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Old 12-30-2010, 09:16 AM
 
24,714 posts, read 26,785,278 times
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Quote:
Originally Posted by user_id View Post
You never got a refund for FICA taxes, what would be the point of that? If you are self-employed you can deduct 50% of the FICA taxes, but that doesn't change the fact that you are paying ~15% in FICA taxes. The reason for the 50% deduction is to give the self-employed person equivalent tax treatment as the employed person. The employed person doesn't pay taxes on the employers contribution to FICA taxes (which is of course half of them), just the 50% they contribute. That is to say, the 50% deduction prevents you from playing federal income taxes in addition to the FICA taxes on half your FICA taxes.

Anyhow, self-employed people pay ~15% in FICA taxes, not 12% as you stated. I'm not sure why you feel the need to call me names for correcting something you stated.
But the point is, they get some of it back, so they're not paying the full 15%.

You just love being argumentative & obtuse, don't you?

 
Old 12-30-2010, 11:45 AM
 
Location: Pikesville, MD
5,229 posts, read 11,481,696 times
Reputation: 4846
Quote:
Originally Posted by Keim View Post
You are correct, it is somewhat arbitrary. That's why it is a working definition. I could easily say it is the top 5%. Lets stop flapping our gums and look at some real numbers. According to the census (Statistical Abstract: Income, Expenditures, & Wealth, Family Net Worth Mean and Median) in 2004 the mean for ALL households was $448,200, median was $93,100. I am certain the significantly wealthy skew these results high (poor is poor, but their is no upper limit on wealth).
Something else, as an FYI for this discussion about the "Rich." Other than a few at the very top, the "rich" are in a constant state of flux, and it's not the same actual individuals year to year. It might be a similar NUMBER of individuals each year (and the census sort of covers that) but the actual individuals that make it up are rarely the same. Some get righ on real estate holdings, then lose that welath a following year. A one time lottery winning can do it. It might be a good investment year, or it could be a year that a net worth of over $2mil in investment assets vanishes in businesses going bust or individual stocks falling. A person may work for a while to get rich, and put away savings, then a bad business deal not only wipes out normal assets, but savings, as well.

Just something to think about when deciding who "the rich" are.

Carry on.
 
Old 12-30-2010, 12:09 PM
 
Location: Moscow
2,078 posts, read 2,903,275 times
Reputation: 2523
This has been an interesting exchange, UserID. Seems to me that we have both adequately expressed our viewpoints:

I believe most people would consider someone w/$1m to be rich; and have backed my opinion with US Census data.

You disagree, and do not like the data provided (You raise a good point about the data. I have no way of knowing distribution based off of mean and median. However, based on the data provided, it would truly be an odd distribution for any more than 5% or so to be in the $1m plus camp.). You have not provided any data to support your opinion.

Unless you have some hard data to add, it seems we have reached an impass.

Quote:
Originally Posted by user_id View Post
Right you contend that, but none of the information you just cited adds anything to the discussion. You are citing a mean and median, yet its the distribution that matters. But drawing some line at some income level is arbitrary, you agree, yet continue with this line of reasoning. The important question is what the particular amount of money affords the person and here the type of assets matter a lot. Someone with $1 million net worth minus home equity and retirement accounts is much different than someone with $1 million in net worth including retirement and home equity.


I'm not interested in redefining what is meant by "rich", the word already has a particular, if perhaps vague, meaning. Being able to afford a comfortable retirement is not what most are going to consider rich, they have something much more in mind.

Regardless, the millionaire title is from a period where the dollar was worth far more than it is today and most people had pensions, etc instead of 401(k)s. By the time someone in their 30's retires a million is going to be very common place.
 
Old 12-30-2010, 02:15 PM
 
Location: Conejo Valley, CA
12,476 posts, read 16,966,907 times
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Quote:
Originally Posted by mysticaltyger View Post
But the point is, they get some of it back, so they're not paying the full 15%.
Right that is your point and its wrong. They don't get any of their FICA taxes back, rather they don't have to pay federal income tax in addition to the FICA taxes on 50% of the FICA taxes. I have no idea why you think that means they don't pay the full 15%, they do, they just don't have to pay additional taxes on 50% of it.

If being accurate is being obtuse then I'm all for being obtuse, after all having the correct understanding of taxes is important. One of the best ways to "save" is to lower your tax burden, not going to happen if you have an inaccurate view of the tax code.
 
