Inflated Perceptions of Normal Wealth Make Americans Scramble

There’s an interesting entry over at the Living on Less blog . It discusses how exaggerated the perception of wealth is in the United States and how it is that even relatively well-off people have the impression that they’re falling behind as they scramble to try to live an artificially expensive lifestyle they feel they should be able to afford.

Would it surprise you to know that the median wage in the U.S. is $12 an hour, or, assuming a 40 hour workweek and no time off without pay, $24,960 a year? This factoid is from the Economic Policy Institute, and was reported in the New York Times []. It does not, as far as I can tell, include people who aren’t working, or who receive welfare, disability, or social security. If you were to add to this statistic the incomes of the non-employed, you would get the actual median income in this country. I won’t hazard a guess, but it’s clearly considerably less than $25,000 a year.

In other words, less than I earned, tax-free, this year. The author goes on to talk about why so many people think “that owning a new car, a house in the suburbs [which can easily cost half a million dollars!], and expensive gadgetry like big screen TVs, palm pilots, cell phones, etc. is the affordable norm for the average person.” Not surprisingly, advertising and “lifestyle” reporting is blamed (One note: “Not long ago, the Today show presented the following: the results of a survey by a travel magazine on its readers’ favorite vacations [favorite destination: Sydney, Australia; favorite hotel: some Beverly Hills hotel whose rooms cost $350 a night], and a feature on new leisure boats available for sale [least expensive boat: a catamaran for $5000; most expensive boat: a yacht for $300,000]. The New York Times travel section stated recently that vacationing on a yacht is no longer just for the rich: a one-week vacation is available on a rented yacht for a mere $4800!”).

This mass hallucination even reaches, sadly, to the war tax resistance movement — which often makes tax resistance through income lowering sound like a frightening plunge into the depths of deprivation. Take, for instance, the edition of the War Resisters League book War Tax Resistance, which has this caveat about that form of tax resistance:

For most people in this country, this is not a realistic option, and it leaves them little room to incorporate war tax resistance into their lives. Promotion of this method may discourage people who might otherwise be sympathetic to war tax resistance.

As I’ve noted often in the last couple of weeks, about 25% of the people who file income tax returns in the United States are already living below the tax line. So it’s absurd to say that a lifestyle that is already being practiced by a quarter of us is “not a realistic option” for “most people in this country.” But even people in the war tax resistance movement, who should know better, have an unrealistic view both of how much you can earn and still stay below the tax line, and of how far such an income puts you from relative or absolute poverty.

A reader writes with some interesting news of his own tax protest: