Editore"s Note
Tilting at Windmills

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February 7, 2010

THAT'S RICH.... RNC Chairman Michael Steele sparked some guffaws this week when he argued, seriously and in public, that Americans making a million dollars, after taxes, are not bringing home "a lot of money." But a variety of conservative voices have also spent quite a bit of time lately arguing that those making a quarter of a million dollars aren't well off, either.

The political salience of this is pretty obvious -- Democratic policymakers intend to scrap Bush/Cheney tax cuts for those making $250,000 a year or more. Republicans have an incentive, then, to make it seem as if the president and his allies are placing undue burdens on those who can't afford it.

Daniel Gross explained this week that this comes up from time to time, but the rhetoric is never persuasive. Those making $250,000 are bringing home five times the median household income in the U.S., which puts them in the top 2% of all earners.

There are, of course, regional differences. It's obvious that $250,000 in a major metropolitan area is different from a small, rural town. But "even if you look at the wealthiest metropolitan areas -- Washington ($85,236), San Francisco ($76,068), Boston ($70,334), and New York ($63,957) -- a quarter of a million dollars a year dwarfs the median income."

In a few ZIP codes and neighborhoods, to be sure, brandishing a $250,000 salary is like bringing a knife to a gunfight. There are significant numbers of rich people -- including a healthy contingent of filthy rich people -- in places like New York City and San Francisco. If you want to live in a neighborhood where starter homes cost $1 million, and you want to send your kids to private schools, and you want to go on great vacations and have a beach house, then $250,000 likely won't cut it. When the investment banker down the street just got a $2 million bonus, the knowledge that you're doing better than 98 percent of your fellow Americans is little solace.

But the places where $250,000 stretches you are few and far between: some of the swankier East Coast and Chicago suburbs, several neighborhoods in Manhattan, chunks of the California coast. Even in the most exclusive communities where the wealthy congregate, $250,000 is still pretty good coin. Consider this: In late 2008 Forbes ranked America's 25 wealthiest neighborhoods. In all of them, someone making $250,000 a year would probably not be able to afford his dream house. But in all of them, someone making $250,000 would be doing better than most of his neighbors.

What's more, Atrios noted an important point about the looming tax shift: "[T]he tax increases on the $250,00+ set are marginal tax increases which only apply to ... money in excess of $250,000. People making, say, $300,000 aren't going to see their tax bill increase by very much."

Something to keep in mind when the complaints begin in earnest.

Steve Benen 10:10 AM Permalink | Trackbacks | Comments (28)

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Comments

What have the Democrats said this week? Have they kicked around any good ideas on passing HRC?

I sure am tired of hearing about the Republicans and TeaBaggers.

Posted by: Fed Up and Tired on February 7, 2010 at 10:17 AM | PERMALINK

How can anyone suggest we go back to the Hellscape that we suffered under Clinton?? We are all SOOOO much better off now!

Posted by: Dems lose huge in 2010 on February 7, 2010 at 10:18 AM | PERMALINK

No, Fed Up and Tired. The democrats haven't said anything, so knocking the Republicans is all Benen's got.

Posted by: Al on February 7, 2010 at 10:20 AM | PERMALINK

The average family income in Manhattan is actually around that $250K, so the irony is that Republicans are protesting a tax that will hit all of Manhattan, the Bluest place on earth, the hardest. In fact, I would guess that most of the people hit by the tax live in Blue states.

Posted by: bob h on February 7, 2010 at 10:26 AM | PERMALINK

The problem for rich people this year is that Mitch McConnell and the Senate Republicans have manuvered themselves into such a hate to appeal to their madhouse base they have no room to make a deal with Obama. Rich people are left with Ben Nelson and the other blue dog senators.

One of these days real soon Mitch is going to pitch a deal to Rahm. A few votes for health care reform or maybe a jobs bil in exchange for extending the Bush tax cuts for while. The problem for Republicans will be finding those "mavericky" Senator votes in the current hate filled environment.

Posted by: Ron Byers on February 7, 2010 at 10:28 AM | PERMALINK

The early meme gets the worm- that is, the media bounce, until it becomes "everybody knows".

Thus, 'former' reporter Andrea Mitchell said this morning, "Sarah Palin, author of the runaway best seller".

And, when Steele says a million bucks doesn't go far, it draws some Democratic guffaws, but he got it up the flag pole first, and before long the talking heads will be saluting.

And, if you doubt me, think about "Death Panels" for a moment. . .

Posted by: DAY on February 7, 2010 at 10:28 AM | PERMALINK

Do most people really think a modest tax increase on the wealthy is worth getting upset over? Hardly. But it doesn't matter since Republican own the megaphones, and by extension, the national conversation. By the end of the week, Republicans will make tax-cut recission equivalent to the Bataan Death March. Teabaggers will climb on board. Cokie and Peggy will intone gravely. Joe Sixpack will figure out that if he wins the lottery he's screwed. Let's just stipulate that paying for stuff is not a good idea in 21st century America.

