Monday, July 9, 2012

Obama's Skewed Definition of "Wealthy"




According to the Merriam Webster Dictionary, the word “wealthy “ is defined as having goods, property, or money in abundance.

According to President Obama, any family that earns a combined income of $250,000 or more is considered wealthy or rich. Apparently, Mr. Obama and his cronies have been abducted by aliens and their brains zapped with mind altering drugs or they base what constitutes wealth on what it costs a family to live in say…Walton, Indiana.

I think most Americans would conclude that families earning $1,000,000 or more would be considered wealthy.  That is why it has been part of the American dream to be “a millionaire”.  But the government determining that ¼ of that sum qualifies one as being rich is just plain boneheaded.

As with many factors that one must consider in determining wealth, where one lives is of paramount importance.  In determining who should pay higher taxes, the IRS and Congress will not differentiate according to geographical location. The fact of the matter is, $250,000 is a reasonable income in Lincoln, Nebraska or Jackson, Mississippi.  A family of four cannot live with any degree of abundance in San Francisco, New York City, Washington, DC or Boston on a combined income of $250,000.

As an example, an individual who commutes from Ashburn, Virginia to Washington, DC will pay $25 in gasoline, $12 in tolls and $15 in parking daily.
That is $52 per day, $260 per week, $1040 per month and $12,480 per year. This does not include the wear and tear on the vehicle and the 3 hours per day spent in a vehicle. There is no mass transit from Ashburn, which is a bedroom community of Washington. One can drive to a park and ride, take a bus to the Metro/subway and then take the Metro/subway to the city.  This will add an extra hour to the commute but really only reduces the costs by half.  This results in an average of 15 hours to 20 hours per week commuting, or 60 to 80 hours per month and 720 to  960 hours per year commuting. That equates to 30-40 days per year commuting to a job!

Housing costs in the coastal cities is high. The median cost of a home in Seattle is $386,000;  in East Harlem New York is $670,000; Capitol Hill in Washington, DC ( which is not a safe area) is $649,000.  The average monthly mortgage payments on these properties would run from $2650 per month to $5000 per month.  This would constitute mortgage payments annually ranging from 31,920 to $60,000.  Add that to commuting costs and the costs for mortgage and commuting to work runs from $38,000 to $72,000 per year. This is before   a car payment, auto insurance, home insurance, utilities, food, daycare,  medical insurance, clothes, dog food, and dry cleaning bills and the $70,000 that family is already paying in income taxes to the  federal government at a 28% rate. 

Compare this with commuting cost in Indianapolis of $20 per day, and the average home sales for Hampton Geist, a very desirable area  are $207,000 – less than 1/3 the cost of an average home in Washington, DC or New York City. 

Perhaps a combined income of $250,000 would be considered affluent in Indianapolis or another Midwestern city or town. But in the coastal cities that have high housing and commuting costs, a family of four would be struggling.

The persons who claim that anyone making less than $1,000,000 per year is wealthy do not live on incomes of less than $1,000,000 per year in major metropolitan areas.  Most members of Congress who are advocating increasing taxes on those earning less than $1,000,000 annually are not just millionaires, they are multi millionaires.  They are pandering to the constituency that has no clarity as to what constitutes wealth. It may be all relative. But geography makes a huge difference and President Obama and his followers are just spouting BS.
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