Who Is Rich?

Who is rich? This topic comes up regularly, mainly when Democrats draw a lower limit on who is wealthy and therefore whould be punished for it through higher taxes. Democrats have set the limit as low as $100,000 per year but President Obama has consistently set it at $250,000 per year. Daniel Gross of Newsweek and Slate recently chimed in that, yes indeed, $250,000 per year makes you rich. His case is in two parts. The first one is a numbers game - if you are making five times the median income and more than 98% of the population then you must be rich. The second is that someone with this income level can afford to live in the most expensive communities although he admits that it would be a stretch.

I've written about this before, also and I have two rebuttals.

First, annual income is a poor indicator of wealth. Total assets is a much better indicator. Who is richer - someone who makes $250,000 per year but has a mortgage on his $4,000,000 house or someone who makes $250,000 per year and owns his $4,000,000 house outright? Or someone who makes $200,000 per year but owns a $5,000,0000 house outright? Obama and Gross count the first two as being identically rich and the third one as being middle-class.

Second, even if you make more than 98% of the population, you still can't live like someone who is rich. You might be able to afford a McMansion (with a mortgage) but you cann't afford a palatial spread like Al Gore or John Edwards. You might be able to afford an illegal immigrant cleaning woman but you aren't going to have a full-time staff. You can afford a private plane as long as it's a Cesna and you fly it yourself but you are not going to be collecting jets like John Travolta.

The truly rich are not the upper 2% of the population, they are the upper 0.1% of the population. They make many times $250,000.

Clearly, Obama, the Democrats, and Gross are playing with statistics in order to inflate the number of rich. Why? Because there are not enough truly rich to fill their coffers. This is all class warfare games. Obama needs more taxes so he is trying to hit a sweet spot where he gets enough taxes to be useful without causing a tax revolt.