The rich aren't easy to define, other than to say they ain't us

January 22, 2003|By JAY HANCOCK

MAYBE we can agree with Sen. Tom Daschle that the fiscal adrenaline being prepared by the White House is "a stimulus plan for the rich." Since the wealthy pay most of the taxes, you could say almost any tax-cut scheme helps the rich.

What we can't agree on is who are these despised, elite rich people? And how can we join them?

You, of course, are not rich. The rich are always two or three neighborhoods away, and their children are better looking and their roof gutters kept clean.

Almost nobody thinks of himself as wealthy. In a Gallup Poll a few years ago, the typical respondent believed 21 percent of Americans were rich. But less than a half-percent saw themselves as rich.

Most Americans describe themselves as "middle class," perhaps because of this country's proud rejection of royalty and the rest of the Old World caste system.

Warren Buffett, of course, is upper-middle class. A single mother of two earning $13,000 is poor according to the Census Bureau, but she sees herself as working class, a variety of middle class.

Perhaps we can find the wealthy according to where they live.

Howard County is often identified as one of the 10 richest counties in the country, but in reality it contains little Rockefeller-class, megabuck moolah. Howard County is actually a remarkably homogeneous jurisdiction of upper-middle-class burghers.

It owes its high rank in the average- and median-income categories to a lack of poor people more than the presence of rich people. Only 5 percent of Howard County households took in $200,000 or more in 1999, a measly result compared with Marin County, Calif., where 12.1 percent made $200,000 or more, Fairfield, Conn. (10.4 percent), or Westchester County, N.Y. (10.4 percent).

Howard County's median household income in 1999 was $74,000, which could have been attained by a wife earning $40,000 as a policewoman and a husband making $34,000 as a teacher. Are they rich?

The Washington suburb of Montgomery County, where 7.6 percent of the households made more than $200,000, is Maryland's answer to California's Marin, a liberal haven of heavy-duty dinero. But Montgomery also had 38,000 households -- 12 percent -- making less than $25,000, which pulls down its average.

True wealth, of course, is related to income, but only partly. Wealth is a balance-sheet measure, the accumulation of years of income into assets that tower over liabilities. Any mortgage broker or private banker can tell you of people who make $300,000 or $400,000 but can't save a cent. Are they rich?

One mark of wealth might be qualifying for the "high net worth" category of clients sought by bankers and other money managers. Definitions vary, but generally you must own at least $500,000 or so in assets, not counting your house.

You're probably rich if you have enough money to live well off the financial income alone, without having to work for a salary. Given today's low stock and bond yields, this might take a hoard of at least $3 million. Would you admit you were rich with $3 million? Maybe not.

The secret of human aspiration is that people are rarely happy with what they have, no matter how adequate or munificent their station. By much of the world's standards, even minimum-wage U.S. workers are wealthy beyond hope, yet they do not feel rich.

"Men do not desire to be rich, but to be richer than other men," wrote John Stuart Mill. He should have added: "richer than other men and women whose lifestyles can be observed close at hand, including on TV."

Numerous human-resource pros have shown that employees are much more concerned about keeping up with or surpassing the salaries of their co-workers than earning any particular amount of money.

Numerous sociologists have shown that happiness in most countries often is tied to relative, not absolute, material success. The rise of satellite TV and the beaming of Beverly Hills 90210 across the planet has not improved the world's self-esteem or its kind intentions toward the United States.

If we take the above-mentioned Gallup Poll respondents at their word, a fifth of all Americans are rich. According to the Congressional Budget Office, the top fifth of U.S. households had average incomes in 1997 of $167,500, a nice sum but hardly Bill-Gatesian in size.

How about the top 5 percent of American income-earners? Few would argue that these folks are not rich absolutely, relatively, in income, assets, vehicles-per-family-member or any other way you measure. They had average household incomes of $356,000 in 1997. And, the CBO says, they paid more than half of all federal individual income-tax revenue.

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