Patrick's Diary - 8/13/2015

Wow, it sounded cars were racing in a street not far away from the window in my reading room. Drivers in our area are pretty calm in general, probably the noise was caused by the special engines of the cars. Especially, it's 11:00 pm, so the noise could be amplified through quiet night sky. 

It's a pretty normal day, so nothing needs to be elaborated. As I shared yesterday, I would like to provide some inputs during 2016 Presidential Election. My focus is based on my own economic model: Integration of Capitalism & Socialism.

Since this is the election of President of United States, I only apply my model to our country, it may not be applicable to other countries, even other advanced economies. 

I depicted this economic picture before: 90% of families are middle class; 8% are rich and only 2% are poor. 

I am going to use Seattle Metropolitan as a sample to walk my model over the course of this election:

Living Standard for Middle Class Family - A couple with two kids:

• 2,500 square foot House: 4 bedrooms, 2 & 1/2 bath, 2 car garage, Front & Back full yards in a safe, quiet and clean area: $400,000
• One SUV - $35,000; One Sedan - $25,000
• Monthly Expenses:
• Housing related expenses: Mortgage, Property Tax, Insurance, Utilities, etc.- $2,500
• Car Loan - $1,200
• Daily Necessitates: Foods, Drinks, Misc. - $3,600
• Car - Gas, Maintenance - $700
• Children educational extra expenses other than free K-12 - Books, Club Fees, etc. $400
• Family Entertaining Expense: Movie/Dine out/Sports Events/etc - $500
• Vacation: Once a year, domestic - $10,000
• College Savings - $1,000
• Retirement Savings - $2,000
• Unpredictable - $1,000

So, annual family expenses: ($2,500+$1,200+$3,600+$700+$400+$500+$1,000+$2,000+$1,000)*12+$10,000 = $164,800

Assuming tax rate for this family is 20%, then total gross income is $164,800/80% = $206,000

In this regard, if the couple are both mid to high level professionals, the expenses can be covered.

Though this seems a bit high, families with lower income down to $150,000 can live in a smaller house down to 2,100 Sq, drive cheaper cars down to $45,000 for both, cut vacation expense by half. 

Middle class families can sustain their lifestyle purely by themselves without any public support. 

Alternatively, if payers accept higher tax rates, all educational related expenses and retirement savings can be eliminated. Even expenses for vacation can be reduced due to much cheaper infrastructure supports. This will be closer to Swedish Economic Model. All medical expenses have been covered through the couple's employers no matter whether the tax rates are increased or not. 

Tomorrow, I will lay out how rich families contribute to the communities and how poor can live comfortable life through welfare financed by rich.