@jym626, that’s actually the tax bill on a house valued at 2.3 million.
Yeah, we have high property taxes in Texas. We don’t have state income tax, so this is how they fill the gap.
@jym626 , don’t know about a 2.5M , but our $600,000 house was taxed over 15000 last year in the Dallas area where she lives. We pay 8.25% sales tax but no income tax.
Exactly! It seems the tax laws are written more for those with wealth than those striving to build wealth. In other words, if you* make* a lot of money, you pay a lot of taxes, but if you have a lot of money, not so much.
Because I’m a beneficiary of these policies I probably shouldn’t complain, but it’s ridiculous. For the last 15 or so years we’ve had nothing but passive income and our tax burden has been embarrassingly low. For example, there were a couple years where our total income was approximately $140,000, all of which were long term capital gains, and our total federal tax bill was about $5000. Compare that to (married filing jointly) workers pulling in the same income, utilizing two personal exemptions and the standard deduction, who would pay approximately $26,000 in federal tax, plus social security withholding, which we haven’t paid in many years.
I see no rational reason that earned income should be taxed at five times the rate as “unearned” income.
As an afterthought, to the extent that it implies its beneficiaries are undeserving, I object to the term “unearned income”. In our case, at least, we’ve “earned” our passive income through years and years of hard work and careful investing. I just don’t believe we deserve such favorable taxation.
Hear, hear!
@dragonmom, that was about what the county/school/library taxes were on my parents house. but they had a state sales and income tax too. @Nrdsb4 -thats a hefty real estate tax!
“Obviously, that is personal choice, but let us hope such a household is not complaining about not making ends meet on an income far higher than what most people earn.”
Whether they are complaining or not, many such households simply haven’t been making ends meet and now have the vast bulk of their wealth tied up in home equity. Having seen what happened in 2008, typically they will run for the hills (literally - Tahoe, Sierra foothills, Oregon, etc) as soon as the kids are in college, especially if they feel the housing market has run up too far. The exodus is very noticeable right now.
Wow, @Madison85 , that’s outrageous. Wealth keeps “trickling” upward.
“Really? No exceptions? Are there no parents of really awesome students who want their kids to receive a private religious education, or kids who can handle rigor and competitiveness as long as they have a really low teacher to student ratio only found in a private school?”
Sure, there are exceptions for religious education. But in terms of excellence of education kids who can deal with the rigor and competiveness of our public schools don’t go private for a better education. This is especially so because our schools are neighborhood based. Pulling your kid out of public school vastly affects their social life. Where my sister in law lives the default is not a neighborhood school which seems to make more people open to privates.
Public schools really helped us to afford college. We are lucky to live in a school system where there were specialized programs and both our sons benefited hugely. Of course, the housing market reflects the quality of the school system. The programs offered things the privates couldn’t, esp for S1. (We looked. No go.) If we had been dropping 25-30k per kid for HS, college options would have been limited. The trade-off worked well for us
“Yeah, we have high property taxes in Texas. We don’t have state income tax, so this is how they fill the gap.”
Holy JPMorgan. We have no state tax either, but the property taxes are about half of that! Our property tax collections per square foot of land are probably much higher though. 
It doesn’t have to. We pulled ours out to homeschool at grades 9,7, and 5 when we finally decided that our district (the same one I work in) wasn’t going to meet their needs. They teach to the “average” student and feel the talented students will do well no matter what. Yes, they flat out told us this. The bar at school is set so low - not raised for talented kids, even in many of our top classes, that it just wasn’t going to work for what we wanted. I went to a good school in my day so I can see the difference.
My oldest two flourished. At college, their peers couldn’t believe they’d been homeschooled. We saw to it that they kept involved in youth groups (church and community), the school’s chess team, and had other terrific experiences (like our traveling and helping H with his job). When they went to college they had both high stats and terrific ECs plus people skills. No troubles at all adjusting and enjoying themselves.
Youngest opted to return to high school for his education. We had our doubts, but let him choose. He’s just as intelligent as his older brothers, but his ACT was mid top 20s vs mid 30s - a reflection of his foundation as mid top 20s is terrific at our school. He was considered a genius by his peers at school. When he got to college, he had trouble adjusting. It worked out and he ended up enjoying himself, but there was definitely a shaky period.
All three are doing just fine now. Public school certainly wasn’t needed.
BUT, I’ve seen some who homeschool their kids and keep them in a bubble. That doesn’t help. Most I personally know who homeschool purposely see that their kids have socialization opportunities and they do well. It’s a myth to think they don’t. It all depends upon the family. FWIW, not all kids in public school have great people skills either.
