How much do you have to earn to be classified as "rich"?
There’s a hotly contested issue being fought over on Capitol Hill these days, and you’ll never guess what it’s about: money.
At the heart of the squabble lies tax cuts still lingering from the George Bush administration. As they stand, in essence, the richest of rich Americans are taxed similar to what you or I would pay in penalties, were we from south of the border. This is, in essence, not a responsible tax system.
So then in rides old Barry Obama on his horse named Equality and he wants to shake things up. Only, what changes does he make? How does one man tax the “rich” more severely from the rest when we’ve never really defined what “rich” is?
Certainly, this is one question too big for this space and an answer that’ll elude anyone that goes looking – what, exactly, is rich?
For some, it’s security. For others, it’s gobs of cash. For you, it might be family. Respect. Good health. Charity. Yada, yada, yada.
If you’re looking for more on the philosophical meanings of wealth, check out this MSN article from MP Dunleavey. Tons of good stuff in there.
Yet while we’re sure to never agree on a theoretical definition of “rich,” maybe we can at least do our best to narrow the financial fragments of the term down to a dollar sign standard or two.
Which leads us back to our friends in the States. By Barack Obama’s suggestion, Bush’s existing tax cuts should be altered around the benchmark of $200,000 per year. If he had his way, those who earn more than two hundred grand annually (or $250,000 per household) would be taxed at a higher rate that those who earn less than that figure.
A salary of $200,000 per year, then, is what Barack Obama and his administration classify as “rich.” Before, under Bush’s reign, “rich” meant you earned more than $375,000 per year.
Of course, Obama’s proposition has ruffled some feathers. The top tax bracket in the U.S. levies a 35 per cent charge on Americans’ per-year income, so then, if the tax system actually gets shuffled, every Yankee that earns between $172,001 ($172,000 is the second-highest existing tax bracket standard) and $374,999 annually would have their tax penalties jacked up to a place they’d never been before.
(While the Conservative opposition chastises Obama for such a move – it would hurt honest small business owners, they say, not the wealthy plutocrats that are the President’s main target – no one in Canada is likely to bat an eyelash. Thirty-five per cent as the highest national tax penalty is a joke: anyone who earns over $127,021 per year in Canada regularly pays more than 43 per cent in annual taxes. Nova Scotians who make more than that each year pay the highest income tax across the nation – 46.5 per cent total.)
In any case, the “is $200,000 per year ‘rich’?” argument gives us a good starting point for a debate.
If we have to boil it down to annual salary, what do you think you’d have to make each year to be classified as “rich”? $100,000? $200,000? More? Less? Tell us below.
By Jason Buckland, MSN Money
Posted by: Long Ago | Aug 11, 2021 10:06:41 AM
Depends where you live in Canada. Regardless, the US is a cake walk versus Canadians anywhere. Everyone should be measured against their MPs and their benefits etc. Once into their second term they enter the Rich Category.
The only difference between them and weathermen is that they can be voted out, but again, after two terms do they really care?
Posted by: Tax Guy | Aug 11, 2021 10:17:43 AM
Dear Jason
Jason you are comparing apples and oranges. Yes the top U.S federal rate is 35% but the top Canadian federal rate is only 29%. The remainder is made up in provincial taxes which the Americans also have to pay (they have state taxes). Also with the differences in deductions it is very difficult to compare (ie. Americans can deduct their mortgage interest, can have single joint family filings, etc).
On to the really rankling part of the article:
Why is a flat tax regime not a "responsible tax system?" In the U.S their tax system rewards individual effort without stiffling individual desire while in Canada the tax system is heaivly weighted against a few. Personally in Canada my wife and I are still in our twenties and paid over 60K in taxes last year with little use of Public services. I have a friend at the same age with 4 kids who actually was a net beneficiary of the Canadian tax system with child tax benefits and GST benefits outweighing all tax collected from his family not even consdiering his much more extensive use of the government services.
What possible motive has the graduated Canadian tax system left me to strive much harder just to watch the majority of it be taxed away from me while others get a free ride around me?
A flat tax system like the U.S at least spreads the tax amount over all income earners versus those that are perceived to have extra funds. The people in this country that actually pay taxes are getting pretty grumpy.
Posted by: kristy | Aug 11, 2021 10:22:15 AM
To define rich should not me measured on household income as our household income exceeds $200,000 and our family is far from rich. From mortgages on homes, cars in the driveways, hobbies, my brother and I attending university, credit card debts, helping/supporting elderly parents/grandparents, day to day living. We are from rich. We live in Ontario and are subject to high taxes as well, not to mention all the taxes that Toronto imposes on people.
To define rich should be summary of how you are living (100's of factors), simply accounting: Assets to liabilities to future liabilities.
