To be clear, when we urge the Democrats to hold firm for extending Bush-era tax cuts only on incomes below $250,000, we're talking about taxable income, subject to deductions, exemptions, and AMT; and the $250k figure is shorthand for wherever the top two tax brackets (ideally, top 2% of income earners) will begin for 2011 income.
That means, in effect, that the Democratic proposal will continue existing Bush tax rates for individuals with gross income up to $450,000 and families up to $468,000, with no increase in taxes. (and when I say "Democratic proposal", I'm referring to the fantasy world where Democrats have spines)
Using 2011 tax brackets projected by the Tax Foundation, and tax scenarios made possible by a spiffy tax policy calculator at mytaxburden.org, you can input real-world examples to see how little the Democratic tax plan impacts incomes from $250,000 to $550,000.
At $550,000 income for a family with two kids*, the difference between extending all Bush cuts and letting only the top two brackets expire is 0.6%. That's six tenths of one percent, or an additional $3,400 in federal income tax. For an individual it's 2.3%, an additional $13,000 higher tax bill on that $550,000 income.
And the hit on millionaires is also mitigated: their income tax under the Democratic plan is still 0.8% lower than if all Bush rates expired, and 3.6% higher than if all Bush rates were continued. On the margin, an extra $36,000 income tax off of the million-dollar income. How many jobs are those millionaires going to add to our economy if we let them keep that $36,000 in their bank accounts?
(*I assumed typical deductions for state, local & property taxes, mortgage and other deductibles)