5 ms·

> You basically just need to participate in an IPO-style windfall, and maybe split it over two tax years. I realize we're on HN, but... calling that not hard f

> You basically just need to participate in an IPO-style windfall, and maybe split it over two tax years. I realize we're on HN, but... calling that not hard feels out of touch. By definition it's extremely rare. I guess if you mean, an individual who's gotten into that rare position doesn't need to struggle particularly hard to see the fruits, the comment makes sense. Is that it?

manwe150 3y ago
It is only rare in a particular year. If a given person is assumed to only earn that for 1-2 years of a 30+ year career, then 10-20% of all people will be a top 1% earner, by rough math. Still rare, but not nearly as uncommon when looked at that way, if you take the hypothesis that it is commonly a one-time event.
- digging 3y ago
  If your math adds up, (and it might but I'm not following it at all) -- 10% is still kind of rare. But yeah, not extremely so. For example, I consider myself pretty good at what I do, but I'd likely have to work very hard (for me) to get in that position. My circumstances don't put me anywhere near it.
- oefrha 3y ago
  You do realize that the vast vast majority of the population never have an IPO-style windfall in a 30+ year career, don’t you? Are we witnessing some sort of fake out-of-touchness as humble brag here?
  - cableshaft 3y ago
    Yeah, I've been a software engineer for almost 20 years and I've never had an 'IPO-style windfall' (and don't see how that's going to happen in the next ten years either, unless I join a unicorn startup). Closest I've ever gotten to that is a $10k bonus one year. That definitely doesn't count. I've been an early employee at two startups also, they just didn't pan out. If I don't get that in one of the more well-paid professions, then I don't see how a teacher, or a janitor, or a waitress, etc, would ever get one.
    - digging 3y ago
      > If I don't get that in one of the more well-paid professions, then I don't see how a teacher, or a janitor, or a waitress, etc, would ever get one. Yeah I was entirely limiting the population discussed to SWE as well. Anybody who doesn't work in a core tech role has no chance whatsoever of such windfall, and that includes many people who do work in tech roles.
      - robertlagrant 3y ago
        Of course they do - lots of roles in a business will get pre-IPO share option packages.
    - fzeroracer 3y ago
      This has been my experience too as a software engineer with about 8 years of experience under my belt. A massive windfall like that simply isn't in the cards for me and even being fairly well compensated saving a majority of my money I don't see homeownership in my future. That's been increasingly the experience of friends and coworkers too. I think a fair number of people are either far better off than they think, or just don't see the huge middle class and below squeeze going on.
      - cableshaft 3y ago
        Well, I do own a home. But the only people I know my age that seem to own homes (that don't have high paying jobs) took advantage of something in order to get the money together for the downpayment, like lived with their parents for years rent-free while saving, or their parents just outright provided the downpayment. Or they bought a single-bedroom apartment as a condo for like the same price that most people used to pay for full-size homes back in the day. And that was all pre-pandemic, when prices were like 70% of what they are now and mortgage rates were super low (that's when I bought mine also). I don't know of anyone who's bought a home my age since then (and I'm an older Millennial, it should be mostly us buying homes right now).
        anonymouskimmer 3y ago
