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How do you define Wealthy?

As 2010 draws to a close and POTUS/Congress have allowed the Bush Era tax breaks to continue, I wanted us all to pause and reflect upon the definition of Wealth.

How do we define ‘wealthy’? is it just annual adjusted income, or is it something more? Who has more wealth—a lawyer in Monterey, Calif., who has an adjusted annual income of $250,000 per year and who paid $700,000 for a modest house while picking up the full tab of $50,000 a year for his daughter at a private liberal-arts college, or a Project Manager in Harrisburg, PA, with an adjusted annual income of $100,000 per year, living in a house that is twice the size of the one the lawyer mentioned above lives in out in CA, but has a cost level that is less than half; both in terms of mortgage and taxes? With a son attending a State University on Financial Aid that is need based?

By the same token, defining ‘poor’ may be just as hard. In this era of cheap electronics, even those at poverty level can have a mobile phone through companies like Tracfone, Net10, Virgin Mobile, or Smart Talk inexpensively. Some more expensive models have a built-in camera, web browser and e-mail/texting capability—all for $40 or less per month. How about a portable music player with literally thousands of songs on it for around $50? Those of the middle class level and below have far better access to many items that were once luxury items than did the super-wealthy just two decades ago.

I certainly have a more elevated level of ‘status’ (for want of a better word) than my single mother (father died when I was young) did, but I work almost two and one half times as many hours to earn the income (Salary) to have those items. Ironically, my salary is also two and one half times what my mother made during her last year of employment—-which includes overtime pay. However, if I adjusted her up to 2011 inflation rates, she would actually exceed me by about 18%. So, am I really more ‘wealthy’ than she was? By income, no..by other things; perhaps.

Many in our government, and indeed many people on the street believe that income is the single factor that should determine who is ‘wealthy’. Never mind that $250,000 per year has less buying power in Monterey CA than it does in Swayzee, IN—a very small rural community. But, the magic ‘number’ for President Obama and many members of the government (and thanks to the media, ,the proverbial ‘man on the street’ too) believe that $250,000 is some magic number that defines ‘Wealthy’.

Should adjusted annual income alone trump all other considerations when the costs of living vary widely by region, and eligibility for billions of dollars in federal and state subsidies is predicated on income levels? It’s been said that somewhere around 5% of the wage earners in this country account for around 60% of the taxes, and that numbers approaching 40% of all wage earners are ’tax exempt.

A few days ago, Slashdot published this blurb on how inexpensive renewable energy was powering villages in Africa (sadly, the larger article requires a subscription). There is the OLPC project, with the hope of a cheap laptop for even the poorest of the poor in the world at large.

Will Technology help us finally blur the line between ‘wealth’ and ‘poverty’? Will it empower a fair playing field?

or will lables like ‘poor’ and ‘wealthy’ still continue to be bandied about; with a forced expectation that a certain adjusted income level makes one ‘wealthy’ and that through forced concessions, those of that income level will need to give up to help pay for everyone below that level; be it Health Care Costs or even just transportation on public conveyance; without regard for their own cost of living?

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Information This article was edited after publication by the author on 31 Dec 2010. View changes.
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Poor trade by Occams

Economists consider that “wealth” is not about income or expenses. It is about assets and their value.
I agree with you that Governments generally don’t target wealth for taxes and other policy, but income. I think the reason is probably pragmatic. It can get at your income before you do. They don’t care about your expenses because they expect you yo adjust your lifestyle to what you can afford after taxes. Before-tax income is just an illusion.

You are talking about another economic concept: disposable income. That is the income amount left over after essential needs are paid for

The person with the higher disposable income is probably better off because he can satisfy more of his unnecessary desires. But then that comes down to expectations, life style, living standards and so on.

>Will Technology help us finally blur the line between ‘wealth’ and
‘poverty’? Will it empower a fair playing field?

I doubt it, because of the human factor. Many people have no concept of saving for a better future.
More relaxed cultures would regard you as being poor – time poor. You are trading money for your time. Which is essentially a poor trade because money is replaceable. You are trading precious time with your young family for money to give them a better life, and youth for old age.

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