Defining "rich" would be the same as defining happiness. It will be different for everybody. Ask someone in the "projects" they may see my family as rich. Ask someone on the Bridle Path they may see us as lower-middle class. The point is the term "rich" is merely an anomaly.
Posted by: Frugalite | Aug 11, 2021 10:25:03 AM
Pay me a decent salary and I'll gladly pay taxes.
If you make $1000 a month, food, shelter, and your bus pass pretty much eat up all of it.
Posted by: hem | Aug 11, 2021 10:46:20 AM
I wish I had an income of $200,000. If you make that money and you aren't living a comfortable life, then you are most definitely spending outside of your means. My annual income is under $35,000. How can you even compare that? Somehow I manage to put a roof over my head, food on the table, go to school and pay for my car. I live paycheck to paycheck, but I manage. An income of over $200,000 would make me feel incredibly rich.
I'm sorry but if you make that kind of money and you aren't responsible with it then that's your own doing. The income is there, you're definitely not suffering in any way. That's a pretty cushy life.
The point is you want bigger and better. If you have it of course you don't think you're rich because you want more. For the rest of us scraping by it's a huge difference. I'll gladly take on your income, but just choose to be more wise about how I'd spend it.
Posted by: Stefan Dolega | Aug 11, 2021 11:30:03 AM
I don't see it so much as $200,000 makes you rich, but instead, $200,000 being the cut off line. If making $205,000 makes me pay a higher tax bracket, maybe it would be better to get yuor employer to pay you $195,000 instead, saving you in theory $13,250 in taxes on the $10,000 wage differnce, so total savings of $3,250 ($205,000 x 35% = $71,750 ; $195,000 x 30% = $58,500)
Posted by: Colin M. | Aug 11, 2021 1:06:16 PM
In response to Stefan's post. It would increase your marginal tax rate, meaning everyone still pays the same tax up to the cut-off line. I.E - If you make $201k, the first $200k is still taxed at the same amount, it's just the $1k that incurs the higher tax. So in your example above the extra tax @ 5% would have you pay an extra $250, not $13,250 {$5000 x 5% (which is the increase in your marginal tax rate) = $250}.
Posted by: Lance | Aug 11, 2021 3:08:27 PM
maybe we should all look at how much minimum wage is and base twice the amount a minimum wage employee makes after all they make up the largest portion of wage earners.they also have to pay for cars, in laws,and elderly family members as well and some people take 3 to 5 years to make 100,000.00.We should just look at it realistically. If you are bringing in 30.00 an hour you are rich compared to most.
Posted by: Lisa | Aug 11, 2021 3:10:17 PM
I like what "tax guy" says. That pretty much sums up why I'd much rather live in the USA than Canada. Work is rewarded there, much better than Canada.
I also agree with "hem." Man, if I had 200,000...what I could do with that...it's a dream...it would be like winning the lottery. However, like "hem"...if I ever DID get that kind of money, I'd think long and hard before spending it. I would try my best to be wise with it. (Wow...Torontonians really DO live in a different world.)
The good news is...despite not making upwards of 200,000 a year, I still have a smile and am able to live within my means.
Posted by: Tyler Jones | Aug 11, 2021 3:22:27 PM
200,000 dollars a year familly income is decent but it does not get you very far in certain cities such as Calgary, were things are expensive from housing to parking, I would consider that paycheck to paycheck with a little leftover, nowhere near rich.
Posted by: FP | Aug 11, 2021 3:24:11 PM
The US is not the tax haven that so many in Canada have been lead to believe. FACT: when you add state taxes, user fees, sales taxes and federal taxes (and the lovely "personal property tax" so favored in places like New York and West Virginia) you pay LOWER taxes in Alberta than you do in MOST states. There's only a handful of US states that have no state income taxes.
Posted by: FP | Aug 11, 2021 3:27:08 PM
Oh, and Jason, I defy you to find anyone in Canada making $127,021 that pays $54,619 in taxes. That 43% is a MARGINAL tax rate, not a total tax rate! Learn the difference.
Posted by: Steve | Aug 11, 2021 6:07:53 PM
Is Rich based on income and Wealth on assets? Perhaps if all income (Foreign and Domestic Businesses included) was taxed this wouldn't be such an issue. Perish the thought, going back 1950's economics. Nah, Lets just 'get those rich people', to make things easy we can just make the 'rich' line at $100,000 per couple. The National debt should clear pretty quickly then.
