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Even in New York City, $250,000 is rich

income_distribution_in_new_york_city.png

Arguments over income taxes tend to get bogged down in arguments about who is really "rich." And what you hear then is that rich in Ohio and rich in New York City are different. But how different?

According to the Census Bureau, only 6.3 percent of New York City's households pulled in more than $200,000. So if you're a household making $250,000 or more, you're easily in the top 5 percent -- even in New York City.

Now, it's true that those people might not "feel" rich. There's lots of stuff to buy in New York City. It's pretty easy to construct a lifestyle where you spend $250,000 a year. In Columbus, Ohio, only 1.3 percent of households make more than $200,000, so there's less stuff for them to buy and fewer rich people for them to try to keep up with. But what you buy and whether you try to keep up with the people in the penthouse is a personal decision, not an objective economic necessity. The fact of the matter is that a household making $250,000 in New York City is making more than pretty much anyone else in the city. Being rich is more than just a feeling.

By Ezra Klein  |  September 10, 2010; 11:45 AM ET
Categories:  Inequality  
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Comments

In Boston too http://www.youtube.com/watch?v=IcsVPis1iNs

Posted by: bdballard | September 10, 2010 11:52 AM | Report abuse

NO.

Just in NYC anything under $200k is POOR in relative terms to say Memphis TN.

Posted by: visionbrkr | September 10, 2010 11:57 AM | Report abuse

Ezra's article on Social Security was superb. Having said that:

It's amazingly bad politics for liberals to get drawn into discussions of what makes someone "rich." It's even worse when we raise the topic ourselves. There is never a serious reason to have that (utterly pointless) discussion. But conservatives love to generate that discussion, because it's bad politics for us.

Posted by: bobsomerby | September 10, 2010 12:13 PM | Report abuse

1/20="pretty much anyone else in the city?"

Posted by: stantheman21 | September 10, 2010 12:30 PM | Report abuse

@bobsomerby: I agree with you. I mean, if someone that makes $250k doesn't feel rich, that's their problem. Statistically they are rich, bottom line. I, personally, almost have to feel sorry for someone that makes that much money and doesn't feel rich. But hey, I guess that's why they make a lot of money and are motivated to make more: because they want to feel rich (at some point I guess). I mean, at what point do people that are statistically rich actually feel rich? 500k, 1mil, 10mil? Then I'll really know when I'm actually rich (and not statistically rich).

Posted by: nickthap | September 10, 2010 12:34 PM | Report abuse

also, you could have just linked to a cost of living calculator. indeed, living in columbus is much cheaper not just because "there's less stuff for them to buy." (A salary of $250,000 in New York, New York could decrease to $127,998 in Columbus, Ohio)


indeed, this might have been this blog's worst posts i've read...

Posted by: stantheman21 | September 10, 2010 12:36 PM | Report abuse

*one of the

Posted by: stantheman21 | September 10, 2010 12:38 PM | Report abuse

I don't really care if someone making $250,000 doesn't feel rich, even though he/she definitely is. The simple point is just that those few lucky people in that income segment make a lot more money than the vast majority of everyone else, and therefore if we need to raise taxes it is wise to look for the money where it is located. Why is that hard to understand?

Posted by: AuthorEditor | September 10, 2010 12:39 PM | Report abuse

Yeah, but uhh... something something trickle down... rising tides lift boats... ummm... i can haz tax brake?

Posted by: KBfromNC | September 10, 2010 12:43 PM | Report abuse

Stantheman:

So are you suggested that Income Taxes should be indexed to someones's local cost of living? So that someone, for example, living in NYC making $250k is at the same marginal rate as someone making $127k in Columbus? That'd be a)impossible to enforce (making Columbus America's Isle of Man) and b)make the tax code even more complex. If the $250k New Yorker feels so burdened by the cost of living there, they can move to Columbus.

Posted by: nickthap | September 10, 2010 12:47 PM | Report abuse

1. I'm not so sure you shouldn't be using families, and not households.

2. In the northern Virginia suburbs of D.C., where the cost of living is extremely high, over 20% of families earn more than $200k. Are you saying that more than 20% of northern Virginians are "rich"?

3. "There's lots of stuff to buy in New York City.... In Columbus, Ohio ... there's less stuff for them to buy" Huh?

Posted by: ostap666 | September 10, 2010 12:49 PM | Report abuse

ostap666:

Northern Virginians are rich, compared to the median.

Posted by: nickthap | September 10, 2010 1:03 PM | Report abuse

All you need to do is buy a house in NYC and trust me, that's where all your disposable income will go.

