The Good, the Bad & the Ugly

It's almost the end of the year. For many people this means the celebration of holidays: either the spirit of Christmas or observance of the high holy days, Hanukkah. Retailers and charities both hope that people are feeling generous this year. Children are making popcorn strings and gingerbread houses. Martha Stewart is baking cookies to give to people in elaborate packaging.

For a bookkeeper, the end of the year means exactly that: the end of the fiscal year. People are starting to think about taxes. Sole proprietors are asking what they made and what their deductions are so that they can inform tax advisors and allocate enough to their IRAs.

I haven't bought a Christmas gift or lit a candle, but I'm in the spirit - the spirit of taxes.

Today D began asking questions about our tax situation. Being the resident expert, research is my job. I spend most of my time regarding finance working to save people money by allocating expenditures in adventageous ways. I rarely look at tax tables. It's depressing.

If you are in the middle class, defined here as "Married Filing Jointly, with a combined taxable income of $63,700 to $128, 500 in 2007," you will be paying the Fed's $8,772.50 plus 25% of the amount over $63,700. To simplify: if you have two people earning $100K total, they would pay $15,172.50 in federal taxes (after the personal deduction of $10,700.) When I write it in terms of percentages, 15% doesn't seem like *that* much.

I realize that to someone outside California, $100K could sound like a lot of money. In this area, you can't even think of owning a home making that much or more. Condo's are nearly half a million dollars...and that's in Oakland, not San Francisco. Rentals are expensive, even prohibitive as well.

As this baby grows in my belly, we talk about the future and we both want to start building equity by paying a mortgage instead of rent. But even with a large down payment that would clear out D's inheritance and our savings, we'd be paying almost $1,000 more a month to own a small, modest home in a middle-class neighborhood. I say that, and our rent isn't cheap. We could pay a mortgage almost anywhere else in the country for what we pay each month for one bedroom w/o a dishwasher, garbage disposal, laundry, or parking.

So why don't you move? That's a logical question. We talk about it. But we both have family here. And though our drive to own is strong, we feel that it's important for our child to know its family (crazy though they may be.) We are considering a move to Seattle. But we're both complaining about the cold here now. It's been 53F during the day and 33F at night. In Seattle the high is 41F with the same low. We are going to go check it out and see how we do. There are good friends that compel us to consider it more seriously than we might otherwise, but the family consistently pulls our conversation back.

Is it realistic to believe that with a new president that the middle class might be able to start bridging the divide that continues to widen between us and the upper class? How is a new family supposed to buy a house, save for college, save for retirement, eat healthy food, have money for their kids extra-circular activities like sports or music lessons, pay for medical insurance, pay taxes AND have money in the bank? How is a family where one parent loses a job supposed to cope with that loss? These days, one income can be devastating to a family.

All I can do is hope. I'm still hoping that Al Gore will reconsider and lead the way to a bold new future.