Bailout

$190,000 a year is rich

By Felix Salmon

I just started reading Erika Olson’s Zero-Sum Game, her account of the CBOT-CME merger. Her introduction of the CBOT’s CEO, Bernie Dan, includes this passage about his college days:

He’d often tell classmates his future goal was “to pay more in taxes than most people make.” They thought he was joking, but he wasn’t.

That seems to me to be a good baseline for what it means to be rich; it certainly felt that way to the young Bernie. And so I wondered what income that amounts to.

The national median income is $52,029; in New York state it’s $55,980; and in Manhattan (New York county) it’s $68,295. Playing around with a paycheck calculator, I reckon that in order to pay $68,295 in annual income and payroll taxes, a NYC resident with one standard allowance would have to earn about $192,000 per year. And of course if you start taking further deductions for things like children and mortgages, that number rises significantly.

It’s harder to work things out nationally, since taxes vary from state to state. But an Illinois resident with the same single deduction would have to earn about $186,500 in order to pay $52,000 a year in taxes.

In other words, using Bernie Dan’s definition, it’s reasonable to conclude that “rich” is about $190,000 a year. Which seems reasonable to me.

Full post as published by Macroprudential on December 15, 2010 (boomark / email).