Click for an interactive calculator.
wealthometer
Source: Wealthometer

 

Income inequality has been all over the news this year. Political fights about raising the minimum wage are in the near future.

A related, but just as fascinating, issue is how wealth is distributed. Click through on the calculator above, and you can see where your families wealth falls in percentile basis.

 

Continues here

Category: Economy, Research, Taxes and Policy, Wages & Income

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

17 Responses to “Wealthometer: How Does Your Houshold Wealth Compare?”

  1. BennyProfane says:

    Well. Even though I’m a lowly renting working schmuck, I came in high. Real high. Which adds to my worries that the even wealthier politicians will pander to the vast majority of Americans, especially the ever increasing number of late 60s to 70s Boomers who are entering the end game with squat for savings. Roth IRA holders are positioned a whole lot better, I’m afraid. But, I wouldn’t be surprised if they change that rule late in the game.
    If I owned a home in one of the high tax areas of the northeast, I’d get out while the gettin’ is good. Those bills will accelerate even more.

  2. bigsteve says:

    Interesting. But this calculator does not include pensions. To purchase a dual annuity that me and the wife have coming would cost us about 1.3 million dollars. Even with out it this calculator says we are at the 86% mark and we are in our peak wealth gathering years. Late fifties and early sixties. But even so we are far from the top 1% families in wealth and income.

  3. tagyoureit says:

    I entered $0 for all assets and debt, that resulted 13%, which I found quite interesting. The chart says 15 million US households have negative wealth, which is more than the total number households in Canada ($12 million as of 2006).

    • rd says:

      Just think of all those students graduating with student loans. Right off the bat, they all have significant net worth. It will take many of them a decade or more to get to positive net worth (10% savings/loan payments per year on $40k/yr gross income with an average of $26k student loan at 7% interest). we haven’t even looked at the working poor and lower middle-class then either.

  4. Al_Czervik says:

    Interesting, but flawed methodology.
    As a single person, I don’t believe I’m twice as wealthy as a couple (or 4x as wealthy as a family of four) with the same amount of net assets.

  5. Chad says:

    Interesting calculator on page #2. I explored the site a little further and Page #3 is absolutely horrifying. I’m all for setting up the system to encourage (not force) a redistribution of wealth, but taxing wealth directly seems really heavy handed.

    • mockware says:

      A tax on wealth troubles me also. Nothing like having the government whittle away at my stagnant savings. Kinda like paying a money manager to lose my money for me. Skimming off some of my income is a lot less painful. At least with estate taxes, I’m not in a position where I need the money anymore.

    • ffejie says:

      Completely agree. Tax consumption, not wealth!

  6. supercorm says:

    Doesn’t work on my side, weird.

    Although I’m one of the first to denounce the inequality our society is facing (corporate profits as a percentage of the GDP are at a all time high, back to 1929 levels), I’m against a wealth tax.

    When I was living in Hong Kong, I met a French guy who had just sold his company. He had $10 million in his pocket, and surely he left France and decided to live in HK. In France, or Paris, he would have probably paid $2.5M to buy a appartment. With $7.5M left, the “safe” asset (back in 2010) was Treasuries, which paid 2%. So 2% on $7.5M is $150k, for which, in France, you get taxed at 50%, you end up with net $75k. Then, there is the 1% wealth tax of 1%. 1% of $7.5M (your house is exempt) is $75k. So, at the end, there is nothing left, you haven’t paid your city or property taxes, and you still haven’t paid for the electricity and the groceries… while in HK, despite the 2% yield, you end up with $150k as there is no taxes on foreign income.

    All in all, tax appropriately on your income/revenues, dont waste tax payers revenues, and improve public services instead of spending energy in finding new sources of taxations …

  7. Iamthe50percent says:

    I’ll have to change my name to Iamthe83percent according to this. BTW the 50% is based on income not wealth. Like many older Americans I used to male a LOT more.

