More importantly, Americans are losing hope in their ability to succeed. According to The New York Times/CBS News poll this week, 51 percent of Americans say they are pessimistic about the future, as opposed to 43 percent who say they are optimistic. Just 10 months ago, 56 percent of Americans were optimistic, versus 38 percent who were pessimistic. According to the Pew Economic Mobility Project, just 47 percent of Americans believe that their children will have a better standard of living than they have now. Even more frighteningly, 59 percent say that it will be more difficult for their kids to better their economic status than it was for them.
And Americans are right.
The simple fact of the matter is that each day, government grows larger. And each day, hope for most Americans grows dimmer. It is now almost impossible to get "rich" living in California due to regulations and taxation. Say a 30-year-old Californian wants to start a business. She has to pay $800 immediately for the corporate tax, even if her new LLC makes no money whatsoever. She has to pay approximately $200 in sundry filing fees.
But she's stubborn and decides not to quit. And her persistence is rewarded -- she begins making serious money. Let's say she even earns $250,000. She's on her way to wealth, right?
Wrong. Let's do some rough calculations. First, California takes 9.3 percent off the top. That's $23,250. Then Social Security takes 13.3 percent as part of her income and 2.9 percent on the rest. That'll cost about $17,700 more.
Then federal income tax takes 22 percent. There goes $46,000. Her annual income is down to $163,000. She's still doing well.
Now assume she has a mortgage in Los Angeles. She's probably paying somewhere in the neighborhood of $3,000 per month, if she owns a decent house; over the course of the year, she's paying $36,000. She's now at $127,000.
The average American spends approximately 13 percent of his or her budget on food. So take away another $30,000 or so. Now we're down to five digits, at $94,000.