- mcguire 3y ago
  FYI: Median personal income in the US in 2022 was about $40,000. https://fred.stlouisfed.org/series/MEPAINUSA646N https://fred.stlouisfed.org/series/MEPAINUSA646N
- anonymouskimmer 3y ago
  I would guess that in any given year a large chunk of the top 1% income earners were also top 1% income earners in other years. The median top 1% income earner, when calculated by the total number of living people who have ever had a top 1% income, may be a person who is only such an earner for 1-2 years. But it's fairly straightforward to see that this median can be reached while the majority of top 1% income earners in any given year are those who have been, or will be, top 1% earners in other years. Basically, for a 30 year period, if a grand total of 5% of the populace will earn a top 1% income in their life, you could have 0.5% earning a top 1% income for the majority of their lives (so using up half of the top 1% slots). Another 0.9% earning a top 1% income for an average of 10 years of their lives (using up an additional 30% of the top 1% slots). And in the 30 year period this would leave only 1/5th of the top 1% slots open to the remaining 3.6%, who would have an average of 1.6 years each of being a top 1% income earner. Any spare slots would go to lottery winners.
  - manwe150 3y ago
    Just to throw a concrete number on this, extrapolating from Wikipedia, about $350k family income will put you above the 1% mark. I assume IPO-windfall would be considerably higher than that and maybe be at least top 0.1% that year ($2M+), which would be a different discussion. So, mathematically, the number must lie between 1% and 30% that will be in the top 1% over a 30 year career. The question that remains is where in that range, which gives a measure of economic mobility for a country.
    - anonymouskimmer 3y ago
      For those calculating based on average house sales prices, I think the current threshold for a 1% income is just under $550k per year now in the USA. https://taxfoundation.org/data/all/federal/summary-latest-federal-income-tax-data-2023-update/ https://taxfoundation.org/data/all/federal/summary-latest-fe... > Income Split Point $548,336
Damogran6 3y ago
'average' people might see it in a year with an inheritance. That was me two years ago. It was a finanically interesting time before the money got placed in more safe places than the checking account. By the same token, it's not hard for a person to be worth $1M+...steady long-term investment in a 401k over the course of your career can get you there. But it's _unavailable_ to the average person. They'll get taxed brutally if they touch it, and when managed correctly, will be divvyd out over the course of their retirement...so having 1M doesn't mean it's liquid.
- sokoloff 3y ago
  > 'average' people might see it in a year with an inheritance. inherited money is not taxable income to the recipient (in the US).
  - boringg 3y ago
    Actually the current rule is not taxable up to $12M but that changes with the whims of politicians and has changed quite frequently.
    - sokoloff 3y ago
      No, it is not income (nor taxable) to the recipient regardless of amount. There is a tax on the estate of the decedent if the estate is larger than the exclusion amount.
      - boringg 3y ago
        I think we are saying the same thing. Not taxable until it is over $12M. The only difference is that I didn't state that it wasn't taxed as income (which it shouldn't be) - it should be taxed as inheritance if it should be taxed at all.
        sokoloff 3y ago
        Its unusual to start an agreement response with “actually” but glad we cleared up my misunderstanding of that phrase. In the context of “an inheritance put me in the top 1% of income”, that’s obviously wrong, which was my point.

