Millionaires

Andrew Gelman observes,

It used to be that a millionaire was someone with million dollars. Nowadays, though, the term is often used to refer to people who make a million dollars a year. (See here, for example, in a discussion of the so-called millionaire’s tax break.. I guess it makes sense–lots of Americans have a million dollars in assets, and so for “millionaire” to keep its traditional meaning of “really rich,” it had to shift somehow.

Recall that the Thurston Howell character from “Gilligan’s Island” was described in the opening theme as “the millionaire.” That’s the image we have in our minds, not someone living in a middle class home with a modest retirement nest egg.

I should note, however, that someone who earns a million dollars in a year would not necessarily qualify as a millionaire under the old definition.  Not only is it quite possible to spend that kind of money as fast as you take it in, as several entertainers and professional athletes have demonstrated over the years, but even at present tax rates federal, state, and local governments can take half of that million right off the top.

Hat tip: Ezra Klein

FILED UNDER: Economics and Business, Quick Takes
James Joyner
About James Joyner
James Joyner is Professor and Department Head of Security Studies at Marine Corps University's Command and Staff College and a nonresident senior fellow at the Scowcroft Center for Strategy and Security at the Atlantic Council. He's a former Army officer and Desert Storm vet. Views expressed here are his own. Follow James on Twitter @DrJJoyner.

Comments

  1. john personna says:

    I think the expectation is that if you make a regular $250K income, you are (or will shortly be) a millionaire(*),

    It’s one of the things that makes income averaging for tax purposes seem fair to me, but I guess the gov sees too much money “lost” by that path.

    * – if you make a regular $250K income and don’t break a million in net worth, that’s pretty much your choice.

  2. john personna says:

    (But yes, to live like Thurston Howell III, you need more like a million a year these days.)

  3. James Joyner says:

    if you make a regular $250K income and don’t break a million in net worth, that’s pretty much your choice.

    Absent pretty extraordinary circumstances, certainly true.

  4. tom p says:

    Wow, where do I begin?

    ‘Recall that the Thurston Howell character from “Gilligan’s Island” was described in the opening theme as “the millionaire.” That’s the image we have in our minds, not someone living in a middle class home with a modest retirement nest egg.”

    James, I live in a middle class home with a “modest retirement nest egg”. We make less than $100.000 together

    “I should note, however, that someone who earns a million dollars in a year would not necessarily qualify as a millionaire under the old definition.”

    But still do under my definition…

    “Not only is it quite possible to spend that kind of money as fast as you take it in, as several entertainers and professional athletes have demonstrated over the years, but even at present tax rates federal, state, and local governments can take half of that million right off the top.”

    James, I don’t care how fast they blow it, they could have saved it, (remember, I live quite well on less than a tenth of what they make)

    “but even at present tax rates federal, state, and local governments can take half of that million right off the top.”

    So what? Tuff shit. (I pay taxes too) People don’t like it, they can go away. (I wish they would, they are leaches on the tit of society)

    Quit yer whining….

  5. James Joyner says:

    @tom p:

    Depending on where in the country you live, a middle class home costs from around $200,000 to $1,000,000. It’s not tremendously difficult to get to a million in net worth. That doesn’t translate into a lavish lifestyle, since it’s not liquid.

    Regardless, you’re going back and forth between definitions. It’s either based on your assets, in which case your income is only a contributory factor, or it’s based on income and your actual lifestyle doesn’t matter.

    And, while my wife and I are doing nicely, we bring in way under a mil a year between us. With emphasis on the way. I’m not bitching, just noting that grossing a mil in a single year doesn’t make you a millionaire under the traditional definition, since you’re unlikely to actually see much more than half that.

  6. Drew says:

    “So what? Tuff shit. (I pay taxes too) People don’t like it, they can go away. (I wish they would, they are leaches on the tit of society)”

    This is one of the more mind numbingly stupid things I’ve seen at OTB in awhile. Contributing a half a million a year makes one a leach.

    Just for shits and giggles let’s posit that Tom P makes $80K, and pays $20K a year in taxes. Over a 30 year career that would be $600K contributed to the Treasury.

    Similarly, the “millionaire” would contribute 83% of that in just one year, and 25x that in a similar 30 year career.

    top p – you were saying something about leaches?