Posted by: don | Aug 11, 2021 7:01:33 PM
The problem is if you have a vehicle to turn your income to wealth you pay no taxes. I know many people who have more than i will ever have, but have no income. It is not the fact they pay little to no tax that hurts so much...it is that they draw on things such as child tax benefit and Gst rebates. This is one of the reasons the rich just get richer. it is really quite disgusting. How many people can draw from a system that dont pay into it? we need to take a close look at creative accounting and grey areas. This would go a long way to solving the money crunch. All taxes should be paid on gross. Personal and business unless omeone is willing to tighten the rules about what can come off before you start paying taxes.
Posted by: walter | Aug 11, 2021 9:55:31 PM
FP - you asked Jason "I defy you to find anyone in Canada making $127,021 that pays $54,619 in taxes. That 43% is a MARGINAL tax rate, not a total tax rate! Learn the difference."
I'm one that paid less then that amount.
@ Steve are you for real? Without the rich types any country would fall flat on its face and second 'get those rich poeple' comment is so stu1ped. the first thing that anyone with money would do is leave that country with everything they had. leaving the lemmings to fend for themselves.
Posted by: Tommy | Aug 11, 2021 10:22:21 PM
Ah, the belly-aching about paying taxes. We should all be so lucky as to earn enough to pay taxes. We should all be so lucky as to be able to contribute to society. As for the guy who says he doesn't use public services, what about: roads, the electric grid, money, the phone system, the airwaves, passports, police protection, the courts, the armed forces, the water supply, the sewage supply, inspected foods, inspected restaurants, goods brought to us courtesy of the roads, heck, even the internet (which would not exist were it not for early public investment and on-going government support). It just doesn't ring true. Sort of like the myth of the self-made millionaire. As if anyone can get rich without...well, all the things above plus much, much more, including people with whom to work and people who buy one's products.
Posted by: jake | Aug 11, 2021 11:18:52 PM
I am working class Canadian Citizen like many who work for a living and pay their fair share of taxes. I suppose the Rich are one like Conrad Black who first defrauded Canadians and then got greedy and went for the American Investors, only to discover they know how to defend their money and got him in jail. If he was what we called Rich by Canadian standard, then perhaps these are the reasons why he refused to return to Canadian soil after the government asked him to declare his assets and finances as he was relieved from his jail sentence. Also , our past Finance Minister, Paul Martin, a once to be liberal party leader and prime minister who lost in the federal election, decided to register his father shipping business in the Cayman Islands instead of Nova Scotia, Canada, was also a very rich person, otherwise he would not need to hide his riches from Canadian tax system after being the finance minister of the country. So what I am saying is I believe rich and wealthy Canadians with huge assets already knows the Canadian Tax system and understand how to avoid paying taxes through their accountants, that is why they are rich, powerful, and wealthy.
If you know how to beat the system, you are automatically a extremely wealthy person in Canada. If you dont , then too bad for you.
Posted by: Terry Hogan | Aug 11, 2021 11:45:59 PM
I think rich is defined more by net worth than income. If you recently finished all the schooling and other crap to become a doctor and are now making 200K, but are still paying off your student loans, I wouldn't consider you rich (you'll probably get there some day). If you have a big family with 2 kids in college and 2 playing hockey, 200K a year won't get you too far. Warren Buffet only takes a 100K salary from Berkshire Hathaway, but he's definitely rich.
Posted by: Lisa | Aug 12, 2021 11:54:53 AM
Yes "Tommy" we all pay the basic taxes...including those in the USA...get over it. However, 13% is my higher than 6%. Why do you think the border crossings are packed full of Canadians going to the USA?? (I know...I was just there.) The stupid taxes here in Ontario are too fricking high! So, get over that stupid argument.
And your argument about...if there were jobs people would take them. That's not completely true. I know people, that are "govt funded"...shall we say...that are perfectly capable of working, that if given the chance...wouldn't! Why? They are getting FREE money handed to them by our Canadian gov't. How do I know? I've been told by them. So...that argument isn't really true.
To "Terry," mentioning the hockey, that's a laugh. Many kids AREN'T in sports because their parents can't afford it. Sports, like hockey, should be funded for "poorer" kids...by (NOT the gov't) the people IN hockey.
Posted by: Eric | Aug 12, 2021 1:12:32 PM
What the heck is a "tax penalty"? Jason, taxes aren't a penalty, they are part of life. Do I enjoy paying them? No! Do I think I should pay my share? Yes!
I'm fortunate to earn enough that I pay about $22K in taxes every year. How else would we pay for all the services (and more!!) outlined by Tommy (above). In my oberservation, those who complain most about taxes are the very first to whine when they have to wait clear customs in the airport, or when the paramedics take 10 minutes to respond to a call, or when a pothole swallows their car.
Get real folks - it costs big buks to give us our wonderful Canadian lifestyle. We all need to pay our share.