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Comment by dclusin | Hacker News Reader

The median annual earnings of palo altans is about $400k/year. That's probably workable for cheaper areas like south palo alto where a house built in the 80s will run you $2.5 mil. Move closer to downtown and you could easily double or triple your necessary annual take.

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"According to Census data, the median household income in Palo Alto is $137,000 a year, while the US average is $57,600"

from: https://www.cnet.com/news/silicon-valley-middle-class-earns-...

I think this type of Census data understates household incomes. I am not exactly sure why, but Atherton comes in at about 400k a year per household. That is a lot, but doesn't seem like a lot for Atherton.

No, this seems right. The typical distribution of income across the pop., even in a distorted environment like the valley, looks far more like a Poisson distribution with a long tail than a typical Gaussian

137 is a median. Half the people in Palo Alto make less than 137 in household income? Maybe, if you count East Palo Alto. But Atherton at 443 ( https://www.bloomberg.com/graphics/2018-hundred-richest-plac... ) ? seems too low

I can't find the $400k/year number anywhere. The census puts it at "$250,001" which seems like a fishy number.

https://www.bloomberg.com/graphics/2018-hundred-richest-plac...

I believe it is skewed since many people in these neighborhoods aren't making their money through salary income (anymore), but instead through interest / dividends.

If you sold your company, aren't working at FB/goog/etc and are sitting on a ton of stock holdings, your income is going to show as near $0

that should be accounted for in govt household income calculations, but I could be wrong. For example, ton of stock holdings will pay you dividends or capital gains.

What you put on your tax return every year doesn't really reflect your actual wealth. Even in tech most people top out at ~$200k-$250k base salaries but you may vest and accumulate millions in stock RSUs that you don't sell in a given year.

Stock RSU vests go on your tax returns.

Ah ok - I'm thinking private shares

Those do too. The only thing that doesn't is deferred compensation in the form of an ISO or NSO. The latter is recognized as ordinary income when exercised.

Don't RSUs show up on the W-2 as income though (even if you don't sell them)?

They do; RSU vesting is a taxable event. It's counted as ordinary income based on the fair market value at the time it vests and taxes are due immediately. Companies tend to withhold a percentage of the shares and sell them to cover your tax burden.

My working explanation is that it's actually survey data. the richest people either don't answer the survey or understate their actual holdings when they do answer.

You don't want to rely on it for means because the high incomes are capped at a relatively low level so that they don't out high-earners in sparse areas. But that shouldn't affect medians.

Those numbers don’t remotely reflect the cost of living for people moving to the area now. Prop 13 has distorted things dramatically. In Palo Alto, there are numerous retired people living in houses paying property tax rates essentially set in the 1970s. In fact, Palo Alto has the lowest tax rate in the country by percent since the houses are so expensive but the people pay so little compared to the value.[1] You could definitely live off $500k, but $137 would be really tough to near impossible with a family. Prop 13 has really broken the California housing market.

https://www.bizjournals.com/sanfrancisco/news/2016/12/01/pro...

Stock options are not counted as income. They are exactly that: Stock options. Your income is your take-home pay, specifically gross pay on your stub extrapolated to annual salary.

Yes, there is capital income from stocks and other market investments, but appreciation for those comes under capital gains, which are calculated (and taxed) separately, and don’t count as employment income, for good reason: You can’t use stock options vesting in 4 years to buy food tomorrow or pay mortgage next month.

Which makes it ironic that capital gains taxes can bite exercisers before they are actually able to be liquidated.

The spread between purchase and grant price for Incentive Stock Options actually is counted towards income for Alternative Minimum Tax.

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