Defining Wealth

By November 26, 2007Taxation

Joel Achenbach has an interesting piece in the Washington Post today about who’s rich and who’s not rich.

As presidential candidates Clinton, Obama and Edwards spar over who to tax more, Achenbach gives some insight into the different issues that determine wealth — specifically geography and higher costs of living in big cities. The oft cited example is the firefighter in New York City.

One thing we wish he’d mentioned is that it’s not just geography that can impact degrees of wealth. Small and medium sized manufacturers often file as S-corporations — meaning their business income and expenses are filed as part of their individual return. This can kick entrepreneurs into the “rich” category when in fact most of their income is invested back into the business — adding jobs, purchasing new equipment, and other things that grow and feed the economy.

Throwing small business owners into the top tax bracket makes no more sense than putting the New York firefighter in the top bracket.

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