Far too many of my fellow progressives have been lured into the trap of discussing whether a family making $250,000 a year is "rich" or not.
They are simply answering the wrong questions.
Despite the fact that a $250,000 income is well above the median income everywhere you look, the fact remains that the purchasing power of a $250,000 income has declined over time.
I am not making the argument that someone making 250k/year could not afford 39.6 percent taxes - far from that. However, we're really missing the boat if we turn our guns on those people.
Consider the fact that many conservatives are still championing a flat tax under the pseudonym "fair tax" - this will, in effect, raise taxes on the poorest Americans while significantly cutting taxes on the wealthiest - not only because of its effect on the income tax, but because of no effect on dividend or capital gains taxes, which contribute to lower the overall taxation of the wealthiest Americans.
Any effort to "simplify" the tax code does this - any reduction in the number of tax brackets ends up meaning that the folks with higher incomes will pay less in taxes and the folks with lower incomes end up paying more.
Consider the current brackets (all numbers under married filing jointly, which have been the same as single rates since 1993):
Tax Rate |
Income Range |
10.0% |
$0-$17,000 |
15.0% |
$17,001-$69,000 |
25.0% |
$69,001-$139,350 |
28.0% |
$139,351-$212,300 |
33.0% |
$212,301-$379,150 |
35.0% |
$379,151 and up |
A return to the Clinton-era rates (2000) would simplify the brackets from six to five...
Tax Rate |
Income Range |
15.0% |
$0-$43,850 |
28.0% |
$43,851-$105,950 |
31.0% |
$105,951-$161,450 |
36.0% |
$161,450-$288,350 |
39.6% |
$288,351 and up |
Rewind a few more years, and let's look at the Reagan endgame - numbers coming from the year 1988. First, married filing jointly:
Tax Rate |
Income Range |
15.0% |
$0-$29,750 |
28.0% |
$29,751 and up |
And for singles...
Tax Rate |
Income Range |
15.0% |
$0-$17,850 |
28.0% |
$17,851 and up |
Now while there was a "rate bubble" of 33% for incomes between a certain range ($71,900-$149,250 for MFJ, $35,950-$113,300 for MSS, $43,150-$89,560 for single, and $64,200-$128,210 for HOH), the shortfall in revenues was recouped not necessarily on th backs of millionaires and billionaires, but on the upper-middle class individuals who fell into these brackets.
In 1987 there were five brackets, in 1986 there were 15.
Now let's examine the Great Depression (and I will not be creating a table with those numbers because it is FAR too time-intensive). In 1929 there were 23 brackets, with the top bracket charging 25% for incomes over $100k. The tax code was reformed for the 1932 tax year, when there were 55 brackets - with eight brackets to cover incomes north of $100k/year. (Keep in mind, we're talking 1932 dollars here.)
The top tax bracket in 1932 was 63%. In 1936, the brackets were simplified down to 33 brackets, including 11 brackets at the $100k-plus level. The top bracket, for earners making $5,000,000/year or more was 79.0%. The brackets stayed similar until 1941, when we dropped to 32 brackets, yet increased the top marginal rate (incomes over $5,000,000) to 81 percent.
After 1941, we would no longer have millionaire tax brackets, as the code was simplified down to 22 brackets, with the top bracket ($200k-plus) paying 88 percent. In 1944, incomes over $200k were now subject to a 94 percent marginal tax rate, the peak of the marginal rates.
So my question to my fellow Kossacks is this: Why do we insist on fighting the war on the $250,000 field? Is that a lot more than some of us make, and indeed some of us will ever make? Of course. But we have to avoid criticising folks who fall at the lower end of the upper tax bracket. They're not the ones kicking and screaming, sabotaging the government and treating any tax increase as a Soviet-style takeover of their finances.
A true tax code reform would address the inequities in the system by tilting back toward a more progressive tax, with additional brackets above the current six. Here is something I would propose:
Tax Rate |
Income Range |
10.0% |
$0-$20,000 |
15.0% |
$20,001-$38,000 |
28.0% |
$38,001-$91,850 |
31.0% |
$91,851-$140,000 |
36.0% |
$140,001-$250,000 |
40.0% |
$250,001-$500,000 |
45.0% |
$500,001-$1,000,000 |
50.0% |
$1,000,001-$5,000,000 |
75.0% |
$5,000,001-$10,000,000 |
90.0% |
$10,000,001 and up |
Millionaire tax brackets make sense, especially in this time of crisis. The thought that someone like a LeBron James... or an Alex Rodriguez... or Insert Hedge Fund Manager Here... is playing in the same tax bracket as YOUR DOCTOR ought to be unacceptable.