Posted by: gorbachev | September 10, 2010 1:06 PM | Report abuse

Can we give up deciding what constitutes "rich"? It's meaningless. It would be more useful to recognize that there are people/families with a high annual income, and people/families with a high net worth, but those two categories don't always overlap.

As repeatedly recognized, it's very easy to make $250K in NYC, WDC, or any other major metropolitan area and live the same basic, comfortable middle-class lifestyle as someone in the exurbs making $90K. Both are sending their kids to decent schools, purchasing consumer goods, and living in a good home. The city dweller is just paying a lot more for these items.

But at the same time, neither is saving vast sums such that they are likely to ever be a high net worth individual/family, and it's a high net worth that most people have in mind when you talk about who is "rich."

(This distinction does nothing really for tax policy, outside estate taxes, but I thought I'd throw it out there.)

Posted by: JEinATL | September 10, 2010 1:08 PM | Report abuse

Hey, how people spend their money (or make personal choices such as sending their kids to expensive private schools) is not anyone's problem but their own. If you make >$200k, but bought a million dollar house, then yeah, you're not gonna feel rich I guess because you can't go to the Hamptons every weekend. But you could rent an apartment in Brooklyn and be saving your money.

Posted by: nickthap | September 10, 2010 1:15 PM | Report abuse

JEinATL:

I agree, this is kind of a pointless exercise. But this really does affect how people view the upcoming expiring tax cuts. If those who make >$250k can convince those of us who really are middle class that Obama wants to "raise" taxes on the "middle-class" (i.e., those that make >$250k), then people who aren't "rich" will feel that their taxes are going to go up. Because they're raising taxes on the middle-class.

Because people that make $250k aren't rich, they're middle-class. Just like me.

The whole thing of denying that people that make >$250k aren't rich is just another ploy to keep their taxes lower than they should be.

Posted by: nickthap | September 10, 2010 1:25 PM | Report abuse

"According to the census..." The census has statistics on incomes only because of what people voluntarily say they make. They could be lying. Why not use IRS stats to determine who makes what where?

Posted by: rjewett | September 10, 2010 1:28 PM | Report abuse

I think it's commonly known that most people "feel" they're middle-class. Lower-income folks feel they have more than they do, and higher-income folks feel they have less than they do. Hell, back in the old days at least rich people looked like they were rich (Louis the 14th, etc). Ever seen a picture of the King of Spain? He looks like he could be your next door neighbor in Columbus.

Posted by: nickthap | September 10, 2010 1:42 PM | Report abuse

I think Ezra is confusing "keeping up with the Joneses" and "cost of living." Ezra seems to think that this discussion comes down to New Yorkers saying they need to wear Guccis to be respected, whereas Clevelanders don't. I don't think that's what the New Yorkers mean.

My friends who moved here to Cleveland from New York always point out that they can get a much nicer, more centrally placed apartment here for $1,000 a month than they could get for $4,000 in New York. (Similarly, my best friend from law school and I recently bought houses. I bought a 2500 square foot house on two acres ten miles from Cleveland for half the price of his townhome in Alexandria).

The partnership I work for operates in many states, and the partners have to pay state income tax for every state we operate in. New York taxes are by far the most hated.

And that's just the big ticket items - not the cost of groceries, getting lunch, etc.

I don't know what "rich" is - I'm not even saying that $250,000 in New York isn't rich - I just don't think Ezra made a very reasonable argument here.

Posted by: jesmont | September 10, 2010 1:52 PM | Report abuse

Yes, 20% or more of people in Loudon or Fairfax county are rich, wealthy, upper class, however you want to define it. People who are making $200k in a large city are not living the same lifestyle as someone making $125k in the exurbs of the south or midwest, but a lot of the difference is the amenities and culture that someone is paying for by living in a particular type of urban, suburban or exurban community. Someone's consumption choices aren't going to change a lot if they stay in a NYC and their income goes from $100k to $250k, but the fact that they can spend that much on housing means that they are rich.

Similarly if you move to Northern VA and get a job with a contractor with double your previous salary, just because your consumption choices haven't changed doesn't mean you aren't rich. Rich suburbs are all around major US cities and people who choose to spend that much on a house are paying a really high premium for being in that community.

Posted by: tmorgan2 | September 10, 2010 1:55 PM | Report abuse

I well remember Michelle Obama bellyaching about the cost of repaying student loans she incurred in return for the best education in the world, and whining about paying for music lessons for her kids.....and she made $300,000 plus per year. Wonder how rich she felt?

Posted by: bgmma50 | September 10, 2010 1:58 PM | Report abuse

Yes, it costs more to live in New York City, but in exchange you get to live in NEW YORK CITY.

