There is no denying the fact that Americans are rich by world standards. With an average per capita income of ($48,000), America falls in the list of Top 10 in the world. The other nine are Qatar ($88,300), Luxembourg ($80,000), Singapore ($57,230), Norway ($52,230), Brunei ($47,500), Hong Kong ($45,000), Switzerland ($41,800), Netherlands ($40,800), Australia ($39,632) and Austria ($39,100). The source of the data is IMF (2015) and the World Bank and CIA World Factbook gather and validate similar data.
If at birth, you had the mental capacity to choose where you would like to live for most of your life, one of these 10 countries should perhaps be on your list thanks to proper infrastructure which allows for opportunity. Even if you finish off being the most run-of-the-mill producer, you’re still far ahead of much of the world. It is too bad that a lot of us can not choose where we want to grow up and earn a living. As such, it is pleasant to comprehend how we make comparison alongside rest of the world to give us some perspective.
If you and everybody earns an amount of $1 million per year, of course being a millionaire isn’t that big deal anymore. Simultaneously, if everybody earns below $20,000 per year, the level of income for poverty must be redefined. Everything is relative. Let us get started to learn about each other’s incomes.
What the Top 1%, 5%, 10%, 25%, and 50% Make In America?
According to the database of Internal Revenue Service 2010-2014, below mentioned is the data as to how much the top Americans make:
Top 1%: $380,354
Top 5%: $159,619
Top 10%: $113,799
Top 25%: $67,280
Top 50%: >$33,048
On the basis of a prior 1000+ survey study on Financial Samurai in Fall 2014, nearly 80% of readers are in the Top 25% ($67,000+). Good to know that many of you are doing well. We can also see from the table things about equality or inequality, that is to say that the top 1% of tax payers pay 38% of all income taxes yet only have a 20% share of total AGI. Also, the top 50% of tax payers pay almost all of the nation’s federal taxes (97.3%) while commanding 87.25% of total AGI.
Just a little exercise by comparing the top 25% of American income to the Top 10 per capita income countries in the world, you can once again realise how lucky most of us are. Congress constantly holds the nation hostage by bickering over whether to cut $10 billion here, $50 billion there. All we have to do is make those who earn above the poverty line who pay no federal income taxes pay just $43 a month and we’d raise $60 billion a year right there for example!
Let every person contribute to the well-being of our country. We are all in this together! Those who’re just struggling to keep their heads above water, let us offer them a helping hand.
Who Are The 47% Who Pay No Federal Income Taxes?
According to the Tax Policy Center’s Donald Marron, they’re categorized into three main groups:
The working poor. The earned income tax credit and the child credit can assist families who make $50,000 or over pay no taxes or get money back. Nearly 60% of those who don’t pay income taxes do contribute to payroll taxes, implying they must have some source of earned income.
The elderly. An augmented standard deduction for those 65+ years of age, and an exemption on part of Social Security earnings, means that several older Americans pay not any income taxes. Please do take into account though the elderly have paid their dues through years worth of federal taxation during their careers.
The low-income. A family of four which claims only the standard deduction and personal exemptions pays no federal income tax on its initial income of $27000.
From the above you can make out that, being poor or elderly probably implies that they aren’t required to pay net federal income taxes. There is no denying the fact that we are all going to grow old one day, so let us give this group a pass. The senior paid into the system, so let us take care of them. In my view, not any one of you would like to be poor so as to free himself from paying any federal taxes. So, let us give them a pass too.
Children are projected to cost anywhere from an amount of $100,000 to $500,000 from the age group of 1 to 18 years. Perhaps to have multiple children on a low income isn’t ideal. But, how are you going to repudiate passion?
No Reason To Ever Complain
For those who work in United States, you can see from a top down and bottoms up viewpoint you are doing fanciful. If you’re in the bottom 50% of Americans who earn under $33,048 per annum, know that you can earn more if you want to. Half the battle is just moving to a vivacious location such as the San Francisco Bay Area where billions of dollars are flowing in because of technology innovation. You just need to hop on a bus or a plane to be at a place where the action is rather than braving the high seas in order to reach America or ride a horse for three months to get from New York to California.
Two decades ago, I recall making $550 per month working at McDonald’s for $3.65 per hour. With wages 3 times higher now, I would be pulling in $1,650 per month or $20,000 per annum. Heck, tack on driving for Uber for 20 hours/week part-time at $36 per hour and you will make another $2,000 per month and be in the list of top 50% of income earners. There is a complete gig economy out there for freelancers to make additional money after work or freelance full time. Why not take benefit?
