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How much money makes you 'rich'?

It all depends on whom you ask. 'The higher your income, the more money you think you need to be rich,' says one economist. And the answers can be much different in expensive cities like New York and L.A.

December 12, 2010|By Geraldine Baum, Los Angeles Times

Reporting from New York — It's just not the same on this island as anywhere else.

In Manhattan, a monthly parking space goes for $550. A magician for a children's party asks $650 an hour. (A rookie will take $400.) The nanny gets $600 a week. Breakfast for four at a corner diner is $40; a dog walker is $10,000 a year; a plumber who makes emergency calls won't lift the toilet lid for less than $250.

Occasional spa treatments?

"Did you have to ask?" said Ricky Metz, a Manhattan hairdresser who boasted about the combined $310,000 she and her husband earn a year but became embarrassed trying to explain how it is spent. "I know, I know I shouldn't whine, but in New York unless you're a millionaire you don't feel rich. We feel middle-class."

Really, they're not. They're among the 2.5% of Americans — couples who annually earn more than $250,000 and individuals who earn $200,000-plus — whom the Obama administration and the Democrats have considered wealthy enough to pay higher taxes starting next month.

Last week President Obama reluctantly accepted a two-year extension of the Bush-era tax cuts for all income levels, including those at $250,000 and above, but the fragile compromise remains the subject of debate in Congress — and elsewhere.

Certainly, many citizens of this expensive city, run by a billionaire mayor, could make a case for taxpayers in the lower end of the higher-income bracket continuing to get tax relief.

Metz and others said they liked New York Democratic Sen. Charles E. Schumer's suggestion that only people who earn more than $1 million should have to ante up.

"Millionaires, now — they're the people who should pay more, not the likes of us raising a family in a crazy city where everything goes up but our incomes," Metz said. She is a hairdresser at a fancy salon who charges $150 a cut, and her husband is a lawyer at a beleaguered bank. Neither has had a raise in years.

Waiting at Grand Central Station to meet a friend for Christmas shopping, Metz, 45, detailed the family's growing expenses: taxes consume about half their income, leaving the rest to cover mortgage payments and fees for a two-bedroom East Side condominium and college savings for two sons, ages 11 and 13. The boys attend public schools, but sometimes have tutors and coaching.

"Did I mention the six grand for each kid to have braces?" she asked. "I can't even discuss this with my parents.... The 310K we live on in Manhattan is like the 70K they raised me and my brother on in Queens. Shouldn't each generation do better?"

She needn't ask. When it comes to evaluating where she stands in the pecking order among her deep-pocketed neighbors, Metz is probably as good a judge as academics or politicians.

"There is nothing in sociology or economics that defines what income you need to be rich," said Joel Slemrod, a University of Michigan economics professor and tax policy expert.

Survey data have helped economists understand popular views — and perceptions vary widely. Slemrod cited one survey showing that Americans, on average, believe an income of $122,000 is enough to be rich. "The higher your income," he said, "the more money you think you need to be rich."

In Atlanta, Eddie Christian, a soft-spoken man with sparkly gold teeth, said he makes do on less than $250,000 a year, though he declined to say exactly how much less.

On Friday morning, Christian, 54, an independent contractor, was cleaning up the Foxy Lady Lounge, a gritty strip club in southeast Atlanta, in anticipation of a lunchtime crowd.

The sprawling Atlanta metro region has always had its share of housing bargains, and Christian said he and his wife were covering payments on their six-bedroom home in suburban Ellenwood, Ga. They bought the place years ago, and it would have been paid off by now if he hadn't refinanced to raise some cash.

He said he once fit into that $250,000-and-up category the Democrats call "wealthy." But he said that since he had lost a number of government cleaning contracts, the club had been his only client.

But even during these hard times, Christian didn't consider a family making $250,000 a year to be rich.

"Maybe in the '70s or '80s," he said. "Not now."

Down the road, the Moreland Pawn Shop was doing a brisk trade, despite a deflated Santa out front and a less-than-cheerful sign that read, "Do not bring loaded gun in shop."

Clark Willard, 54, browsed, but left empty-handed. A former fish factory worker, Willard has been disabled since 2000, when he began having eye problems. He lives in public housing and gets $900 a month from the government. "I would like to live in the middle class," Willard said, "and I'm not there."

Los Angeles has a vast middle class, but like New York, it is also a land of tremendous income disparities, along with one of the largest homeless populations in America.

Arnold Cantu stood Friday on an exit ramp of the Hollywood Freeway with a sign pleading for money and a crumpled paper cup holding a small wad of dollar bills.

Once a certified structural welder, Cantu said he was injured on the job and had been homeless for longer than he can remember. A big part of his day is spent, mostly fruitlessly, with his cup out.

"People have money, but they won't help the less fortunate," he said.

His threshold for feeling wealthy would probably also prompt debate in Washington. What would it take?

"About $20," he said.

Times staff writers Richard Fausset in Atlanta and Ralph Vartabedian in Los Angeles contributed to this report.

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