Who Are the Rich and How Do We Know?
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Income vs assets?
from NCPA

It is often a little difficult for rational economists and policy analysts to understand President Obama’s near-obsession with certain arbitrary and self-imposed standards like his definition of the “rich.” The basis for numerous policy stances and delineations, the president’s classification between rich and non-rich is grossly misleading and myopic, says Merrill Matthews, a resident scholar at the Institute for Policy Innovation.

President Obama has repeatedly claimed that in the current economy, an individual is rich if they are making more than $200,000 a year (for families, the figure is $250,000). This grouping is incomprehensive and misleading.

• These classifications that are based entirely on incomes fail to take into account assets, which can tell us much more about the comfort in which one lives than incomes.

• One person, for example, may have $10 million in assets that offer an annual 1.5 percent return, thereby providing that person with $150,000 in income.

• The abovementioned individual is, by the president’s standard, not rich, while a person with no savings, no house and no other real asset but with $200,000 in annual income is defined as rich.

Read More: The rich?