manwe150 3y ago

It is only rare in a particular year. If a given person is assumed to only earn that for 1-2 years of a 30+ year career, then 10-20% of all people will be a top 1% earner, by rough math. Still rare, but not nearly as uncommon when looked at that way, if you take the hypothesis that it is commonly a one-time event.

digging 3y ago
If your math adds up, (and it might but I'm not following it at all) -- 10% is still kind of rare. But yeah, not extremely so. For example, I consider myself pretty good at what I do, but I'd likely have to work very hard (for me) to get in that position. My circumstances don't put me anywhere near it.
oefrha 3y ago
You do realize that the vast vast majority of the population never have an IPO-style windfall in a 30+ year career, don’t you? Are we witnessing some sort of fake out-of-touchness as humble brag here?
- cableshaft 3y ago
  Yeah, I've been a software engineer for almost 20 years and I've never had an 'IPO-style windfall' (and don't see how that's going to happen in the next ten years either, unless I join a unicorn startup). Closest I've ever gotten to that is a $10k bonus one year. That definitely doesn't count. I've been an early employee at two startups also, they just didn't pan out. If I don't get that in one of the more well-paid professions, then I don't see how a teacher, or a janitor, or a waitress, etc, would ever get one.
  - digging 3y ago
    > If I don't get that in one of the more well-paid professions, then I don't see how a teacher, or a janitor, or a waitress, etc, would ever get one. Yeah I was entirely limiting the population discussed to SWE as well. Anybody who doesn't work in a core tech role has no chance whatsoever of such windfall, and that includes many people who do work in tech roles.
    - robertlagrant 3y ago
      Of course they do - lots of roles in a business will get pre-IPO share option packages.
  - fzeroracer 3y ago
    This has been my experience too as a software engineer with about 8 years of experience under my belt. A massive windfall like that simply isn't in the cards for me and even being fairly well compensated saving a majority of my money I don't see homeownership in my future. That's been increasingly the experience of friends and coworkers too. I think a fair number of people are either far better off than they think, or just don't see the huge middle class and below squeeze going on.
    - cableshaft 3y ago
      Well, I do own a home. But the only people I know my age that seem to own homes (that don't have high paying jobs) took advantage of something in order to get the money together for the downpayment, like lived with their parents for years rent-free while saving, or their parents just outright provided the downpayment. Or they bought a single-bedroom apartment as a condo for like the same price that most people used to pay for full-size homes back in the day. And that was all pre-pandemic, when prices were like 70% of what they are now and mortgage rates were super low (that's when I bought mine also). I don't know of anyone who's bought a home my age since then (and I'm an older Millennial, it should be mostly us buying homes right now).
      - anonymouskimmer 3y ago
mcguire 3y ago
FYI: Median personal income in the US in 2022 was about $40,000. https://fred.stlouisfed.org/series/MEPAINUSA646N https://fred.stlouisfed.org/series/MEPAINUSA646N
anonymouskimmer 3y ago
I would guess that in any given year a large chunk of the top 1% income earners were also top 1% income earners in other years. The median top 1% income earner, when calculated by the total number of living people who have ever had a top 1% income, may be a person who is only such an earner for 1-2 years. But it's fairly straightforward to see that this median can be reached while the majority of top 1% income earners in any given year are those who have been, or will be, top 1% earners in other years. Basically, for a 30 year period, if a grand total of 5% of the populace will earn a top 1% income in their life, you could have 0.5% earning a top 1% income for the majority of their lives (so using up half of the top 1% slots). Another 0.9% earning a top 1% income for an average of 10 years of their lives (using up an additional 30% of the top 1% slots). And in the 30 year period this would leave only 1/5th of the top 1% slots open to the remaining 3.6%, who would have an average of 1.6 years each of being a top 1% income earner. Any spare slots would go to lottery winners.
- manwe150 3y ago
  Just to throw a concrete number on this, extrapolating from Wikipedia, about $350k family income will put you above the 1% mark. I assume IPO-windfall would be considerably higher than that and maybe be at least top 0.1% that year ($2M+), which would be a different discussion. So, mathematically, the number must lie between 1% and 30% that will be in the top 1% over a 30 year career. The question that remains is where in that range, which gives a measure of economic mobility for a country.
  - anonymouskimmer 3y ago
    For those calculating based on average house sales prices, I think the current threshold for a 1% income is just under $550k per year now in the USA. https://taxfoundation.org/data/all/federal/summary-latest-federal-income-tax-data-2023-update/ https://taxfoundation.org/data/all/federal/summary-latest-fe... > Income Split Point $548,336

Damogran6 3y ago

'average' people might see it in a year with an inheritance. That was me two years ago. It was a finanically interesting time before the money got placed in more safe places than the checking account. By the same token, it's not hard for a person to be worth $1M+...steady long-term investment in a 401k over the course of your career can get you there. But it's _unavailable_ to the average person. They'll get taxed brutally if they touch it, and when managed correctly, will be divvyd out over the course of their retirement...so having 1M doesn't mean it's liquid.

sokoloff 3y ago
> 'average' people might see it in a year with an inheritance. inherited money is not taxable income to the recipient (in the US).
- boringg 3y ago
  Actually the current rule is not taxable up to $12M but that changes with the whims of politicians and has changed quite frequently.
  - sokoloff 3y ago
    No, it is not income (nor taxable) to the recipient regardless of amount. There is a tax on the estate of the decedent if the estate is larger than the exclusion amount.
    - boringg 3y ago
      I think we are saying the same thing. Not taxable until it is over $12M. The only difference is that I didn't state that it wasn't taxed as income (which it shouldn't be) - it should be taxed as inheritance if it should be taxed at all.
      - sokoloff 3y ago
        Its unusual to start an agreement response with “actually” but glad we cleared up my misunderstanding of that phrase. In the context of “an inheritance put me in the top 1% of income”, that’s obviously wrong, which was my point.