This BBC article has an interesting rich/poor county map on it:
https://www.bbc.com/news/world-us-canada-45602535
H comes from one of the least prosperous counties. I come from a county one tick above that. We live in a county one tick below the most prosperous. There’s a reason we moved for opportunities. No regrets, esp since the one we picked doesn’t have a super HCOL.
Well as presented here in post 429, those are some pretty comfortable ends! 12K a year for children’s activities, almost 10k a year for vacations, money for cleaners/gardeners, 2 newish 40K cars, 8400 for outings besides those vacations.
Surely someone spending that way could find a way to trim costs, if necessary. But since that budget also allows for college and retirement savings, maybe it’s not even necessary–seems quite comfortable.
I’ll just say that 15 years ago or so, on a takehome less than that (prices for everything lower back then, of course, including college), we paid one third of takehome to college tuition, saved one third for the next kid’s college, and lived on the last third. (about 35-40K for each third.)
But still made ends meet.
Please understand I’m not saying everyone needs to or should do that. I’m saying that that person you describe could carve a lot of college tuition, maybe all of it, out of that budget, with some belt-tightening. And might not even need to, with all the saving factored in. Seems like a pretty rich position to be in.
@BunsenBurner, as you know, we helped our D1 scope out neighborhoods in Seattle, and we were astounded at the prices, so I have no doubt about the above.
Is Washington state in general a high COL state in terms of housing?
Here’s what 2.5 million buys you in Dallas, and then just in general in the DFW metroplex:
Dallas proper:
https://www.ebby.com/property/221223433/4209-woodfin-dallas-tx-75220/
Metroplex:
https://www.ebby.com/property/201142803/2500-stone-haven-court-arlington-tx-76012/
“Surely someone spending that way could find a way to trim costs, if necessary. But since that budget also allows for college and retirement savings, maybe it’s not even necessary–seems quite comfortable.”
The biggest reason why they haven’t felt under pressure to meet ends meet is that their home equity has gone through the roof ($960K original mortgage is now say $850K and house is worth over $2M). And for many their restricted stock is now worth quite a lot too.
So they might not be making ends meet on a monthly basis, but drawing down that home equity instead to pay for the Tesla or the overseas vacations or the private school. Should they feel rich for having those assets or not rich because their income doesn’t cover current expenditures? Either way many would likely need to make significant lifestyle adjustments if home prices were to crash and/or HELOC availability dried up like in 2008 (whether or not they were laid off).
Yes, its a lot but that includes summer camp as well. These days, with two parents working it can be a real scramble to find a good situation for kids when school is out. If the kids don’t go to camp, they have to go somewhere or be watched by someone and it is going to cost money. In our town there are some relatively inexpensive town camps, but they don’t cover the whole day while parents are at work. The aftercare centers that function during the school year are closed during the summer. I’m lucky that I work mosly from home but for most, Its a problem.
“Having seen what happened in 2008, typically they will run for the hills (literally - Tahoe, Sierra foothills, Oregon, etc) as soon as the kids are in college, especially if they feel the housing market has run up too far. The exodus is very noticeable right now.”
Hoping you are right… we need a major correction in the traffic situation around here ;-).
Looks like such a family with $300k income ($210k after income and payroll tax) needs to re-evaluate its spending habits, since it looks like they allowed spending creep to consume all available income. Regardless of whether or not they feel rich in the current state, they are vulnerable to financial shocks, particularly since home equity / house prices associate with the local and national economy, where a downturn increases the risk of job loss as well.
Even in an expensive area, $300k income (income rich) provides ample opportunity to become financially secure (asset rich, and not just home equity). However, some people fail to make use of such an opportunity because they are not careful with their spending habits.
It does make one wonder if these folks ever consider just how the < 80 or 90% in their area get by. My guess is they have learned to say “No, we can’t afford that” whereas those making the 300K and wondering how to make ends meet haven’t come to that conclusion.
Humans judge the poor all the time. “Why is anyone on SNAP buying cookies or steak??? How dare they! If they want those things they shouldn’t be getting aid.” Yet those who are wealthier complaining about not having need based aid for college somehow is ok because all they bought were vacations or new cars or X?
Wealth has little to do with money. It’s a state of mind. People who drive fancy cars or have fancy houses aren’t necessarily rich. Others who live in a modest house and drive modest cars aren’t necessarily poor either. For my family, we make a good living, but we choose to live in a modest house because it works for us. We made a decision to stay in our house and pay it off. All our friends around us have bigger houses, but we don’t care. The reason these people don’t “feel” rich is because of how they spend. Wealth adds complication to life if you let it. Living simpler lets you keep more of your money.