For those who’re only working 40 hours per week or less and complaining why they can’t get ahead, you need to really reassess your work ethic and prospects. Anyone can do it, you just cannot be delusional enough to think that you will be able to compete, when everyone in the world who wants to get forward is working more than 60 hours per week and getting paid much less to boot! Take out time to spend online understanding global wages from our biggest competitors in countries of China and India. To maintain our incomes, it is necessary to continuously update our skills.
To get a six figure job is not a big deal anymore. There are ample of them. All you require is the desire, motivation, work ethic and perseverance to get there. Did you have any idea that the San Francisco police chief takes home $320,000 per annum? Besides this, at the time of his retirement, he will receive $200,000 per year as pension for life! It is not only the doctors, lawyers, venture capitalists, bankers, movie stars and athletes who take home healthy amounts of money. Even one of my friend, union electrician by profession who is not allowed to work over 35 hours per week receives $120,000 yearly and gets a $5,000 per month as pension at the retirement age of 55 years. Leave aside the $30,000 yearly he makes doing side jobs with all that free time. There are six figure earners in almost each single industry, which includes the non-profit industry!
Getting back to my point where if everyone receives a million dollars per annum, nobody is rich. Living in San Francisco, it surely feels like most are in the topmost 5% of income earners ($159,619). I am pretty sure that many of the people who live and work in Manhattan, and potentially LA and Chicago feel the same way. The cost of living is costly out here, and that’s mainly driven by high wages. Just combine two income earners with these amounts, and you can actually start understanding why exceeding what the government considers as wealthy ($250,000) is not too problematic.
Thank The Rich For Always Paying More Taxes
The continuous recovery of the economy in the year 2016 will see the top 1% of income earners likely paying an even higher percentage share of overall income taxes than their share of income validates. If things were reasonable, the top 1% would only have to pay 20% of total income taxes as 20% is their total income share. Unfortunately, the rich pay nearly double of what they owe.
On the other side, the lowest 50% who make 12.75% of total earnings just pay 2.7% in overall taxes. However, we have seen above that most of the bottom 50% are old or poor. Just how protesters incorrectly combine the top 1%, who make more than $380,000 with the ultra-rich, who make millions of dollars per annum, is mysterious. Fanatics are also grouping together those earning ~$30,000 yearly with the most destitute!
Inequality is wrong. No matter whether you’re being terrorized by the IRS or being protected by the nation’s military from nuclear war, you need to pay taxes. If you get to drive on interstate highways, you are required to pay taxes. Simply to put, it’s not right to every time go after a group of earners, who already pay the most federal income taxes, if you don’t pay any taxes or aren’t eager to pay more taxes yourself!
Be Your Own Boss If You Want To Be Rich
Today is the age of technology and internet. For those who’re actually interested in unlimited earnings potential, you might also be your own boss one day. With a little cost now, you can get started with your own website and brand yourself online, connect with like-minded people, find fresh job and consulting opportunities, and actually make a healthy living online. Take a look at this income statement example of a friend with a simple personal finance blog.
In 2009, I started Financial Samurai as a hobby in order to help make sense of the financial destruction. After two and a half years, I negotiated a severance, the reason being I was making approximately $80,000 per year from this hobby. These days, I am earning in excess of what I was making as an Executive Director at a large financial firm while working 90% less and having 100% more fun!
With the help of sites like WordPress, you can start with as little as $2.95 per month like in case of Bluehost. Bluehost is optimized for WordPress and consists of service and speed. Turn up with an exclusive and notable domain name, find a free website theme, connect your hosting and you will be up and running in a duration of 30 minutes. All of us should begin something on the side. The crucial part is to adopt a profusion mentally and just try. The things you do at present could change your life forever! Visit my step-by-step guide on how to start your own website in under 30 minutes duration.
Track Your Net Worth For Free
Tracking their net worth is the other action item done by the wealthy people. And it seems right too since you can only truly augment your wealth if you recognise where all your money is going! Sign up for the web’s #1 Free wealth management tool, Personal Capital, in order to get a better grip on your finances. Since 2012, I have been making use of them and have made much prudent financial decisions from that time. My pockets were getting less by $1,700 per annum in fees, which I had no clue was paid by me.
Once you link all your accounts, make use of their Retirement Planning calculator that pulls your real data to provide you as pure a valuation of your financial future as likely using Monte Carlo simulation algorithms. Input numerous expense and income variables in order to see how you stand. Your goal should be to get to a 90% probability of accomplishing your goal. Try it out yourself free of charge. Your future is too important not to take it that serious. Clearly, you would not like to end up old and not have adequate money for the reason that there is no reverse button!