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Old 05-03-2010, 12:55 PM   #1
BlahBlahYouToo
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Default the HENRY class - High Earners, Not Rich Yet

While I don't make quite that much, I can sympathize.
obama is punishing the hard workers, the risk takers (small business owners), that generate jobs and incomes for others.

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On Tax Day, April 15th, I picked up the Wall Street Journal and was amazed to see an editorial titled "A Message from HENRY" by a California financial advisor. The author, Mike Donahue, condemned the big and growing tax burden shouldered by high-earners like himself, a group he identified as "the HENRYs," in words so scorching that steam practically rose from the page. "We may be only a small percentage of the population, but we pay a large portion of the taxes and employ many," Donahue concluded. "If you take the incentives away, you will lose the HENRYs."
For this writer, it was a proud moment. I invented the name "HENRYs." I wasn't steamed that Mike Donahue didn't credit Fortune for creating the term. On the contrary, just seeing a headline about the HENRYs showed that my brainchild may be entering the culture as a catchy pop label for our times. It may even achieve the same currency as a Fortune invention from the 1980s, "Trophy Wives."
The Journal story inspired me to revisit the folks behind the acronym.
I first wrote extensively about the HENRYs in a November, 2008, cover story called "Look Who Pays for the Bailout." It described the plight of a strata of affluent Americans I called "High Earners, Not Rich Yet," or the HENRYs for short. They're the doctors, attorneys, accountants, owners of real estate agencies and security firms, who earn -- or used to earn -- between $250,000 and $500,000 a year.
These aren't investment bankers, hedge fund managers, CEOs, trust fund babies or other members of the super-rich. No, the HENRYs are generally folks in their 30s and 40s who got the best grades in high school, worked their way through college, and logged long hours as law firm associates or consultants on the rise. In most HENRY households, the husband and wife both work to tally those big incomes.
Put simply, the five million HENRYs form the core of the nation's entrepreneurial and professional class.

Obama eyes the HENRY class
When my story appeared, just before the presidential election, Barack Obama was targeting the HENRYs for big tax increases, declaring that families making over $250,000 a year were "the rich" and needed to "pay their fair share." Even then, I argued, the HENRYs were so squeezed between their big expenses for the things they considered staples -- private schools and day care for the kids, for example -- and an immense tax burden that typically took at $100,000 from a $350,000 income, that they not only weren't rich, but stood little chance of ever saving the big nest egg to qualify as truly wealthy.
The story predicted that the squeeze would become far tighter as Obama raised the top tax rates, and the AMT -- the dreaded parallel system that bars the high-earners from deducting their heavy property and state income taxes -- trapped more and more of the HENRYs. To be sure, the promised increases are scheduled to hit next year, along with a new Medicare surtax aimed straight at the HENRYs.

The high earner in a recession-scarred era
But the world has changed immensely since late 2008 in the wake of the financial crisis and soaring jobless rate. So as it turns out, the rising levies, though painful, aren't the biggest problem the HENRYs are now facing.
To examine the HENRYs new challenges, I called one of the financial planners who proved so helpful in the 2008 story, Barry Glassman of McLean, Virginia. Most of Glassman's high-earner clients are classic HENRYs: physicians, partners in law firms, and business owners. "Most of these people have seen their incomes drop by 20% to 25%," says Glassman. "The families that were earning $400,000 two years ago now make maybe $300,000, and the $250,000 families are below $200,000." The latter are even dropping out of HENRY range.
The HENRYs, says Glassman, saw their incomes jump in the great economy of the early-to-mid 2000s. During those flush years, they took on bigger and bigger fixed expenses and commitments, from big mortgage payments to private school tuition to college saving plans. "Now, the HENRYs are trying to cut their costs by shortening vacations and considering public schools," he says.
The rub is that the drop in their incomes is so dramatic that they can't economize fast enough to maintain a decent flow of savings for retirement. "The HENRYs weren't saving much before," says Glassman. "Now, they're dipping into their savings and investments to maintain something close to their former lifestyles."
What does that mean for their future? What looked like a far from luxurious retirement -- even in the good times, they could forget about getting rich¬¬ -- is now looking even more modest. "The HENRYs will typically end up with $1 to $2 million in savings," says Glassman. So at 4%, they will have incomes of maybe $100,000 a year in retirement, including Social Security. And that $100,000, points out Glassman, will be worth a lot less than it is today.
Of course, an economic rebound could raise their incomes to the pre-crash levels. If so, their biggest burden will shift back to gigantic looming tax increases. So as I've warned before, we might have to Gallicize the name of these members of Yankee bourgeoisie to HENRIs -- High Earners, Not Rich Indefinitely.*
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Old 05-03-2010, 01:05 PM   #2
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Really. Tell me how they pay a lot more now due to direct actions of Obama?


