How much money makes you rich?
A table of Rotarians considered an interesting question this week that impacts every citizen of the state: What amount of assets is needed to consider someone to be wealthy?
One answer was $2 million. Another probably came closest to how most of us think. That answer was: ”Twice the amount I have.”
Few of us consider ourselves to be among the state’s wealthy. Most of us are not among the wealthiest.
Whatever amount of income we earn, however, we don’t want to pay more taxes.
A recent report by the Washington, D.C.-based Institute on Taxation and Economics Policy ranked Alabama’s tax system the 10th most regressive in the country. Taking into account income, sales and property taxes, the state’s poorest 20 percent of residents pay 10.3 percent. But, the 1 percent of wealthiest pay only 4.9 percent.
In hard cash, that’s about $1,339 for someone making $13,000 and $14,308 for someone in the $292,000 bracket.
Paying nearly $13,000 more than the poor guy might lead some people to say that the tax schedule is more than equitable. They may think that a proposal to give the earners at the low end a break at the expense of the high-income earners is income redistribution.
The amount in taxes poor people pay means far more to their quality of life than the amount paid by people who are wealthier. One indication of that is the percentage each group pays in sales and excise taxes. Low wage earners pay 7 percent compared to 1 percent for the highest wage earners.
We must ask ourselves if the present system is fair. The answer might be that we don’t know anyone who would swap places with the 20 percent who earn $13,000 or less annually, and have the $1,339 tax burden.