How's that for a headline? This outcome is predicated on the fact that Barack Obama wins the Presidency. The CNN story delves into how Obama's tax plan defines wealthy:
Indeed, under Obama's tax plan, married couples with at least $250,000 in gross income are likely to see their taxes go up if Obama is elected president.
But what about single filers? The line for them would likely be about $200,000, according to an Obama adviser.
The purpose of this post isn't to talk about whom to vote for, but to lay out facts. Are higher taxes on the wealthy good or bad? I have my opinions, but won't go into them here. The mechanism for the increase is simple:
Obama would restore the top two income tax rates to their pre-2001 levels of 36% and 39.6%. Currently they're 33% and 35%.
Impact of the proposed plan on taxes
From what I've read, McCain would keep the rates as is, if not lower them. The latest issue of Fortune has a story with a comparison chart prepared by the Urban-Brookings Tax Policy Center of how taxes would change for the various income levels (unfortunately, the story isn't online. It's the one titled The Evolution of John McCain.) For the $112,000-$161,000 level, McCain's plan decreases taxes by $2,614, and Obama's plan by $2,204. At the $161,000-$227,000 level, McCain's plan decreases taxes by $4,380, and Obama's plan decreases taxes by $2,789. And at the $227,000-$603,000 level, McCain's plan decreases taxes by $7,871 and Obama's plan increases taxes by $12. Obama's plan really starts to increase taxes at the $227,000 and above income levels.
Does Obama's plan really just soak the 'rich'?
The 'not-so-rich' rich that these changes would impact are of course not happy.
Such rhetoric leaves Hammer steaming. "I don't mind paying my fair share, but people act like they're just talking about Bill Gates," he says. "We would definitely feel a hit if our taxes went up." Although a year ago he would not have considered voting Republican in November, now he's not so sure: "Do you vote your heart, or do you vote your wallet?"
[...]
Like Hammer, many facing higher taxes don't consider themselves part of the exalted crowd. They have good incomes, to be sure, particularly compared with the median household income of $48,200. Of the 149 million households filing federal income taxes for 2006, some 3% reported income between $200,000 and $500,000; fewer than 1% claimed income above half a million dollars.
But many also live in high-cost areas with expenses to match—and feel burned by talk of "taxing the rich" that doesn't recognize that $250,000 stretches a lot further in the South or the Midwest than in Manhattan or Silicon Valley. "There is a huge difference between what politicians define as rich and what many Americans would call middle class," says Patrick Anderson, CEO of the Anderson Economic Group and co-editor of The State Economic Handbook.
I understand the point of the family profiled in the story, things are getting tougher for the mass affluent, especially in high cost areas like the coasts. Times are getting tougher for every other American. What isn't seen in the online version of the article, but is in the print version in BusinessWeek, is that the family is posing for a picture in their hot tub, with their pool in the background. If they are looking to get a little sympathy, that isn't the scene they should have painted. I'm sure that the photographic editor had a lot to do with the setup, but still.
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