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Definition of ‘Rich’ Changes With Income

"Congratulations, Joe! You're rich!" John McCain said to Joe Wurzelbacher in the 2008 presidential campaign. Joe was thinking of buying a small plumbing business. He was dismayed to learn from Barack Obama that the candidate planned to raise marginal tax rates on individuals earning more than $200,000 a year was described as "taxing the rich."

Mr. Wurzelbacher didn't think he was rich, which makes him a lot like the rest of us. Only 5 percent of Americans describe themselves as "rich."

While ideas about how much money it takes to be rich fluctuate depending on current income, most Americans agree with Joe (who happened to be in a one-income household); they think being rich means having a household income over $200,000 a year. And despite the equal opportunity promised in the American Dream, most people don't think they'll ever get there.

These data come from the survey research firm YouGov, which recently asked a representative sample of 1,000 Americans if they thought they would ever be rich. Nearly three-quarters of respondents to the survey said this was unlikely, while 20 percent thought it was at least somewhat likely.

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Women, independents and those with less education were slightly less optimistic than men, partisans of either side or people with college degrees. But these differences were hardly the most interesting. Living in the city rather than the country was associated with increasing expectations about becoming rich.

Among city-dwellers, 28 percent thought there was at least a small chance they might one day become rich, while 18 percent of people who lived in the suburbs felt this way, and only 5 percent of those who live in rural areas. But roughly three times as many rural Americans (about 7 percent) and twice as many suburbanites (4 percent) thought they were already rich relative to those in cities. These associations don't appear to be driven by other things like current income or education levels.

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Single people were more likely than people in relationships to think they'd one day strike it rich, a result that easily disappeared once age was taken into account. Being divorced or in a domestic partnership dampened the optimism about becoming rich regardless of one's age, gender or current wages. Surprisingly, people with children in the home are no less hopeful than those without.

All of this led me to wonder if these patterns didn't have more to do with how much money people thought it would take to be rich rather than anything else, and indeed, there's something to this.

Answer the question yourself: What is your "I'm rich!" number? If you're like most Americans, it depends on how much money you currently bring in, but the number is likely to be more than what 99.5 percent of American households bring home. Americans, it seems, have a pretty good sense of how much money it takes to be at the top level of the income distribution.

I asked survey respondents to tell me how much money the people in their household would have to earn in a year for them to consider themselves rich. I evaluated answers that began at $10,000 and went through $4 million. In households in the lowest quartile of income, those earning less than $25,000 a year, people thought they needed about $293,000, on average, to consider themselves rich. And in households earning between $30,000 and $60,000 of annual income, the magic number was closer to $394,000. As people earn more, the multiplier on current income goes down, but the absolute number goes up in a somewhat linear fashion.

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In households with annual income between $60,001 and $120,000, the dream of becoming rich comes true at $426,000, on average; and, for the top 15 percent of incomes ($120,000 and up), the average number was $501,000.

Most of us, it turns out, are chasing the elusive dream of multiplying our income to become rich, and, like Joe the Plumber, would be surprised if someone told us we were already rich. In the 2008 campaign, Mr. Obama was trying to tell voters that he would raise taxes on other people, "rich people." This works because most voters don't think they are rich.

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But by linking "raising taxes on the rich" to "raising taxes on those earning $200,000 a year," Mr. McCain was trying to change the way voters thought about his opponent's tax plan. This works because most people don't think $200,000 of household income means a family is rich. And the disconnect between what those people think and what Mr. Obama thinks it takes to be rich makes it seem to those voters that Mr. Obama just doesn't understand people like them.

The next time you hear candidates talking about "the rich," ask yourself what they mean by that. Better yet, ask them. And remember some basic facts about American household income: According to the Census Bureau's 2012 Current Population Survey, roughly 4 percent of households earn $200,000 a year or more. Median household income is about a quarter of that — near $51,000 a year. And 25 percent of the households in America are getting by on less than $25,000 a year.

Still, about a quarter of the population thinks they could be rich one day — something both Democrats and Republicans agree on — and the pattern is clear: The more you make, the more you think it takes to be rich.

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