26196, Most people in the top 5% are the "Working Rich"|
Posted by M2, Sat Mar-05-05 08:56 PM
To be in the top 5% income wise just means you have a household income over $125k/yr and so in terms of sheer numbers, a lot of those people are just upper-managers at big companies and/or Executives, own privately held businesses, are consultants, Lawyers, Doctors, Accountants, etc.
Most of them aren't "Rich" ($1 Million in Liquid Assets) but having that kind of income will enable them to either become rich later in life and/or has them close to being rich now.
Most of the ways these people will become wealthy relates to being able to Invest, Save more than the average person, buy properties in areas with higher appreciation, receive a greater tax break from deducting the interest on their home since their homes are more expensive and they have a higher top marginal tax rate (Tax Deduction = interest X top marginal rate) and finally contribute more to their retirement funds.
Thing is - the majority of their income comes from a job or their share of the profits from a business they own and it's taxed just like regular income. Plus, people of all income groups build wealth via these methods and can take advantage of the tax benefits.
The difference is that the higher income folks have greater capacity to take advantage and/or more education so they are much less likely to leave money on the table by not taking advantage of various opportunities.
This also means that they're paying more taxes via having more income and wealth streams to be taxed, still - the impact on their finances is MUCH less in terms of it hurting their ability to take care of basic needs and save for the future.
Which nullifies Fox's little discovery of elementary school math.