HALF A MILLIONAIRE

According to the Department of Labor’s latest survey, the average U.S. consumer annually spends about $49,638 on housing, transportation, food, healthcare and others (www.visualeconomics.com). On average, his income before taxes is about $63,091. The average federal income tax rate is 17%, so he will pay about $10,725 annually. Because each state has a different income tax rate, ranging from 1-9%, I will use 5% to calculate his state income tax, which is $3154. Let us assume that he does not live in Alaska, Florida, Nevada, South Dakota, Texas, Washington or Wyoming where there is no state income tax. His total tax is $13,879. His take home income is $49,212 ($63,091 - $13,879). Therefore, annually, the leftover money is -$426 ($49,212 - $49,638). Where does he find $426 to keep the household afloat?  

We, Americans, love materialism. It is in our blood. We love shopping. And, our excuses are Halloween in October, Thanksgiving in November, Christmas in December, New Year’s Day in January, Valentine’s Day in February, Easter in March and April, Memorial Day in May, Independence Day in July and Labor Day in September. In between, we add Mother’s Day, Father’s Day, birthday and back-to-school day. We also decide among ourselves that Saturday and Sunday are also shopping days because they start with “s”. Our leaders love us, so they always find ways to spoil us. In 2001, after the 9/11 tragedy, President Bush and Alan Greenspan lowered the interest rate to put more money in our hands because they believed that our spending played the key role in economic recovery. As a consequence, we produced one of the most spectacular economic events–the financial crisis.

Undeniably, the world’s economy depends on our spending. We buy products made in China. We buy cars from Japan and Germany. We buy oil from the Middle Eastern countries. In return, they buy computers, air planes, and many other goods from us. Therefore, our leaders always ask us to spend more of our money to keep the economy going and ultimately to create more jobs. When we have jobs, we will make more money. And, when we have more money, we will spend more. In 2008, President Bush publicly asked us to be patriotic by spending the extra tax return money to stimulate the economy. In 2009, President Obama put some money in our pockets by increasing our take home money per paycheck in hope that we would spend it to revive our economy. 

Obviously, no one can totally escape the current system because we all belong to the human society. Therefore, we must play the game, regardless if we want to or not, because we all need food, clothes and shelter. I am not asking you to stop spending completely because it is impossible. However, I am asking you to be mindful of the game. To win it, you must have the courage to swim against the current. When others are being patriotic, you choose to be unpatriotic. When they spend, you save. And, when they spend, you find ways to make money off of their spending. In other words, instead of following them, you define patriotism on your own terms.