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President Obama has been putting all those who make more than $250,000 in US as "wealthiest Americans". There is a major flaw in his math leading to this upper limit. I agree with Warren Buffet, that this upper limit needs to take into account the cost of living index.

I do not agree with President and I agree with Warren Buffet that a cutoff limit of $250,000 is not fair for those living in places with high cost  of living. The study (if any) that lead to choosing $250,000 as the upper limit needs to take normalization based on cost of living index into account.
In bayarea, CA, both husband and wife with masters or Ph.D can each make $100,000 and with little bit of stock trading, they will hit this limit.  But, in NO way you can put them into same boat as the "wealthiest Americans". Wealthiest Americans are those who attended President's dinners during campaign in Atherton, Menlo Park, CA. The folks he is labeling as "wealthiest American" would also include a two income family, trying to buy a 3 bedroom house, that costs over a million here, with 1.2% property tax, sending kids to a decent school in a state whose public school are ranked 47th in the country, trying to pay their student loan and all the regular expenses. They are middle class folks here in bay area.  President talked about doing math and arithmatic, if you add up expenses, loan payments together, they don't add up to make families hitting the limit of $250,000 as wealthiest American family, here in the bay area.
This limit needs to be arrived at by using arithmatic and logic; not just by picking a number on a whim. Thanks for taking time to read.

Poll

Should the cost of living be taken in to consideration in order to set an income cutoff limit for tax purposes?

30%19 votes
69%44 votes

| 63 votes | Vote | Results

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Comment Preferences

  •  Income over $250,000 would be taxed at 4% or so (18+ / 0-)

    more than it is today. Everything under 250 would stay the same. If someone  makes $260,000, they will pay that extra tax on just $10,000, which would
    amount to about $400. I think such a family as you describe can afford that.

  •  I don't see it (13+ / 0-)

    I imagine it would be decently complicated to adjust for cost of living.  I would also argue that a lot of factor which go into cost of living may be tax deductible (such as state and local taxes).

    $250,000 certainly goes a lot further in some areas than in others.  But so does $50,000, and so does $5,000.  Cost of living adjustments to tax rates would need to be done from top to bottom, and that would just add even more complication and regulation to a complicated tax system (and one more loophole for the wealthy to take advantage of by claiming they live in a certain area over others, when they have multiple homes).  

    I think most would say that being taxed like a 'wealthy' person when you're just 'middle' for the high cost area you live in, is part of the high cost of living in that area.  

    •  I agree. (6+ / 0-)
      Recommended by:
      kyril, avsp, Jbearlaw, phonegery, bear83, ColoTim

      Not only complicated, but I'm pretty sure the Hamptons has a high cost of living but I don't want to subsidize Donald Dumps mansion.

      If people are good only because they fear punishment, and hope for reward, then we are a sorry lot indeed. Albert Einstein

      by kharma on Fri Nov 30, 2012 at 11:31:48 AM PST

      [ Parent ]

    •  More like "INdecently" complicated. (0+ / 0-)

      You'd have to create an entirely new bureaucracy devoted just to figuring out such a moving target, not to mention inviting a huge amount of politics and influence peddling to game the system.  How are you going to break this idea down?  Okay, so it's costly to live in Beverly Hills; so, my jewelry allowance to attend a party at the "Housewives" should be taken into account because that affects my cost of living, right?  Or how about my car elevator?  Is that a transportation cost, or a housing cost, or labor cost (mainentance, etc.)?  

      Over 4%.  NUTS!

      We are the first to look up and know, with absolute certainty, that the sword we ourselves have forged, is real.

      by Jbearlaw on Fri Nov 30, 2012 at 11:40:54 AM PST

      [ Parent ]

  •  "In bayarea, CA, both husband and wife" (2+ / 0-)
    Recommended by:
    kyril, ColoTim

    Maybe should read "both spouses" or "both household earners".  Perhaps ESPECIALLY in California.

    Jes' sayin'...

    Good diary.

    I'm part of the "bedwetting bunch of website Democrat base people (DKos)." - Rush Limbaugh, 10/16/2012 Torture is Wrong! We live near W so you don't have to. Send love.

    by tom 47 on Fri Nov 30, 2012 at 11:20:11 AM PST

  •  I live in one of the most expensive places on the (12+ / 0-)

    planet, from a cost of living and housing standpoint, and most of the more expensive places are within an hour's drive of where I live.

    Anyone who can afford to actually live here can afford another 4% in taxes on income over 250k.

    (I make, on average, about 2/3 of the 250k limit although there has been a year or two in the last 20 when bonuses and stock went really well and I exceeded it.   I am a homeowner in this expensive district, and have enough money left over to eat really well, cover healthcare for myself and a disabled wife, and employ three part-time people to help out with various tasks in life)

    Once you make enough money to get a roof over your head, cover medical expenses and deal with consumables (food, utilities, like that) plus max out your 401K or IRA, the money after that is pretty much gravy.   It just goes into one investment or another (paying down mortgages is an investment too)

    I would be DELIGHTED to make twice what I currently make, in this extremely expensive cost of living place, and pay 4% more on the final 50K of earnings.

  •  So move (10+ / 0-)

    If you can't afford Upper East Side or Pac Heights, then you move somewhere you can afford.  Us 5-figure salary folk have to do it all the time.