"HENRYs were so squeezed between their big expenses"

Damm Obama making them keep up with the Jones.
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Old 05-03-2010, 01:06 PM   #3
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Are you putting this "unfair burden" into perspective? Raising tax rates sucks as an absolute rule, but it's nothing America hasn't weathered before. Plus it's not like the debt your taxes are going towards just magically appeared on the books one day. This is your bill coming due.

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Old 05-03-2010, 01:10 PM   #4
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Originally Posted by Marlin1975 View Post
Really. Tell me how they pay a lot more now due to direct actions of Obama?


"HENRYs were so squeezed between their big expenses"

Damm Obama making them keep up with the Jones.
Tax increases signed into law on the health care bill just to start. Plus his numerous marriage penalty taxes where two people pay a lot more filing jointly than if they were single.

Then there is the proposed elimination of

1) HCE limit on social security
2) Mortgage interest deduction
3) Charitable donation deduction
4) Tax cuts to sunset
5) No fix to AMT
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Old 05-03-2010, 01:10 PM   #5
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They oughta pay more than people who make less, and less than people who make more.

Which by and large is the case, except for welfare for the very rich, like lower taxes on dividends.


Other than that, we have to pay for the government we have. The one category where we could have saved money was interest on the debt, which is why I felt the Bush tax cuts were so foolish, should have used surplus if there was one to reduce debt.

There's no will to really reduce spending, and for the most part reducing spending would be counter productive.

Last edited by Tom; 05-03-2010 at 01:15 PM.
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Old 05-03-2010, 01:12 PM   #6
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Really. Tell me how they pay a lot more now due to direct actions of Obama?


"HENRYs were so squeezed between their big expenses"

Damm Obama making them keep up with the Jones.
the proposed tax increases for $250k and up earners?

why should their money that they worked hard for be distributed to others instead of being used towards a better life for their kids (private schools, etc) and themselves?

why should they be penalized for working harder/smarter and making more money generally speaking?
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Old 05-03-2010, 01:17 PM   #7
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Tax increases signed into law on the health care bill just to start. Plus his numerous marriage penalty taxes where two people pay a lot more filing jointly than if they were single.
Which marriage taxes did Obama pass? Why didn't Bush and the Republicans fix AMT? They had years. Why isn't that Bush's fault?
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Old 05-03-2010, 01:21 PM   #8
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I'm guessing that you won't get much sympathy around here for anyone that falls into this HENRY/HENRI category -- too many posters here believe that anyone earning that much is evul and more privileged than necessary. The fact that they earned it through extensive and difficult educations, and extremely hard work, won't matter one bit. To many of our resident morons, $250k/yr is just the same as $250 million.

The envy around here is too great to tolerate such success.

Bet?
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Old 05-03-2010, 01:24 PM   #9
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Why didn't Bush and the Republicans fix AMT? They had years.
Damn good question! This should have been fixed long ago and no President has had the guts to do so...hope Obama keeps his promise on this one.
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Old 05-03-2010, 01:26 PM   #10
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Great. We have another class.
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Old 05-03-2010, 01:28 PM   #11
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Originally Posted by BlahBlahYouToo View Post
the proposed tax increases for $250k and up earners?

why should their money that they worked hard for be distributed to others instead of being used towards a better life for their kids (private schools, etc) and themselves?

why should they be penalized for working harder/smarter and making more money generally speaking?
There money isn't going to others, it's buying nuclear subs, checking peanuts for lice, curing cancer, etc.

They aren't being penalized, they're being saved.
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Old 05-03-2010, 01:30 PM   #12
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Which marriage taxes did Obama pass? Why didn't Bush and the Republicans fix AMT? They had years. Why isn't that Bush's fault?
Most every tax policy he states and has been made law has 200K for single, 250K for married. That's a marriage penalty.

Off the top of my head I'm almost positive the health care law made the capital gains tax increases on 200K single, 250K married. That's a marriage penalty.

Two white collar professionals can easily top the 250K mark and are getting slammed because of Obama.

-edit-
AMT gets worse over time to the point now that it's bullshit.
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Old 05-03-2010, 01:34 PM   #13
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Originally Posted by BlahBlahYouToo View Post
the proposed tax increases for $250k and up earners?

why should their money that they worked hard for be distributed to others instead of being used towards a better life for their kids (private schools, etc) and themselves?

why should they be penalized for working harder/smarter and making more money generally speaking?
Wait, proposed? So in other words Obama has not done anything. Yet you nutty right wingers still want to blame him yet Bush and Republicans had 6+ years of control and did not fix the AMTor other areas? But its Obamas fault?
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Old 05-03-2010, 01:35 PM   #14
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Wait, proposed? So in other words Obama has not done anything. Yet you nutty right wingers still want to blame him yet Bush and Republicans had 6+ years of control and did not fix the AMTor other areas? But its Obamas fault?
You're conveniently leaving out the tax increases with the healthcare law.
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Old 05-03-2010, 01:36 PM   #15
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Tax increases signed into law on the health care bill just to start. Plus his numerous marriage penalty taxes where two people pay a lot more filing jointly than if they were single.

