Who Is "Rich?"

May 24, 1999

For decades and even centuries, political demagogues have played the poor against "the rich" -- as in the slogan, "Let's tax the rich!"

But just what does it take to be considered among the rich these days? Not as much as one might suppose.

  • If the incomes of all the people in an American household add up to $72,000, that is enough to classify them in the top 10 percent of all households -- not a considerable amount if that means $36,000 apiece for a working couple.
  • If all the incomes in a household add up to $127,000, the inhabitants are classified among the top 5 percent of household earners -- at $63,500 each, about what a midlevel civil servant would make.
  • The average net worth of households headed by someone 65 or older is more than 10 times the net worth of households headed by someone under 35 years of age -- reflecting the fact that people have accumulated some money in a pension fund, paid off their mortgage and put something aside for retirement and future medical needs.
  • Experts point out that the people who really get hit hard by taxes that are supposed to be soaking the rich are ordinary people who happen to be earning more than they did in years past and more than they will be earning in the future.

Conversely, those in the lowest 20 percent of the income brackets are primarily young people who are more likely to rise to upper income brackets than they are to stay at the bottom.

Source: Thomas Sowell, "Income, Taxes and Demagoguery," Washington Times, May 23, 1999.

 

Browse more articles on Economic Issues