What is rich?
In the world of the American taxpayer,
you're only as upper-income as you feel

The main objection to President Bush's tax-cut plan, unveiled last week, is that it unfairly benefits the rich. But what exactly is "rich," and who fits the category? In recent days, the "R" word has been flung between Republicans and Democrats like a political Frisbee, with lots of spin. Yet "rich" and its relatives — "affluent" and "wealthy" — are hardly ever defined.

For individual American taxpayers, rich appears to be a subjective, elusive and ever-changing condition, dependent on a variety of factors, including income, expenses, net worth and even state of mind. What's striking is that in one of the world's most affluent countries, few seem to see themselves as rich, even if they're in the upper-income brackets.

"My husband and I grossed over $150,000 last year and still had a hard time qualifying to buy a home in a suburb of Los Angeles," said Carol Levey, a marketing executive in Encino, Calif. "We had good credit, which carried us through, but can you imagine? We are considered 'poor' in the neighborhood we now live in, and we just paid $550,000 for our house. Unbelievable!"

On the opposite coast, in New York, advertising executive Robert Rosenthal earns close to the Leveys' income but can't afford a house to live in with his wife and 8-year-old son. They share a two-bedroom apartment on the fifth floor of a building without an elevator in Manhattan that goes for $1,800 a month. Rosenthal says his existence is similar to that of his grandparents, who came to this country in the early part of the last century.

"Here I make more money than I thought I'd ever need to live well, yet I live more poorly than I ever thought I would," Rosenthal said.

According to the Tax Foundation, a Washington think tank, taxpayers with adjusted gross incomes in 2000 of at least $128,336 were in the top 5 percent of all filers.

The top 1 percent made at least $313,469, the top 10 percent at least $92,144, the top 25 percent at least $55,225 and the top 50 percent at least $27,682.

The Tax Foundation used the latest available data from the Internal Revenue Service.

"There's a phenomenon in this country where most people think they're in the middle class, no matter what they make," said John Barry, chief economist for the Tax Foundation. "I think a lot of people would be surprised to learn they're in the top 25 percent of all earners. A policeman and a teacher puts a couple in the top 25 percent. Husband-and-wife union workers on the assembly line puts you in the top 25 percent."

John Fitzgerald, an economics professor at Bowdoin College in Brunswick, Maine, said students tend to judge their economic status in relation to people they grew up with. In a class called "Poverty and Redistribution," he asks them to estimate how much it takes to put a family in the top 10 percent.

"Students from low-income families will say something around $60,000," Fitzgerald said. "Students from high-income families will pick $500,000. Many students from high-income families have little idea of how high their incomes really are."

Fitzgerald's experience mirrors research on "affluents" done at Euro RSCG Worldwide, the world's fifth-largest advertising network.

Marian Salzman, the network's chief strategy officer, based in New York, said the study — which looked at people earning $150,000 a year or those with $1 million in the bank — found "that no matter what you have in income, double it, and you would feel rich."

Polling firm RoperASW conducted a survey of Americans with household incomes of more than $75,000 for the Oct. 10 issue of Money magazine. Respondents were asked to specify what annual income it takes for a family of four to be considered "rich" or "upper income." The results:

• 21 percent named a figure less than $200,000.

• 51 percent named a figure between $200,000 and $499,999.

• 20 percent named a figure between $500,000 and $999,999.

• 7 percent named a figure of $1 million or more.

"We've been doing surveys like this for years, and the main thing we're finding is that the label of 'rich' or 'wealthy' is uncomfortable for people," said Sheryl Hilliard Tucker, Money magazine's executive editor. "Most people who have made their own wealth instead of inheriting it see themselves the way they grew up, which they define as middle class. They don't see themselves as a privileged class, but people who worked hard for their money."

Steven Sandoval, 42, of Santa Fe, N.M., said "ricos," Spanish for "the rich," are those "who can afford to send their kids to Harvard, park a Lexus and Humvee in their garage and own vacation homes in Aspen (Colo.) and upstate Connecticut."

When asked if he considers himself rich, Sandoval — who would only confide that he makes between $50,000 and $100,000 a year as a public relations specialist — said "absolutely not."

"I've never thought of myself as such. I have day-to-day expenses like every other Joe Sixpack."

Kevin Henry of Atlanta never considered himself rich until he toured sub-Saharan Africa for a year, living as its people do, trying to decide whether to pursue a career in international relief.

Henry recalled the first time he stepped back into an American supermarket after the life-changing experience:

"I was overwhelmed trying to decide which of 20 peanut butter brands I should choose after being in African markets where there might be a little bit of onions, or okra, and that would only be available in small quantities.

"I felt rich. I was still a struggling graduate student who had nothing in the bank. I was not rich by American standards, yet I felt incredibly privileged."

That was 23 years ago. Today, Henry is advocacy director for CARE, the global poverty fighter, and has made numerous trips to poverty-stricken countries.

A discussion group user of AskMen.com, an online men's magazine, recently posed the question: "How much money do you need to make to be considered rich? When are you no longer 'middle class?'"

At first, answers related to income and net worth poured in. But then they became more philosophical:

— "When your money works for you, rather than you working for your money."

— "When you purchase without knowing the price, and not when you are browsing the candy aisle in Wal-Mart."

— "When you do not measure success by dollars, but by what you have. A man with ragged shoes is rich when compared to a man with no feet."

— When you are "happy."

It took a question from Carol Levey's 6-year-old daughter, Alexandra, to jolt the California homeowner's perspective away from a $150,000-a-year income that doesn't seem to be enough. The child asked, "Are we rich?" In answer, Levey said, she sang this spontaneous song:

Alexandra Levey, you're a millionaire.

Alexandra Levey, you're a millionaire.

'Cause you're rich with friends and you're rich with love

And you're rich with everything you're dreaming of!

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