Posted by: walt on February 7, 2010 at 10:29 AM | PERMALINK

Give me a quarter of a million dollars and I can retire, living off the interest. Any talk of hurting those making a quarter of a million dollars yearly by taxing them are either drunk, high, or suffering from a lack of oxygen to the brain.

Posted by: Rook on February 7, 2010 at 10:32 AM | PERMALINK

The average family income in Manhattan is actually around that $250K

Do you mean the mean income? I find that difficult to believe but its somewhat feasible that there are enough multimillionaires in Manhattan that it drives that average up far, far above the median income which I imagine is closer to maybe 50 or 60,000. $250,000 as a mean still seems like a stretch to me however. Do you have a source for this info?

Posted by: brent on February 7, 2010 at 10:34 AM | PERMALINK

Then all the more reason to help out those making much less than 250k even more, right? ... heh, right ...

Posted by: neil b, on February 7, 2010 at 10:41 AM | PERMALINK

I, personally, would like to see tax rates for wall street "bankers/investors" and congress-critters so high that they were forced to pursue more productive employment - like flipping burgers at McD's.

Posted by: Chopin on February 7, 2010 at 10:45 AM | PERMALINK

$250,000 gross income?
$250,000 adjusted gross income?
$250,000 taxable income?

These three numbers are different. Taxable income means after adjustments and deductions... the things that people with high gross incomes pay their accountants to come up with, so that their taxable incomes can be made as low as possible.

If the Greater National Bailout Bank of New York tells the New York Stenograph that Tommy Trader "makes $500,000 a year", and the New York Steno prints yet another "poor rich folks" Sunday extravaganza about Tommy's plight, they're both talking about Tommy's numbers before his accountants get a chance to earn their fees. (When the accountants are done, if they're any good at their job, Tommy will probably qualify for food stamps, on paper -- and still be able to afford that third Mercedes E-class for his daughter's high-school graduation present. The professional journalists at the Steno will forget to mention that part.)

Does anyone say which "income" they're talking about when they worry so about going back to the pre-Bush tax rates on "incomes over $250,000".

Posted by: Fleas correct the era on February 7, 2010 at 11:01 AM | PERMALINK

As someone who has lived on a household income of ~$250k/yr in the New York suburbs and tried to keep up the mentality of the kids in private schools, annual European vacations, expensive homes, etc. - the Republicans are right. $250k/yr can seem like just scraping by. However, don't get out your handkerchiefs for us downtrodden elites just yet. The idea that this represents some kind of norm for the rest of the US is nuts.

Posted by: Pi on February 7, 2010 at 11:05 AM | PERMALINK

I'm a bit surprised that Dems haven't got out in front of the all too predictable GOP retort: small businesses are the engine of job creation yada yada yada... There has been some good stuff regarding small businesses, don't get me wrong, but good policies aren't enough (even when GOPers so obviously support large, monopolistic companies at the expense of small ones). We'd be wise to equate this rhetoric to its original formulation: trickle down economics.

Posted by: jhm on February 7, 2010 at 11:17 AM | PERMALINK

Funny how 250G isn't much for them, but when you are talking about poverty, 12G is plenty. And raising taxes on 12G folks will get the economy moving, while a tax raise for 250G's is Atlas Shrugged.

When their tax rate goes up a measly 3.6 percentage points, they scream socialism. But when they raise prices 5 percent while cutting back worker's hours, that's just market forces, winners and losers, etc.

Having to wait a while longer to but a new Mercedes = hardship. Having to go hungry so your child can eat = the ups and downs of the market.

Posted by: Baldrick on February 7, 2010 at 12:31 PM | PERMALINK

Reminds me of John Kenneth Galbraith's quip that, according to the Republicans, the problem with our society is that the poor have too much money, and the rich don't have enough.

Posted by: fradiavolo on February 7, 2010 at 1:02 PM | PERMALINK

The heart and soul of that "vast" right wing conspiracy can be found nested inconspicuously within that upper 2%.

I'll say it again, the main thrust of the Republican party centers around keeping the tax rates on the upper 2% as low as politically possible. That is the hub of their ideology.

Posted by: lou on February 7, 2010 at 1:06 PM | PERMALINK

One million ain't that much.

It's only one-eighth of the RNC's cash on hand, thanks to Jug Ears' mismangement and incompetence.

We should all pray that Jug Ears stays the head of the RNC for next 20 years.

Posted by: Roger Ailes on February 7, 2010 at 1:11 PM | PERMALINK

People making $250,000 are feeling squeezed? Time to revisit the minimum wage.

Posted by: akjenny on February 7, 2010 at 2:23 PM | PERMALINK

As another person who will get nicked by Obama's tax increase, what Pi said--Good thing! We can afford it.

I don't think that people understand the Manhattan ecosystem. "Manhattan," for these purposes, means "White Manhattan:" excluding Chinatown, Harlem, etc. The median income in White Manhattan is a lot greater than $63K. Generally, people in White Manhattan have a bimodal distribution of income--young folk from 0 to $500K or so. People at $250K are pretty much priced out of White Manhattan, if they have to meet a mortgage and don't want to live like starving students.

