Why Rich People Can't Afford To Live In America


A U-Chicago law professor reaped the whirlwind with a recent article complaining about how fast his upperclass salary was consumed by daily costs. The article, “We Are The Super Rich,” argued that he couldn’t afford a tax hike without reducing his cost of living.Everyone flipped out at the post, of course, and the professor took down the post, apologized and quit blogging.

But was his original claim really that unreasonable? We imagined the life of a rich couple earning $450,000 a year, using budget suggestions from economist Brad DeLong.

Add it all up and they can’t even go yachting.

Meet a hypothetical rich couple, who earn $450,000 in year

She is a doctor and he is a lawyer. They spend $60,000 on student loan payments

Money remaining: $390,000

$40,000 is lost in employer contributions to 401(k)

Money remaining: $350,000

Another $60,000 goes in employee contributions to tax-favoured retirement savings vehicles

Money remaining: $290,000

And $15,000 in employer contributions to health insurance

Money remaining: $275,000

They pay another $80,000 in state and federal income tax

Money remaining: $195,000

And $55,000 paying the mortgage on their million dollar home

Money remaining: $140,000

Home insurance and maintenance costs $15,000

Money remaining: $125,000

Another $15,000 goes to property taxes

Money remaining: $110,000

They spend $10,000 in driving costs

Money remaining: $100,000

And they have three kids! That's $60,000 in private school costs

Money remaining: $40,000

Feeding the family costs another $18,000 ($7,500 for groceries and $10,500 eating out)

Money remaining: $22,000

Now some reasonable discretionary costs: $3,500 for a weekly cleaning service

Money remaining: $18,500

$3,000 for his and hers gym memberships

Money remaining: $15,500

You've got to pay the lawn guy another $1,000

Money remaining: $14,500

Only $40 a day remains -- and they haven't even taken a vacation or bought a new TV

They look jealously at the SUPER RICH

Should we pity the rich? Henry Blodget says Cry Me A River

Should we extend tax cuts for the rich?

Maybe law school professors and doctors really do deserve a break.

What about millionaires?

Check Out The Most Expensive Homes Of NYC Bankers >

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