public health and safety, substantially benefiting the quality of life of them and their children.

College would become a lot more affordable, so their children wouldn’t be saddled with so much student debt like they are, and they would have to save less for their children’s education.

Public recreation would be better, so maybe they could play on the public tennis courts or send their children to a free public community center, instead of having to wall themselves off from the rabble like the elites in Honduras — and that is the path that the Republicans have already sent us down to a horrible extent.

The list goes on and on.

Even for a family this wealthy, I would guess that the costs substantially outweigh the benefits, and this is overwhelmingly true for the median family.

The main reason is that Obama’s and the Democrats spending programs, by and large, recognize what the scientific academic economics community learned long ago. An intelligent government role can greatly increase efficiency, wealth, and welfare, due to problems with the pure free market like externalities, asymmetric information, inability to perfectly price discriminate, inability to patent, large economies of scale and monopoly power problems, especially with idea, knowledge products, and more.

The Republicans of the last three decades have a hostility to science and thinking in general when it interferes with their ideology, and their simple-minded, the pure free market is always the best and magic, slogan economics has cost us greatly.
To the A-hole who said that rich means buying a $600K house, remember that is only in parts of that are less desirable/less jobs/less opportunity/less culture/less benefits, etc. Where I live 600K buys you a one-bedroom apartment without a view. Get some perspective. And, no, the income does not make up for it.

This article isn’t about those that are living on less $300,000, it’s about what it takes to be considered wealthy. If you have a nice $500k house and are financing it, you are not wealthy. Wealthy is means you OWN. Everyone else is renting from the banks, stop making your payments and the banks will take “your” possessions.

Hello! Your reality simply isn’t the reality of the rest of the World… In fact try to think of all the people working hard all over the world for mere survival? You should be very very thankful! Easy solutions for you: Buy used cars, fix them yourself, take care of your kids yourself, eat less ($1600/month on food??) Clean your own house, dump the iphones, stop buying clothes every weekend and so on… You will see that you can suddenly start helping your local food bank/homeless center or tutoring center…or buy more stock haha Happiness level in your house will also go up if you stop your consumerist race, promise. Peace!

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