6 ms·

Does a family making 250K-300K in Seattle really count as "rich"? I don't object to the tax in general, but I do object to the terminology. It is certainly a hi

Does a family making 250K-300K in Seattle really count as "rich"? I don't object to the tax in general, but I do object to the terminology. It is certainly a high level of income, but rich?. http://blogs.seattletimes.com/fyi-guy/2014/10/06/as-seattle-incomes-soar-gap-grows-between-rich-and-poor/ http://blogs.seattletimes.com/fyi-guy/2014/10/06/as-seattle-... This is targeting the top 20% of earners in Seattle. Time will tell if this is a sound policy. I think they could have achieved a similar level of tax by having a higher level of tax aimed at a much higher level of income (1 million plus). A family earning 200-250K in Seattle will definitely feel this tax. You still operate at a high level of privilege at that income level, but it isn't crazy. For comparison, according to cost of living indexes, if you earn 250K in Seattle you would need to make ~385K in SF, or only 140K in Atlanta. In Atlanta 140K is comfortable, but not "rich". I really think these sort of taxes should target the top 5% of earners only -- everyone below that actually feels it and is not "rich", especially in higher cost of living areas like Seattle.

tekklloneer 9y ago
Yes, $250K counts as rich. You can "get by" on combined income of $150K extremely easily. Maybe you don't buy a new bmw every year or live in an untrendy neighborhood. Oh, no.
jackfoxy 9y ago
The history of tax the rich gimmicks is simply the history of levying more tax on the middle class, and even eventually working class. Starting with the U.S. federal income tax, which was promised to be a tax only on the rich. In fact some states had no residents who had the minimum targeted income, at the beginning. How long do you think that lasted? Wait and see how long before Seattle adjusts the minimum down.
- IanDrake 9y ago
  And the tax rate up!
- kansface 9y ago
  | Wait and see how long before Seattle adjusts the minimum down. Inflation already does the dirty work.
daveguy 9y ago
Typically taxes like this are levied on the amount above the threshold. So someone making $250,000 / year will have to pay $0 in additional taxes. This is just like the federal income tax, where if you go into the next bracket you don't suddenly have to pay more on everything up to that bracket. It is only the additional income that is taxed at the higher rate. It's amazing how many intelligent conservatives don't understand this basic aspect of taxes in the US. If you make more you always keep more in the US.
- lowpro 9y ago
  Do you have a reference for this? I've honestly never heard of this and had no idea, even though I study politics and economics somewhat closely. I've never seen this brought up as a point on either side when talking about taxes, so I'm curoious if this is the case if there are exceptions that have become the rule and thus this might be technically true but not seen by most people? TL;DR: taxes are hard, do you have a reference?
  - daveguy 9y ago
    Sure: https://taxfoundation.org/2017-tax-brackets/ https://taxfoundation.org/2017-tax-brackets/ https://www.irs.com/articles/2016-federal-tax-rates-personal-exemptions-and-standard-deductions https://www.irs.com/articles/2016-federal-tax-rates-personal... It's how tax brackets work. Notice the "+X% over the excess / of the amount over" wording in the documents. I'm not a CPA, so maybe one can chime in with a counter example of someone who would take home less if they made a larger salary. But I'm pretty certain this is how it works.
  - rndmize 9y ago
    https://en.wikipedia.org/wiki/Tax_bracket https://en.wikipedia.org/wiki/Tax_bracket
  - protomyth 9y ago
    Look at the US tax code (just pull the calculations from the 1040A instructions on the IRS website). That's how tax brackets work.
  - 9y ago
sidlls 9y ago
> Does a family making 250K-300K in Seattle really count as "rich"? Yes, kinda. My family earns in the range of 20% lower than the lowest bound there and we live in the Bay Area. We're at the very least affluent. I would never say "rich", because I reserve that for folks who don't have to work (i.e. they could live off unearned income in perpetuity and readily absorb more than one significant shocks, such as medical expenses, if they chose to), but comparing our situation to even middle-class folks is a bit laughable.