  8. Another “missing link” in this tool is that it neglects to consider the age of the folks in the household.

    A 20 year old with $1M in net worth is going to be in the top 1% of his peers, even if there are some older retirees sitting on much larger nest eggs.

    Similarly, you can be retired with $1M in net worth, be in the top few % for wealth, and yet be living on scraps because you’re only able to sustainably draw 3 to 4% per year… that’s just $30-40K/year for living expenses.

  9. cschene says:

    One really important item left out of net worth calculations is the asset equivalent value of pensions.

    My wife has a pension that will provide her an income of 35,000 per year. It has to be worth at least 400k in asset terms.

  10. constantnormal says:

    It’s a great exercise to make one actually think (something that is difficult for most Bananamericans to do) about how the benefits of living and working in this society are distributed.

    There was a time, only a few decades ago, when it was possible for a poor person to work themselves up the economic ladder. Today, that is nearly impossible. And once one is at a sufficient economic altitude, one can deliver a magnificent set of fumbles and blunders (and even outright public theft) without significant impact to one’s income or wealth — think of a lot of the CEOs of large industries, who have ruined companies and exited with large golden parachutes, or any of our elected officials, who spend most of their time not trying to serve the people they represent, but instead are pandering to moneyed interests, and serving THEM.

    The type of forced, across-the-board redistribution of wealth presented in the latter portion of these slides is, except for the bloodshed and magnitude of the redistribution, exactly the same thing that occurs in revolutions.

    So what the last section is asking you to consider, is how big a revolution are you willing to endure to restore economic stability and bring about a more economically egalitarian kind of society? How much of your wealth are you willing to pay to compensate for the innate inequalities in our system?

    And here’s something to wash down those thoughts with …

    http://www.forbes.com/sites/janetnovack/2014/01/14/no-jail-time-for-beanie-babies-billionaire-tax-evader-ty-warner/

  11. jumbobeaver says:

    I think any wealth tax policy would need to address several key issues:
    1. Would this be incremental revenue to the government or would there be some sort of offset against income taxes
    2. Are all dollars of net worth considered equivalent (is a dollar of equity in your home, a dollar in your IRA or 401K, and a dollar in your taxable investment fund all considered the same for tax purposes?)
    3. Would a defined benefit pensioned be treated as a capital asset (with some actuarial-based valuation formula?)
    4. If incremental tax revenue is generated, is it intended to bolster the Social Security system (to help address the looming train wreck of inadequate private retirement savings)?

    Also, other than attempting to address some generalized desire to reduce inequality, what incentives or disincentives might such a policy create.

  12. granolagrrl says:

    This was an interesting exercise. Yes of course there are limitations to the models, but any model will have limitations. The point is to generate considered thought. Is progressive taxation a good idea? Just what would a flat tax look like? How high would a flat tax have to be to make up for the lost tax revenue generated by our current system?

    Before my household “gave” our house back to Wells Fargo, our net worth placed us in the 1% with negative equity. Immediately thereafter, we ranked somewhere around the 32nd percentile. We already knew that we came out ahead in that disaster. Then, following a (very small) inheritance that allowed us to purchase another (very, very small) house without a mortgage, we bumped up to about the middle 50th percentile. Interestingly, as we played around with numbers representing my eventual employment (I am now a student) and some financial hypotheticals we rose economically–but only incrementally.

    The taxation exercise was even more interesting. First, we put in numbers that represented our situation and political leanings, and the result was unsurprising. Then we began to play around with it. When we entered a number of what-if-we-won-the-lottery scenarios, with $50K and $500K tax exemptions, we were both surprised at our own reaction. Even when the scenario had us paying nearly $1M in taxes, the tax proportion of our fictional wealth was so small, as a percentage, that we felt comfortable with it. And I already know that at that level of wealth, passive income could easily cover a $1M tax burden–every year–without reducing equity. We would never feel it.

    What a surprise.