Then there is the proposed elimination of

1) HCE limit on social security
2) Mortgage interest deduction
3) Charitable donation deduction
4) Tax cuts to sunset
5) No fix to AMT
Good. I'm sick of being punished for renting.
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Old 05-03-2010, 01:37 PM   #16
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You're conveniently leaving out the tax increases with the healthcare law.

What the capital gains tax increases you brought up? You mean the ones that even W.Buffet says allows him and other super rich to pay less tax then his secretary.
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Even I will admit if it were under Bush I would find an excuse to support it even if I thought it was a waste of money.
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Old 05-03-2010, 01:38 PM   #17
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Raise cap on payroll tax for 3% of earners over $102,000

A Trillion-Dollar Tax Increase
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Old 05-03-2010, 01:38 PM   #18
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Wait, proposed? So in other words Obama has not done anything. Yet you nutty right wingers still want to blame him yet Bush and Republicans had 6+ years of control and did not fix the AMTor other areas? But its Obamas fault?
Both are at fault.

next?
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Old 05-03-2010, 01:38 PM   #19
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Good. I'm sick of being punished for renting.
As long as it's not your bull getting gored, eh?
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Old 05-03-2010, 01:40 PM   #20
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What the capital gains tax increases you brought up? You mean the ones that even W.Buffet says allows him and other super rich to pay less tax then his secretary.
The medicare tax of like 4% that's added to capital gains. Then again since it doesn't affect you you're fine with stealing others hard earned money. All the shit Obama has been doing with taxes does affect me, why do you think I know so much about his tax increases and rail against him? Because his policy affects my daily life.

You'll change your tune when it's your bull getting gored.
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Old 05-03-2010, 01:43 PM   #21
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As long as it's not your bull getting gored, eh?
hah. I'm sub-henry, but thanks to my status as someone that makes a decent income, is single, rents, has no kids, etc, I get it pretty bad from the current tax code. The biggest break I would get - student loan interest (I paid $4800 in interest last year) - I am not eligible for. When I filed this year, the program shows stats for your income range. I was at the very bottom of this 100k range - and yet my federal income tax paid for 2009 was about 10% higher than the average for said range.

I'm already being gored, so might as well just let that continue, eh? I bet a lot of those henrys pay a lower % tax than I do.
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Old 05-03-2010, 01:45 PM   #22
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hah. I'm sub-henry, but thanks to my status as someone that makes a decent income, is single, rents, has no kids, etc, I get it pretty bad from the current tax code. When I filed this year, the program shows stats for your income range. I was at the very bottom of this 100k range - and yet my federal income tax paid for 2009 was about 10% higher than the average for said range.

I'm already being gored, so might as well just let that continue, eh? I bet a lot of those henrys pay a lower % tax than I do.
Why do you think I got married?


But honestly, we took a long hard look at it and in some ways tax wise it was better for us to stay single (all of obama's marriage penalties), but in other aspects it was better. As a single making good money, yeah you are getting raked over.
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Old 05-03-2010, 01:45 PM   #23
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The medicare tax of like 4% that's added to capital gains. Then again since it doesn't affect you you're fine with stealing others hard earned money.

You'll change your tune when it's your bull getting gored.

Actually me and my wife are in the 100-200k salary range. As per totalnoob's post, are in a higher percent then the HENRY group. Difference is I live in by my means. I don't keep up with the Jones and cry when a small tax subset goes up.
Let alone be a whinny racist like you because the “Black man is holding me down…”
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Even I will admit if it were under Bush I would find an excuse to support it even if I thought it was a waste of money.
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I'm proud to be a racist now. VERY proud.

Last edited by Marlin1975; 05-03-2010 at 01:52 PM.
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Old 05-03-2010, 01:47 PM   #24
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Why do you think I got married?


But honestly, we took a long hard look at it and in some ways tax wise it was better for us to stay single, but in other aspects it was better.
Oh I ran the numbers, if I married my girlfriend our combined tax burden would have been roughly $4,000 less last year.
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Old 05-03-2010, 01:47 PM   #25
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hah. I'm sub-henry, but thanks to my status as someone that makes a decent income, is single, rents, has no kids, etc, I get it pretty bad from the current tax code. The biggest break I would get - student loan interest (I paid $4800 in interest last year) - I am not eligible for. When I filed this year, the program shows stats for your income range. I was at the very bottom of this 100k range - and yet my federal income tax paid for 2009 was about 10% higher than the average for said range.

I'm already being gored, so might as well just let that continue, eh? I bet a lot of those henrys pay a lower % tax than I do.
fair tax.
QED
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