_delirium 9y ago
There are plenty of pretty affluent households in Seattle, but it's not quite 20% of them that make >$250k. What the linked article says is that the average (mean) income of all 60,000 households in the top quintile is $250k, not that $250k is the lower threshold for entering the top quintile. I can't find detailed enough information to say what percentile a $250k household income in Seattle actually is. What I can find, from the 2015 census estimates, is that $200k is 87th percentile [1]. [1] As aggregated here: http://www.city-data.com/income/income-Seattle-Washington.html http://www.city-data.com/income/income-Seattle-Washington.ht...
- lostmsu 9y ago
  You seem to be missing, that family only pays above $500k
home_boi 9y ago
I don't think so. "Rich" refers to a lifestyle that cannot be afforded by just $250k. An example would be: - Private school - Vacation home - 3+ luxurious vacations a year - Saving $50k+ per year - Eating out at fancy restaurants weekly - Seeing expensive shows weekly - $1+ million dollar home ($3.5+ million if you're in the Bay Area)
- 5ilv3r 9y ago
  250k a year can afford that. Private school is $50k, a vacation home is $24k, vacations are $15k, $50k savings is bs and you know good and well that no one does that while trying to make a presentation of themselves, fancy restaurants are $200 a night so 20k, expensive shows are $200 each so 20k, and a million dollar home is only 60k. so 50+24+15+20+20+60=189 Oh shit look at that, there is room for savings/taxes too! (numbers are yearly cost, not monthly or total cost)
  - influx 9y ago
    You're only taking home ~150-160 of that 250K after federal taxes, does that change your opinion any?
influx 9y ago
No, it doesn't count as "rich". Source: lived in Seattle for 10 years. The actual rich folks don't live in Seattle, they live in Medina, aka BillG, Jeff Bezos, the Seattle Seahawks, etc. This is misguided and unconstitutional.
fwefwwfe 9y ago
> Does a family making 250K-300K in Seattle really count as "rich"? ...A family earning 200-250K in Seattle will definitely feel this tax. A family of 4 could live pretty well on half that in Seattle. Maybe they aren't "rich" as in "filthy rich", but I don't see how they'd actually feel it, other than savings goals having to be slightly less aggressive. At $250,000 / year, your pre-tax monthly income would be about $28,833 and a tax of 2.25% would shrink that by $468. I don't see how I could honestly say I felt the tax if I made only half of 250k and they double it to 4.5%.
vmarsy 9y ago
What about 500k ? Because that's what the Seattle city council tax says [1]. So no, a family earning 200-250k will definitely not feel this tax Even if the limit was 250k, how would a family earning less than 250k feel the tax? It would literally cost them $0 per year since only income above 250k are taxed. From [2]: Tax Filing Status Total Income Rate “single” Total income in the tax year up to $250,000 0% Amount of total income in the tax year in excess of $250,000 2.25% “married filing jointly” Total income in the tax year up to $500,000 0% Amount of total income in the tax year in excess of $500,000 2.25% [1] http://council.seattle.gov/2017/07/10/council-approves-city-income-tax-on-high-earners/ http://council.seattle.gov/2017/07/10/council-approves-city-... [2] http://seattle.legistar.com/LegislationDetail.aspx?ID=3085475&GUID=03909BA9-0535-4A39-9B4A-7C561C7A604D&FullText=1 http://seattle.legistar.com/LegislationDetail.aspx?ID=308547...
- bitexploder 9y ago
  Ahh, that makes more sense. I thought it was combined family income. Thanks for clarifying.
unstatusthequo 9y ago
Totally agree. Rich to me means over $1M/yr per earner, not gross across a couple.
mnm1 9y ago
It depends how you define rich. One guideline I use is that people are rich if they can afford their home outright in cash (not after 15 or 30 years). By those standards, 250-300k is not rich in Seattle. You'd still need to save for quite a few years to buy a home cash in the area.
stmfreak 9y ago
Rich is as vague a term as "fair." To the 50% making $50k per year or less, yes, anyone making over $100k is "rich." And who isn't going to vote in favor of a tax when they lack the historical perspective and imagination that it might ever apply to their income?

