But this line of reasoning is no longer the sole property of conservative commentators. Rep. Mike McMahon (D-NY), who is one of the House Democrats joining the charge to extend all of the Bush cuts, had this to say:
“I think it is a political liability because it’s a [bad] policy right now for the economy and could have a bad impact on jobs,” said McMahon…“A working couple making $250,000 is barely making ends meet,” he said, adding, “If you have a partnership or an S. Corporation you are definitely affected… As professionals or shop owners or restaurant owners, you get hammered.”
Now, to be fair, McMahon’s district — the New York 13 — encompasses parts of Staten Island, where there are sure to be some well-off families. It’s also New York City, so the cost-of-living is one of the highest around. But still, median income in the district is $60,137. So families in his district that are making $250,000 are still doing very well.
In fact, as Daniel Gross pointed out, “$250,000 puts you in pretty fancy company, especially after the collective pratfall the economy took in 2008″:
The Census Bureau last summer reported that real median household income was $50,303 in 2008, down 3.6 percent from 2007. It’s likely that figure fell further in 2009. So a household that’s making $250,000 today is making about five times the median…And 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.
Less than 2 percent of the country makes more than $250,000, and you literally need to begin looking at individual neighborhoods to find parts of the country where that much money is not going to cut it.
The point here is not to demonize the rich, but to note that, in a time of economic hardship and worrying long-term deficits, we have to look at raising revenue from somewhere, and letting the Bush tax cuts expire for the very wealthiest makes sense. In fact, as the Center on Budget and Policy Priorities found, allowing these cuts to expire “will avert $826 billion in added deficits and debt over the next ten years.”
And as for McMahon’s charge that small business owners will be affected, the numbers haven’t changed: less than 3 percent of Americans who collect any business income at all (whether from a small businesses or a corporation) will see their taxes affected by the expiration of the Bush tax cuts.