Old 12-30-2010, 02:23 PM
 
Location: Conejo Valley, CA
12,476 posts, read 16,966,907 times
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Quote:
Originally Posted by Keim View Post
I believe most people would consider someone w/$1m to be rich; and have backed my opinion with US Census data.
The problem of course is that the Census data does not "back up" this opinion, we are talking about the meaning of a word and how people perceive that word. The Census data is largely irrelevant.

Furthermore, if you are going to have relative definition then it also needs to be relative to location. This is yet another reason why I think excluding home equity and retirement accounts better captures matters. Owning even a modest home in San Fransisco is going to push your net worth towards a $1 million even if you have zero other assets. Would anybody seriously consider this person rich? Probably not.
 
Old 01-02-2011, 05:28 PM
 
12,671 posts, read 20,487,421 times
Reputation: 2618
Quote:
Originally Posted by user_id View Post
The problem of course is that the Census data does not "back up" this opinion, we are talking about the meaning of a word and how people perceive that word. The Census data is largely irrelevant.

Furthermore, if you are going to have relative definition then it also needs to be relative to location. This is yet another reason why I think excluding home equity and retirement accounts better captures matters. Owning even a modest home in San Fransisco is going to push your net worth towards a $1 million even if you have zero other assets. Would anybody seriously consider this person rich? Probably not.
Yes, if you don't own anything on the home and its worth $1 million and this person lives paycheck to paycheck then yes, this person is still a millionaire.
 
Old 01-02-2011, 11:00 PM
 
Location: Moscow
2,078 posts, read 2,903,275 times
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Quote:
Originally Posted by Texas User View Post
Yes, if you don't own anything on the home and its worth $1 million and this person lives paycheck to paycheck then yes, this person is still a millionaire.
So true. That cash poor, real estate rich San Franciscan could move to an area with a lower cost of living, and live fairly comfortably.

Money buys options-even if it is only the option to move where your money will go farther.
 
Old 01-02-2011, 11:13 PM
 
Location: Moscow
2,078 posts, read 2,903,275 times
Reputation: 2523
Quote:
Originally Posted by user_id View Post
The problem of course is that the Census data does not "back up" this opinion, we are talking about the meaning of a word and how people perceive that word. The Census data is largely irrelevant.

Furthermore, if you are going to have relative definition then it also needs to be relative to location. This is yet another reason why I think excluding home equity and retirement accounts better captures matters. Owning even a modest home in San Fransisco is going to push your net worth towards a $1 million even if you have zero other assets. Would anybody seriously consider this person rich? Probably not.
In CA, where the avg per capita income is $42k (http://www.dof.ca.gov/HTML/FS_DATA/LatestEconData/FS_Income.htm)? (broken link) And San Francisco home ownership rates hover around 58%, some of the lowest in the nation (http://www.census.gov/hhes/www/housing/hvs/annual06/ann06t14.html)? (broken link) If that house is paid off, I certainly would. Not very rich, but rich. In the land of the blind, the man with one eye is king.

As I said elsewhere, if nothing else money buys you options. This person has the option to sell that million dollar house, and go somewhere cheaper.
 
Old 01-02-2011, 11:18 PM
 
Location: Moscow
2,078 posts, read 2,903,275 times
Reputation: 2523
Quote:
Originally Posted by user_id View Post
...we are talking about the meaning of a word and how people perceive that word.
Actually, when you talk about the meaning of a word and how people perceive it, you are talking about two separate things. You are referring to denotative (dictionary) and connotative (what people feel a word means, taking into account personal biases, context, etc) meanings.

Thus, I can argue that $1mill. fits the meaning of a word, and be accurate denotatively. And, you can argue the opposite and be right from your connotative interpretation.

I KNEW that communications degree would come in handy someday.
 
Old 01-03-2011, 01:13 PM
 
12,671 posts, read 20,487,421 times
Reputation: 2618
Quote:
Originally Posted by maschuette View Post
I know of a brain surgeon who used to make 10K an hour. After he quit working he went broke and is now living off of social security alone. It is not how much you make, it is how much you save. Granted, if you can make more then you can save more, but you still have to save. People who are frugal now can save even more later. Like the Millinaire Next Door says, You cant just play a great offence, you also have to play defense.
Right, I see folks bragging about how much they make and no one talks brags on how much they save.
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