tekklloneer 9y ago

Yes, $250K counts as rich. You can "get by" on combined income of $150K extremely easily. Maybe you don't buy a new bmw every year or live in an untrendy neighborhood. Oh, no.

jackfoxy 9y ago

The history of tax the rich gimmicks is simply the history of levying more tax on the middle class, and even eventually working class. Starting with the U.S. federal income tax, which was promised to be a tax only on the rich. In fact some states had no residents who had the minimum targeted income, at the beginning. How long do you think that lasted? Wait and see how long before Seattle adjusts the minimum down.

IanDrake 9y ago
And the tax rate up!
kansface 9y ago
| Wait and see how long before Seattle adjusts the minimum down. Inflation already does the dirty work.

daveguy 9y ago

Typically taxes like this are levied on the amount above the threshold. So someone making $250,000 / year will have to pay $0 in additional taxes. This is just like the federal income tax, where if you go into the next bracket you don't suddenly have to pay more on everything up to that bracket. It is only the additional income that is taxed at the higher rate. It's amazing how many intelligent conservatives don't understand this basic aspect of taxes in the US. If you make more you always keep more in the US.

lowpro 9y ago
Do you have a reference for this? I've honestly never heard of this and had no idea, even though I study politics and economics somewhat closely. I've never seen this brought up as a point on either side when talking about taxes, so I'm curoious if this is the case if there are exceptions that have become the rule and thus this might be technically true but not seen by most people? TL;DR: taxes are hard, do you have a reference?
- daveguy 9y ago
  Sure: https://taxfoundation.org/2017-tax-brackets/ https://taxfoundation.org/2017-tax-brackets/ https://www.irs.com/articles/2016-federal-tax-rates-personal-exemptions-and-standard-deductions https://www.irs.com/articles/2016-federal-tax-rates-personal... It's how tax brackets work. Notice the "+X% over the excess / of the amount over" wording in the documents. I'm not a CPA, so maybe one can chime in with a counter example of someone who would take home less if they made a larger salary. But I'm pretty certain this is how it works.
- rndmize 9y ago
  https://en.wikipedia.org/wiki/Tax_bracket https://en.wikipedia.org/wiki/Tax_bracket
- protomyth 9y ago
  Look at the US tax code (just pull the calculations from the 1040A instructions on the IRS website). That's how tax brackets work.
- 9y ago

sidlls 9y ago

> Does a family making 250K-300K in Seattle really count as "rich"? Yes, kinda. My family earns in the range of 20% lower than the lowest bound there and we live in the Bay Area. We're at the very least affluent. I would never say "rich", because I reserve that for folks who don't have to work (i.e. they could live off unearned income in perpetuity and readily absorb more than one significant shocks, such as medical expenses, if they chose to), but comparing our situation to even middle-class folks is a bit laughable.

_delirium 9y ago

There are plenty of pretty affluent households in Seattle, but it's not quite 20% of them that make >$250k. What the linked article says is that the average (mean) income of all 60,000 households in the top quintile is $250k, not that $250k is the lower threshold for entering the top quintile. I can't find detailed enough information to say what percentile a $250k household income in Seattle actually is. What I can find, from the 2015 census estimates, is that $200k is 87th percentile [1]. [1] As aggregated here: http://www.city-data.com/income/income-Seattle-Washington.html http://www.city-data.com/income/income-Seattle-Washington.ht...

lostmsu 9y ago
You seem to be missing, that family only pays above $500k

home_boi 9y ago

I don't think so. "Rich" refers to a lifestyle that cannot be afforded by just $250k. An example would be: - Private school - Vacation home - 3+ luxurious vacations a year - Saving $50k+ per year - Eating out at fancy restaurants weekly - Seeing expensive shows weekly - $1+ million dollar home ($3.5+ million if you're in the Bay Area)

5ilv3r 9y ago
250k a year can afford that. Private school is $50k, a vacation home is $24k, vacations are $15k, $50k savings is bs and you know good and well that no one does that while trying to make a presentation of themselves, fancy restaurants are $200 a night so 20k, expensive shows are $200 each so 20k, and a million dollar home is only 60k. so 50+24+15+20+20+60=189 Oh shit look at that, there is room for savings/taxes too! (numbers are yearly cost, not monthly or total cost)
- influx 9y ago
  You're only taking home ~150-160 of that 250K after federal taxes, does that change your opinion any?

influx 9y ago

No, it doesn't count as "rich". Source: lived in Seattle for 10 years. The actual rich folks don't live in Seattle, they live in Medina, aka BillG, Jeff Bezos, the Seattle Seahawks, etc. This is misguided and unconstitutional.

fwefwwfe 9y ago

> Does a family making 250K-300K in Seattle really count as "rich"? ...A family earning 200-250K in Seattle will definitely feel this tax. A family of 4 could live pretty well on half that in Seattle. Maybe they aren't "rich" as in "filthy rich", but I don't see how they'd actually feel it, other than savings goals having to be slightly less aggressive. At $250,000 / year, your pre-tax monthly income would be about $28,833 and a tax of 2.25% would shrink that by $468. I don't see how I could honestly say I felt the tax if I made only half of 250k and they double it to 4.5%.

vmarsy 9y ago

What about 500k ? Because that's what the Seattle city council tax says [1]. So no, a family earning 200-250k will definitely not feel this tax Even if the limit was 250k, how would a family earning less than 250k feel the tax? It would literally cost them $0 per year since only income above 250k are taxed. From [2]: Tax Filing Status Total Income Rate “single” Total income in the tax year up to $250,000 0% Amount of total income in the tax year in excess of $250,000 2.25% “married filing jointly” Total income in the tax year up to $500,000 0% Amount of total income in the tax year in excess of $500,000 2.25% [1] http://council.seattle.gov/2017/07/10/council-approves-city-income-tax-on-high-earners/ http://council.seattle.gov/2017/07/10/council-approves-city-... [2] http://seattle.legistar.com/LegislationDetail.aspx?ID=3085475&GUID=03909BA9-0535-4A39-9B4A-7C561C7A604D&FullText=1 http://seattle.legistar.com/LegislationDetail.aspx?ID=308547...

bitexploder 9y ago
Ahh, that makes more sense. I thought it was combined family income. Thanks for clarifying.

unstatusthequo 9y ago

Totally agree. Rich to me means over $1M/yr per earner, not gross across a couple.

mnm1 9y ago

It depends how you define rich. One guideline I use is that people are rich if they can afford their home outright in cash (not after 15 or 30 years). By those standards, 250-300k is not rich in Seattle. You'd still need to save for quite a few years to buy a home cash in the area.

stmfreak 9y ago

Rich is as vague a term as "fair." To the 50% making $50k per year or less, yes, anyone making over $100k is "rich." And who isn't going to vote in favor of a tax when they lack the historical perspective and imagination that it might ever apply to their income?