The $250,000 battleground is not where we need to fight. It's a soundbite. But if you think high, and you make Republicans be the defenders of the uber-wealthy, and not just the relatively well-to-do, you'll start to see the message resonate quite a bit more.
I'd be willing to pull down the tax rates at a later date, but we're in an economic slowdown, and despite the progress we've made in the last couple years we need to be far bolder, and far more aggressive, in addressing the problems this nation has.
We need a massive public infrastructure program that will put Americans back to work, RIGHT NOW.
We need single-payer health care in this country, so that our businesses can better afford to hire American workers rather than workers from another country that already HAS universal health care - RIGHT NOW.
We need common-sense immigration reform, that will give a path to citizenship to workers and families who are looking to better their lives. They will be the people who truly add to our great country - RIGHT NOW.
We need to invest in our schools, to make sure that teachers aren't forced to teach classes of 50 kids. To make sure that our students are getting a strong education in math and science - RIGHT NOW.
We need to eliminate corporate welfare for businesses making record profits - RIGHT NOW.
We need to safeguard Social Security, Medicare, and Medicaid, RIGHT NOW.
We need to bring the troops home, RIGHT NOW.
But most of all, we need to develop a sense of urgency and stop dithering about the people making $250,000 a year. The argument simply wastes time and turns those of us who SHOULD be fighting together into adversaries, and allows the Republicans to advance their real agenda.
No, $250,000/year is not rich. $2.5 million/year, on the other hand? Yeah, that's rich. Rich is being able to know you could stop working tomorrow and maintain a high standard of living for life. Rich has nothing to do with income, and while it's easier to build wealth at $250k/year (and I don't even make 1/3 that) than it is at $25k/year, it's certainly not "easy street" - at least in this economy. It's just easier, and it distracts us from the real issue is that those who have things the easiest in this country aren't satisfied, and they want what you have too.
It's like the joke about the billionaire, the autoworker, and the Tea Partier. The three of them have a dozen doughnuts. The billionaire takes ten, the autoworker takes one, and as the Tea Partier takes one, the billionaire says "you know, if that autoworker hadn't stolen that other doughnut, it would have been yours?"
When Republicans make us fight the battle on the $250k/year field, we lose. But when we back them into defending millionaires and billionaires, we win the message war. It's as simple as that.
Despite what many of us think, $250k a year isn't a ton of money. It just isn't. And it's a losing war for us to fight. We have to remember - even though most of us here were not alive for it - that there was a time in this country's history when it was considered a patriotic duty to help strengthen the government in a time of crisis.
Today's Republicans would like you to think it's patriotic to shrink the government to the size where you could drown it in a bathtub.
UPDATE: As requested, Eisenhower Tax Rates (1955-1963)
Tax Rate |
Income Range |
20.0% |
$0-$4,000 |
22.0% |
$4,001-$8,000 |
26.0% |
$8,001-$12,000 |
30.0% |
$12,001-$16,000 |
34.0% |
$16,001-$20,000 |
38.0% |
$20-001-$24,000 |
43.0% |
$24,001-$28,000 |
47.0% |
$28,001-$32,000 |
50.0% |
$32,001-$36,000 |
53.0% |
$36,001-$40,000 |
56.0% |
$40,001-$44,000 |
59.0% |
$44,001-$52,000 |
62.0% |
$52,001-$64,000 |
65.0% |
$64,001-$76,000 |
69.0% |
$76,001-$88,000 |
72.0% |
$88,001-$100,000 |
75.0% |
$100,001-$120,000 |
78.0% |
$120,001-$140,000 |
81.0% |
$140,001-$160,000 |
84.0% |
$160,001-$180,000 |
87.0% |
$180,001-$200,000 |
89.0% |
$200,001-$300,000 |
90.0% |
$300,001-$400,000 |
91.0% |
$400,000 and up |
Further Update: Wow, just noticed I made the rec list? Thanks for all the support. First time!