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I thought that we are supposed to move up in social class with each generation.
As in, if your parents are working class, you should make it to lower middle class. But the issue is that not everyone follows this.
My issue is that all my life my parents have been middle class, but after the recession my parents dropped to lower middle class. So, which class should I reach?
There is no "class" and you will do whatever your choices make your future into.
The middle class will go away because to pay for all of the social welfare programs, the President and Congress are going to have to keep lowering the bar to define who is rich so they can tax them more. Pretty soon $100,000 will be the new rich. Then it will drop to $75,000. You'll see.
Everybody's is in favor of the rich paying more or doesn't care if the rich pays more until they become the "new rich."
The middle class will go away because to pay for all of the social welfare programs, the President and Congress are going to have to keep lowering the bar to define who is rich so they can tax them more. Pretty soon $100,000 will be the new rich. Then it will drop to $75,000. You'll see.
Everybody's is in favor of the rich paying more or doesn't care if the rich pays more until they become the "new rich."
The poor have 3x as many children as the middle class.
$80K qualifies for the new means tested welfare program (Obamacare)
AMT hits people making $40K now. Remember AMT was for the "rich" when it got implemented ?
We don't even go by FPL anymore. The programs now all start at 133% and upwards of FPL.
There's your "middle class" decline.
As long as the government subsidizes a middle class lifestyle the illusion will continue.
Take away the over $1 trillion in means tested programs and you'll get a true picture of what America looks like.
Sure, just like Bill Gates, Steve Jobs, and Larry Page would have achieved the same if they had grown up in poor families, right?
Bill Gates got to where he was by spending hundreds and hundreds of hours in computer labs when no one else was. He put in time and effort to build something. He didn't sit around complaining about being a 'rent slave' while doing nothing to improve himself.
There is a lesson to be learned by that, isn't there?
The numbers are a bit dodgy, but the message is decent. Taxation is a barrier to wealth creation, and wealth is about ownership, not income. As far as tax rate in the 50s vs now, Hauser's Law says the rate is irrelevant. From 1935 to 1982, the top marginal rate was somehwere between 70-90%, but Americans paid ~17.5% of GDP in tax. The top marginal rate since 1982 has been between 31-39%, and Americans have paid ~17% of GDP in tax. All taxation is a barrier to wealth creation because every dollar you have taken by the government is a dollar that could have been used more productively (and all the "government am teh awesomez" apologists can spare me, the government does nothing as productively or efficiently as the private sector), but people only accept a certain level of taxation regardless of the rate. Behavior changes and creative ways to receive income are why the tax rate and the actual tax collected don't really match...ever.
But taxes are a generally negative thing. What really holds people back from increasing their ownership of tangible wealth? The shift towards instant gratification and "easy money" of making payments. Take the 30 vs 15 year fixed mortgage. Most people get 30 year loans because the payment is lower. But on average, a 15 year mortgage results in paying 1.5-1.75x the mortgage amount, and a 30 year pays 2.25-2.5x the mortgage amount. Use a $200k mortgage. In 30 years @ 5%, Homeowner_30 pays $461k in principal and interest. In those same 30 years, Homeowner_15 pays $322k in principle and interest. But after year 15, Homeowner_15 can take the money that used to be a mortgage payment, and invest it. Let's say they do that, and get an annual 3% return. When both hit 30, they both own a house, but Homeowner_15 also has ~$400k in invested wealth...all because Homeowner_15 chose a higher monthly payment by roughly $500.
Apply the thinking to everything and then add in the exacerbating effect of taxes, and between Uncle Sam's various forms of forced tribute and our own "instant gratification, make payments" choices, most people simply choose to not accumulate wealth, and income has surprisingly little effect for like 99% of the population, because income simply changes how much interest laiden debt you're capable of accumulating to make sure you save very little. Folks with low incomes accumulate lower levels of debt, but everyone in this instant gratification culture makes sure they save very little, minus those wise few who save as much as possible.
Income stagnation is way behind taxes and our own culture for the why of the barrier to wealth creation.
Bill Gates got to where he was by spending hundreds and hundreds of hours in computer labs when no one else was. He put in time and effort to build something. He didn't sit around complaining about being a 'rent slave' while doing nothing to improve himself.
There is a lesson to be learned by that, isn't there?
Gates, Jobs, Dell…all of them started early, started at the bottom and spent countless hours early in life.
None of them were "handed" their wealth.
Wow, you don't get this at all. No wonder you're off in la-la land.
The percentage of people who make enough to reach that level is very small. Claiming that our current mid-40's is not a deterrent is laughable to the extreme. Many will not put in the effort to even reach that. In my case, theft of 25% is enough for me to say "forget it". I have no wish to feed the corrupt leeches, much less put out effort to give them larger bites.
You having fun in Pauli-Land? Do you even work to earn a living?
Many physicians including myself have actually been in and experienced these positions. And I can tell you from personal experience, that 30% rates are not high enough to prevent docs from pushing and coaxing up their income. Because we have, and I've done it many years. Physicians in many cases like my own are in a position to gain the additional income they desire by altering their practice. Longer hours, more patients, more complicated patients, more procedures, more hospital and consultation work and in house testing can be there essentially at the docs beck and call, or not. Today for me it's not if the effort is more than minimal. And I surely would not put in significant effort if I paid out 75% of earnings as tax.
But as we speak Medicare has a new program for primary care docs to gain income with little physical input on my part. I probably pay on the order of 30% tax on my income. And you can bet that I will be grabbing for all those extra new Medicare bucks while they are hot!
Bill Gates got to where he was by spending hundreds and hundreds of hours in computer labs when no one else was. He put in time and effort to build something. He didn't sit around complaining about being a 'rent slave' while doing nothing to improve himself.
There is a lesson to be learned by that, isn't there?
??? Bill Gates was a subsidy kid, geez, did he ever pay one dollar in housing rent in his life? And even I spent hundreds of hours in computer labs.
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