  •  the other thing (6+ / 0-)

    I'm not sure people understand is that 250k isn't gross income, it's taxable income.  So right off the bat there is the $14,800 exemption for a family of four.  Then there is the deduction for mortgage interest, state taxes, etc.  I think you'll find on a gross income basis we are talking closer to $300k-350k for a typical family of four.  Suddenly 2 spouses making $100k each aren't really that close to the limit[you'd need a million plus in a non-retirement investment account to generate enough to reach the limit, and aren't most of their non-retirement assets tied up in their home which they can barely afford].

    •  When the mortgage interest... (5+ / 0-)
      Recommended by:
      Eric K, phonegery, ColoTim, whizdom, PeterHug

      ...and state tax deductions kick in, many high-wage places on the coast turn into moderate-wage places.

      That said, in NYC we choose to pay high taxes because we like good infrastructure that works. Should other Americans subsidize this choice?

      In many suburbs, the people choose to pay high taxes because they want good schools. Should other Americans subsidize this choice, also?

      These are long-term questions that we should think about after the Fiscal Cliff crisis.

  •  This is why there is a good argument to be made (1+ / 0-)
    Recommended by:
    ColoTim

    for higher marginal rates on incomes above $250,000.

    For example, 45% on marginal incomes of $1,000,000 and above, 55% on marginal incomes of $5,000,000 and above, etc.

    •  Don't think we're ever going north of 40. (0+ / 0-)

      You only get 39.6 percent because the current rate is about to expire.  I don't even think there's a majority for raising them north of that even in the Senate.  What additional revenue you could extract will would come from surtaxes, and the last round of those were passed with the ACA two years ago.

      •  39.6% isnt enough to stabilize the economy (0+ / 0-)

        and reverse income disparity. Not remotely.

        Continuing to to discuss solutions that dont solve problems gets old, and the public is learning.

        Just on this blog the move to be willing to talk about repealing the Reagan tax cuts has exploded over 3 years from nothing to something.

        Funniy 'bout that.

        FDR 9-23-33, "If we cannot do this one way, we will do it another way. But do it we will.

        by Roger Fox on Fri Nov 30, 2012 at 03:37:25 PM PST

        [ Parent ]

        •  The pace of discussion increased. (0+ / 0-)

          But search between 2004 to 2009 for "reagan tax cuts"  yields 2419 hits.  Hardly nothing.

          I don't see the public rallying behind repeal of the Reagan tax cuts.  Hell, I don't see them rallying behind the late 1990s cuts.

  •  Nah, they should just get rid of the current AMT (3+ / 0-)
    Recommended by:
    VClib, Roger Fox, redlum jak

    which penalizes people living in high cost of living areas, and no longer properly targets the most wealthy as it was supposed to.

    •  and the marginal rates on $250K and above should (2+ / 0-)
      Recommended by:
      trumpeter, Roger Fox

      increase.  In fact, there likely should be other marginal rate increases at other theresholds above that.  

      •  Based on historical data, no (0+ / 0-)

        Looking at adjusted 1935 dollars for reference:

        4.0% $0 $65,512
        8.0% $65,512 $98,268
        9.0% $98,268 $131,025
        10.0% $131,025 $163,781
        11.0% $163,781 $196,537
        12.0% $196,537 $229,293
        13.0% $229,293 $262,049
        15.0% $262,049 $294,805
        17.0% $294,805 $327,561
        19.0% $327,561 $360,318
        21.0% $360,318 $425,830
        23.0% $425,830 $524,098
        25.0% $524,098 $622,367
        28.0% $622,367 $720,635
        31.0% $720,635 $818,904
        34.0% $818,904 $917,172
        37.0% $917,172 $1,015,441
        40.0% $1,015,441 $1,113,709
        43.0% $1,113,709 $1,211,978
        46.0% $1,211,978 $1,310,246
        49.0% $1,310,246 $1,474,027
        54.0% $1,474,027 $1,637,807
        56.0% $1,637,807 $2,456,711
        57.0% $2,456,711 $3,275,615
        58.0% $3,275,615 $4,913,422
        59.0% $4,913,422 $6,551,230
        60.0% $6,551,230 $8,189,037
        61.0% $8,189,037 $12,283,556
        62.0% $12,283,556 $16,378,075
        63.0% $16,378,075

         and we...

         add 6 more brackets to the current 6 @

        2mil
        4mil
        6mil
        12mil
        24mil
        48mil

        And remember currently the top bracket starts at about 380k.

        And we make the bottom 3 brackets @ 8% up to35k, 9% up to 55k, and 10% up to 85k.

        We cut taxes for the bottom 70 or 80% and move that tax burden to the top .3%.

        FDR 9-23-33, "If we cannot do this one way, we will do it another way. But do it we will.

        by Roger Fox on Fri Nov 30, 2012 at 03:48:06 PM PST

        [ Parent ]

  •  We are talking an extra $390 tax (5+ / 0-)

    on every $10,000 above $250,000. $390 is not a massive, overwhelming burden for someone making $260,000. It's a couple trips to Costco.

     

    Filibuster reform now. No more Gentleman's agreements.

    by bear83 on Fri Nov 30, 2012 at 01:10:07 PM PST

  •  $250,000 a year? Quit whining. (0+ / 0-)

    Many many people get by on $25,000 and less. You can afford to chip in a little extra.

    •  I save the atitude for folks making at least (0+ / 0-)

      a million a year, the top .33%.

      90% make 186k or less.

      97.5% make 250k or less.

      98.67% make a million or less.

      FDR 9-23-33, "If we cannot do this one way, we will do it another way. But do it we will.

      by Roger Fox on Fri Nov 30, 2012 at 05:28:12 PM PST

      [ Parent ]

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