Don't weep for them--they have plenty of good alternatives. Yuppie swine have no right to live in Manhattan.

Posted by: Joe S. on February 7, 2010 at 3:09 PM | PERMALINK

Median income means that half are below that figure, and one half above.

You can't have 250K as a median, since too many folks fall below that figure.

But don't expect mean folks to understand the difference!

Posted by: Tom Nicholson on February 7, 2010 at 3:26 PM | PERMALINK

Lets have free and fair elections and see which side the clear majority of Americans are on--I am guessing most of us are under the 250K poverty threshold. Probably a filibuster-proof majority. Provided we could elect people from the same economic level. . .

Posted by: Sparko on February 7, 2010 at 4:53 PM | PERMALINK

Democrats as usual fail to clarify the meaning of such a proposal to their advantage. That $250,000 is taxable income -- after exemptions, adjustments, and deductions. Very likely, in most cases, the gross income of such a family -- what we mean when we talk about "how much they make" -- will be between $325,000 and $350,000. Chances are, if the marginal tax rate on taxable income above $250 K is increased by three percentage points, a family "making" $400,000 a year (gross) will pay about $1500 a year more -- another $125.00 dollars out of a monthly income of over $33,000.

Let's cry us a river for those unfortunate victims of "class warfare" and "soak the rich" policies. It's clearly unfair to call them "whiners."

Posted by: urban legend on February 7, 2010 at 5:41 PM | PERMALINK

Give me a quarter of a million dollars and I can retire, living off the interest. -- Rook, @10:32

Nope; not today. In '98, '99, 2000... Maybe, especially if you retired somewhere without utilities and where you grew most of your own food. Today, even if you invested it really well (and, by your statement, you prove that to be most unlikely), you wouldn't have enough for gas to take you to the nearest town for a doctor's appointment (not that it would matter, since you couldn't afford the doctor). A quarter of a million is, in lots of places, very good money to live on and save some but nowhere near enough to live on interest alone.

Posted by: exlibra on February 7, 2010 at 7:45 PM | PERMALINK

What a bunch of greedy, selfish bastards. It is me, me, me all the way and screw everyone less fortunate. Why aren't there more like Warren Buffett who knows he should be paying more taxes.

Posted by: AlisonS on February 7, 2010 at 9:32 PM | PERMALINK

The Republicans and the media have been crowing about the game changing Brown win in MA yet I haven't noticed that the recently passed tax increases on the wealthy in Oregon has gotten much national play.

Posted by: sparrow on February 7, 2010 at 10:10 PM | PERMALINK

Actually, the problem in all of this isn't the usual Republican attempt to suggest Millionaires Are People Too; it is, as some above stab towards, that Democrats are trying to present $250K as some sort of modest compromise... when incomes at $250K, taxable or not, are way above anything one would normally define as "middle class", since they fly well above the understood median income of about $55,000 (and if one wants to discuss Manhattan values... well, I'd love a discussion about affordable housing issues, too). What the "$250 K threshold" does, really, is to include a substantial subset of educated, elite professional couples, lawyers and doctors and corporate types who have recently shifted to a majority Democratic voting bloc, and who bristle at suggestions that they are not part of the great middle, and ordinary, class. This is part of a larger myopia in America that likes to pretend we actually have no class differences, or that they are a minor issue when discussing politics and policy, when in fact, we allow a good bit of what is really the upper classes to pretend that the rich are somehow elsewhere, and they, too, know what it's like to suffer.

This is one major way in which the Democratic has been, rhetorically, slipping away from really representing the concerns of working class people, the actual vast majority of people with incomes well under $100K (you could, really, take that down to $75 and still make the point). Our tax policies are in fact wildly warped, not because we argue over taxing millionaires, but because we accept, as given, that it's somehow unfair or illegitimate to raise more money from well off professionals, or the "middle class." A far more broad minded approach would, in fact, admit that we need to broaden the tax burden, not lessen it, and go where the money is, which is with people in the professional and upper level corporate echelons. That we can't is really an indication that Republicans - or at least what one used to clearly understand as Republicans - have already won: by agreeing that it's somehow a hardship to ask people to bear a greater tax burden when they can claim to be "middle class", we are, actually, backing the "I get mine, and you don't do enough to get yours" logic of conservative selfishness that gets sold as "personal responsibility" and "freedom from government."

The reality remains that our current approach to funding government - with less tax revenue than we actually need, made up with excessive borrowing - continues to be unsustainable. We will, at some point, either raise taxes, or simply have to give up a good deal of spending. As long as Democrats agree to this bizarre playing field of upper echelon tax complaints, we're pretty much sunk.

Posted by: weboy on February 8, 2010 at 12:12 AM | PERMALINK

Republicans would like to shift the discussion from "median income" to "average income". If a billionaire walks into a room with 999 dead-broke people, the average person in the room is a millionaire and the median person in the room is worth nothing.

In an unequal society, the average is a lot higher than the median, because a very few extremely wealthy people pull up the number.

Posted by: Joe Buck on February 8, 2010 at 12:28 AM | PERMALINK
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