Apartments in Anacostia, DC are cheap compared to Dupont Circle, but the trade-off is that I'm living in ANACOSTIA.

Posted by: lol-lol | September 10, 2010 2:20 PM | Report abuse

Why can't we get histograms that start at a baseline of ZERO? This one is particularly egregious, the bottom is 5% and the top is 30%, adding in the 0-5% grid would not effect readability at all. The $200,000+ percentage is small but the chart makes it seem to be less 2% at a casual glance, when it is really 6.3%.

There is no reason to compress the scale in this instance, and doing so makes it look like you are trying to distort the data.

You can do better than that.

Posted by: BottyGuy | September 10, 2010 2:32 PM | Report abuse

nickthap: no, i dont think we should index income taxes to COL, and i do agree that people make choices.

i do, however, think that this blog post was pretty empty, both in the framing (why not discuss COL?) and substance (what the hell does it mean that there isn't as much stuff to buy in ohio?). if ezra really cared about his question "but how different," then i just don't follow the logical links here. speaking as someone whose lived in low (the midwest), high (san francisco) and really high (london) COL areas, the notion that making "250,000 in New York City" means you are "rich" seems a strange way at looking at things.

as to larger issues of why the obama adminisitration is vote-buying by raising taxes only on the "rich" and the relative inefficiency of such taxes given the income elasticity of high earners, well i'd imagine that we have both ideological and policy-wise differences (and all the more reason for a progressive consumption tax IMO)

but that really wasn't what i was getting at...i just found this post underwhelming

Posted by: stantheman21 | September 10, 2010 5:19 PM | Report abuse

So a salary over 200k is 5x more common in NYC, and you still want to say it's all rich. That's a serious logic fail. See what salary you need to be at to be in the top 1.4% in NYC...

Most people are probably thinking Manhattan, not NYC as a whole, but that's neither here nor there. Another problem with your logic is that the issue comes with dealing with competition on a bounded resource (real estate) when you have 4,227 people in Columbus over 200k and 212.6 sq. mi. of area and 192,207 people in NYC over 200k and Manhattan is only 23 sq. mi. (NYC as a whole is about 303 sq. mi.) The buying power of a $ is greatly reduced in NYC. You can't deny that. Apartment price in terms of sqft/month is vastly different.

It's not just rich people that matters for. A person make $50k is vastly poorer in NYC than Columbus.

Also, like bottyguy said, start your axis at 0 unless you want to look deceptive- which you absolutely are.

This is probably among the least useful things you've ever written.

Posted by: staticvars | September 11, 2010 12:34 AM | Report abuse

Also, look up the stats on New York County-- 16.4% are over 200k. That's 11x as frequent as Columbus. Not the same...


http://factfinder.census.gov/servlet/ADPTable?_bm=y&-context=adp&-qr_name=ACS_2008_3YR_G00_DP3YR3&-ds_name=ACS_2008_3YR_G00_&-tree_id=3308&-redoLog=true&-_caller=geoselect&-geo_id=05000US36061&-format=&-_lang=en


Posted by: staticvars | September 11, 2010 12:47 AM | Report abuse

If someone in Manhattan feels poor making 250k, they are free to take the train for an 1hr 20min to Dutchess County and enjoy cheap suburban living. They don't have to quit their job or anything.

Of course they have to accept not enjoying the museums, restaurants, clubs, etc. of Manhattan.

So yes, if you make 250k in Manhattan you are rich.

Posted by: sp6runderrated | September 11, 2010 6:48 PM | Report abuse

Here's a question for libs that usually causes their heads to spin while spewing green liquid, non-answers or silence.

At what HIGH tax rates does the increased revenue stop the gov't from spending all & MORE of what it takes in?

Waiting...

Posted by: illogicbuster | September 12, 2010 9:16 AM | Report abuse

Ezra, I would like to make a request of you:

When discussing tax brackets such as this, please do not use the term "household" when you really mean "married, filing jointly". A household can consist of a single person.

In fact, the best approach would be to state both the single (which I believe is $125k) and married filing jointly incomes for the proposed rate changes.

Thank you.

Posted by: jnc4p | September 12, 2010 10:48 PM | Report abuse

Very few people have to live in NYC. Some rich people who can afford it choose to.

Posted by: tl_houston | September 13, 2010 9:00 AM | Report abuse

As usual, Ezra indulges in some high-profile, gold-plated one-dimensional thinking. Seems good, looks good, but no good.

Posted by: jkilmer | September 13, 2010 9:55 AM | Report abuse

Ezra, how much do you make and are you "rich"? How much do other JournoListers make? Fill us in.

Posted by: frankensundae | September 13, 2010 8:30 PM | Report abuse

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