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I have a nice quality of life with income well above the top 25%. I'm also not callous enough to pull the ladder up behind me, and not stupid enough to think I'm more then one health disaster away from destitution.

I wouldn't say it's "easy" to make it, but it's easy enough to do the right things and most people who do so will make it. It's also easy to fail.

Wrong, there are indeed real Scrooge McDuck vaults in widespread use. Well, they don't have all the money in a pit with a big diving board over it, because you would kill yourself by diving into it and the money would be inconvenient to retrieve, but from a financial standpoint the concept is exactly the same:

http://www.financialsamurai.co...

http://www.cnbc.com/2014/09/22...

(I wonder how many people heed this advice)

No one, because it's a stupid, arbitrary metric pulled from the author's nether regions.

Yeah, and I wanted a jet trainer so badly, but couldn't afford it. And a spaceship. Come on, you live in a car-obsessed country (I wonder how many people heed this advice), and a decent desktop PC is still many times cheaper, what's there to cry about?

The hard-working minority owner of 3 McDonald's franchises is a 1%er. The top 1% of wage earners earns around over $380K/year.

And no, if you want to make a consumption tax regressive, you don't have to make it complicated. You can exempt the first $X of purchases, where $X is some "living wage" line according to some politician's favored theory. You now have a progressive tax.

That's not progressive; that's regressive with a discontinuity. For example, assume the sales tax rate were 25%. In that case, a middle-class person making and spending 2*$X pays 12.5% (25% * 50%), which is a higher tax rate than a rich person who makes 10*$X and spends 5*$X, who pays 10% (25% * 40%). And the really rich person making 100*$X but who ran out of things he wanted to buy at 10*$X has a tax rate that's even lower than that: 2.25% (25% * 9%).

By the way, I wrote that example using easy numbers to illustrate my point. The actual difference in saving rates between normal people, the rich, and the very rich is large, but not quite that large (see the second chart on this page). However, even at realistic savings rates (2.5% for the bottom 90%, 15% for the top 10 to 1%, and 35% for the top 1%) the principle is still valid.

And since everybody would be helping to carry the load of the government they ask for, the big winners in this system are the upper middle class, who are currently getting screwed from both ends of the income spectrum.

On the contrary! As you can see from my example above, the middle class person making significantly more than $X, but not enough to easily save a large fraction of his income, pays the highest tax rate of all. The peak tax rate would occur somewhere around the 50th income percentile, while if the goal were to be progressive it should occur at the 99th percentile.

the top 1% of tax payers pay 38% of all income taxes yet only have a 20% share of total AGI. Furthermore, the top 50% of tax payers pay practically all of the nation’s federal taxes (97.3%) while commanding 87.25% of total AGI. This table from the IRS is the source for the often politically bantered argument that 47% of American income earners pay zero federal income taxes.

- See more at: http://www.financialsamurai.co...

It depends -- what do you mean by "get the job done"? If the cheaper shop will do the minimum possible and do it so fast...

Well, and that's what the people who hire at a business go through as well: "Is 3 years experience sufficient, or do we need the guy with 10 years? Can we save some money here or is it better to hire the more expensive guy?" AC is complaining about the fact that business make those kinds of tradeoffs.

Most people learn at some point in their lives that cheapness often comes with significant costs

Most people buy overpriced "luxury" crap that's made in the same Chinese factories as the cheap stuff. Most people buy stuff that is way too expensive for their income(*). Most people have little retirement savings and lots of credit card debt. Many people overpaid for their houses and mortgages. Most Americans are careless with money and don't understand business.

So, you're right -- an employer pays as much as he thinks he needs to "get the job done" to his standards. If he wants to raise the standards, it might be worth raising the wage and the qualifications necessary for the job.

That's his decision to make. You'd be surprised how good businesses are at making those kinds of decisions. And if the cheap employee doesn't work out, they'll fire him and hire someone more qualified.

Businesses are also very good at figuring out how to get rid of your job entirely if it gets too expensive: they'll eliminate it by buying more expensive equipment or just outsource it to a service provider, possibly overseas. That's what usually happens when government tries to keep the wrong people in jobs.

(*) See whether you're driving a car you can afford: http://www.financialsamurai.co...

Not sure exactly what direction you were taking the last portion of your post, but you DO realize that the top 5% already pay 50% of all income taxes?

http://www.financialsamurai.com/2011/04/12/how-much-money-do-the-top-income-earners-make-percent/

The rest isn't directed at you, but is more just a general statement about taxes.

To be in the "Top 5%" one only needs to make more than $159,000, assuming my numbers are correct.

Where that can cause problems is that many small businesses are taxed as S corporations, which means the corporations taxes are paid via the owners income taxes. In the company I work for, bonuses come from after tax profits. Raising taxes on my boss means less money for me and my co-workers when it comes time for bonuses. It also means less money with which to re-invest to expand the company, it becomes harder to save for expansion, making small businesses more reliant on loans instead of their own savings. So one effect is to favor big businesses at the expense of smaller ones.

You also run into the problem known as "Hauser's law". For the past 50 years, no matter what the tax code and tax rates have been, total revenues have maxed out at about 20% of GDP. States across the country have tried repeatedly to raise taxes on the rich. When they did, revenues go down. Yet in the 80's when rates were cut, total revenues went up. The reasons are not hard to fathom, why bother making those long term investments when a large portion of the projected profits are going to be taken in taxes. Better to put the money elsewhere in less risky investments or lower tax investments.

The problem today is spending. While I agree the military budget needs to be drastically cut, 50% cut just for starters, even cutting defense to zero would not balance the budget. The welfare state is in the beginning stages of collapse. Had the problem been addressed 20-30 years ago there could have been a smooth transition, but it is too late for that now. There's going to be wrenching changes within the decade, even the CBO projects interest on the debt will be $1 trillion per year by 2020 assuming rates don't rise, and it will fall to individuals to try and help those hurt most.