President Obama wants to raise taxes on the “millionaires and billionaires” he railed against in his campaign. So he targets those people who earn more than $200,000 a year in the income-tax revamp he proposes, thereby conflating those “fat cats” with the millionaires and billionaires of his wrath. A lot of people in New York City and Los Angeles (ironically, two of the bluest cities in America) must be wondering what their idol is smoking.
If you are a single filer in New York who is earning $200,000 a year, you probably don’t feel like a fat cat. After paying State, City, and Federal taxes, there’s not much left. $200,000 may be a comfortable wage in Wyoming, but it almost qualifies you for food stamps in Manhattan. (Hey, here’s an idea that some legislators could embrace: Make income tax rates depend on where you live.)
There’s another problem: Once inflation starts to roll, $200,000 will not seem like so much. In fact, the median income could quickly rise to six figures, and the tax meant to nail fat cats (like the Alternative Minimum Tax) will start hitting Joe Six-Pack.
Attempts to avoid the “fiscal cliff” may force Obama to swallow a higher break point – say $500,000. New York legislators, worried that legions of executives will flee the Big Apple, may join Republicans in pleading the case for the $200,000 billionaires. After all, New York is Obama country. In Wyoming, he got only 28 percent of the vote.