Saturday, November 15, 2008

Reasonable, balanced discussion or rant? You decide!

I take this break from my frantic fiction production--over 23K words, almost halfway there--because of this article in Fortune magazine. I realize this is a long article and some or all of you may not want to click through 5 pages to read it all, so I will do my best to summarize it.

First, you may be thinking, Fortune magazine? You read Fortune? Well, my in-laws started the subscription a few years ago when they, perhaps logically, assumed that their son, after completing his MBA, was on the path to junior executivehood (that is apparently not a word) and the subsequent wealth-building such a job would yield. Turns out they didn't know their son very well (and this is totally not a dig at you, Honey), but we actually both enjoy the magazine. What he lacks in career ambition, my husband makes up for in keen quantitative analysis and an appetite for casually acquired knowledge (I refer mostly to the internets). The articles are well-written and interesting. It's usually the 3rd or 4th thing I get to during the week, after Entertainment Weekly and the local yokel newspaper and whatever novel I'm reading. It's become part of my breakfast and lunch reading, when I don't have a novel to read. And right now, I'm not reading any novels because of this whole writing one thing.

Okay, but this article, which graces the cover of the November 10th issue with the headline "Who Pays for the Bailout? You do, of course!" has me hopping. (Or maybe that's the Flea Problem we discovered when we took New Cat to the vet this week.) The gist of the article is that folks (like you, typical Fortune reader--the article actually says this at least once) who make 250-500K are being overtaxed. These folks are dubbed HENRYs, which stands for High-Earners-Not-Rich-Yet. Although they earn more than 97% of Americans, we are encouraged to think of them (us?) with sympathy or even compassion because 1) they are not rich and 2) they are essential to our economic system (so let's not tick them off?).

If you're skipping the full text of the article, you might want to watch this video featuring one of the families from the article. That's problem number one with the article.* This family is great. He's a dentist, she's a part-time pediatrician and part-time stay-at-home mom for their two young children. They're tall, attractive, and African-American to boot. They went through a lot of schooling, sacrifice, and hard work to get to what they themselves describe as a "comfortable" place in their lives. They remind me a little of my own pediatricians who are both moms-of-young-kids (with doctor husbands) and split their hours so they can both work less than full time and be there for their kids. In fact, the couple in the video don't even complain about their taxes. The husband says, Yeah, we pay a lot of taxes, but we'd rather be in this situation than one in which we make less money and pay less taxes. Well, duh. So why is this article being written, again?

Because (surprise!) not all the people in this tax bracket are so reasonable about their proportion of the tax burden. Because you, typical Fortune reader, might be worried about Obama raising taxes on capital gains and, oh yeah, reducing taxes for those who make less than you.

So here's what bothers me the most. The not-so-subtle implication that the hard work of people in this bracket is somehow harder and more essential than other people's hard work. There's also more than an implication that these people make sacrifices due to being dual income households. Here's a quote that had me seeing red (green?): "They're all about the kids: saving for private colleges, paying for day care--practically a must, because Mom and Dad are both working--and providing dance, tennis, or gymnastic lessons. These might be seen as luxury items by middle class workers, but they're absolute necessities to the HENRYs."

Okay, calm yourself, Karen. It's just a sentence. Here goes: most of the people I know use daycare, which could be defined as a necessity (and not a luxury!) for dual-income households earning any amount from the 66% percent of households who earn under $50K right up to the HENRYs and beyond. But, while most of the people I know also provide dance, tennis, gymnastics lessons and may sacrifice to do so, I don't think anyone should refer to them as Absolute Necessities.

These things are choices, not necessities. It's great if you want to send your kids to exclusive private school, but you don't have to. Ditto with socking away money so that your kids can both go to (examples used in the article) Cornell or Duke, but again, that's your choice. It's a choice that costs money. Somewhere in the article it talks about how the HENRYs forgo luxuries to save for their futures. Well, again, duh.

I didn't hear a lot in this article about how the HENRYs are helping others. I'm sure many of them are, but that didn't seem to be important in this article. The authors seemed to consider the fact that the HENRYs are preparing their children by private-schooling and elite-college-preparing the new MasterClass as well as buying and producing economically/capitalistically at a higher level than the other 97% of us to be sufficient to establish their essentialness.

Oh, yes, one more thing. The unwillingness to use the word "rich." Let's take a look at some of the euphemisms used to describe themselves by the HENRYs interviewed in the article: "comfortable" "successful" "well off". Okay, if it makes you better to say it that way. They struggle to define what rich means: "people with golf club memberships" not people who "eat fast food and take [their] kids to soccer." The authors say that "many Americans" would define "wealthy" as having a net worth of around $3 million and/or "if a couple in their 30s, 40s, or 50s has the option to stop working and live on their ample savings . . . they can definitely be classified as rich." Oh, good, something we can finally agree on. I also think MAKING MORE THAN 97% OF YOUR FELLOW CITIZENS is not a bad definition.

Here's the bottom line, there's always going to be a cut off if we continue to use the tax bracket system the U.S. taxpayer has been participating in for years. There are always going to be people on the edge whose modest annual bonus pushes them up to a higher percentage owed to the government at the end of the year. Argue with the system if you want, but if you didn't question it before you reached $250K/year, you kind of sound like a big, fat, rich (yeah, I said it) whiner now.

I am an outside observer, not a HENRY, and a richer American could interpret my interpretation as envy. None of us are unbiased. I grew up squarely in the under 50K bracket, in whatever years' dollars you use. Only in the last year have my husband and I squeaked over that line. Now, I am only ambitious in the sense that I am trying to get a job with health benefits. I admit I don't have the drive of these families in the article. I don't imagine I will ever be a HENRY, unless I, say, write a best-selling novel or my husband hits the top 100 at the WSOP. So, make of that what you will.

I could go on and on, but my daughter has watched enough Disney Channel this morning and I need to sweep/swiffer my crappy linoleum kitchen floor. So, go read the article and tell me what you think.

*I'm going to mostly skip over the fact that the families featured in this article are all, well, families. I'd like to see statistics on this income group, which I suspect isn't any more proportionately burdened with progeny than any of the rest of us.


JG said...

I haven't read the article yet, but your blog post was damn good. In some ways, I feel like all I need to know was that the article's author doesn't want to consider people with an income about the of 97% of Americans "rich." Come on. If we have a roof over our head and enough food to eat, and money to spare here and there for renting a movie and buying a pizza, well, we're rich enough to feel grateful. Why mince words about people with lots more? There isn't anything wrong with being rich -- really, there isn't! But let's not pussyfoot around the fact.

Karen said...

Word verification: bilsiest

Totally. I don't resent what those hard-working doctors and whatever (OK, maybe not so much the guy that worked for United Health) have earned. It just seems that no one (except maybe the richest of the rich or the Old Money crowd) wants to call themselves rich. Or, like, feel like they have to pay their due in taxes. I hope Fortune gets lots of letters to the ed. Mine was way too long--they would never print it!