by Frank James
One of the most interesting moments in last night's Democratic presidential candidates' debate was when an audience member asked one of the most nettlesome questions that can ever be put to Washington lawmakers or policymakers.
The question was essentially, what's their definition of rich?
Here's the passage.
MR. SEALANDER: Well, good evening, everyone.
My wife and I have two daughters -- middle school age. And we do reasonably well financially, but the vast majority of our spare income goes toward funding our retirement, putting aside money for their college education. And we don't have tax shelters. We hear an awful lot about new spending -- all wonderful-sounding programs -- with the answer for funding being elimination of tax cuts that were geared toward the rich. And I was wondering what the definition of "rich" is on the part of the candidates, with using perhaps an income level.
MR. BLITZER: Senator Obama, what is a definition of "rich"?
SEN. OBAMA: Well, the definition that I'm using with respect to paying for my health care plan is those making over $250,000 a year. Keep in mind that all we're talking about is going back to the tax levels -- the marginal tax rates that existed when Bill Clinton was in office. So we're not talking about going back to huge marginal rates.
But you tell a larger story that I hear as I travel all across the country, and that is that folks are feeling hit from all sides. They're trying to save for the next generation's education.
They're trying to save for their own retirement. In some cases, they're looking after an aging parent. Gas prices are hitting them. And one of the things that we've seen in our economy is that the burdens and benefits of this new global economy are not being spread evenly across the board, and that's why as the next president one of my first priorities is to make sure that we institute some fairness in the system: We institute in our tax code --
MR. BLITZER: All right.
SEN. OBAMA: -- we institute it with respect to making sure that Social Security is preserved, we institute it in giving working people an opportunity to save where they don't have it right now, and we make sure that -- as Chris said; and I think Chris made an excellent point -- that college education is simply too expensive at this point.
MR. BLITZER: So give us a number, Senator Obama. At what number would you tell us that there's lower taxes or what number people can afford higher taxes?
SEN. OBAMA: I'm sorry, I don't understand the question.
MR. BLITZER: It's income. Income -- $200,000 a year, $150,000?
SEN. OBAMA: Well, as I said before, I would roll back the Bush tax cuts for those making over $250,000. In some cases, I'd like to see lower taxes. But when I was in the state legislature, one of the things that I introduced was a state-earned income tax credit that provided millions of dollars of tax breaks to folks who can least afford it. And keep in mind, my starting point is not how do I tax people; my starting point is: Are we spending the money that we have wisely and which we're not always doing.
And if you're progressive, you should be just as concerned by this huge spike in earmarks that have been taking place under the Bush administration as any so-called fiscal conservative is.
MR. BLITZER: What's a rich person, Senator Edwards?
MR. EDWARDS: Well, I don't know if I know what a rich person is, but what I'd do for my health care plan is roll back the tax cuts for people who make over $200,000 a year, so $200,000 is a big value.
These answers didn't really address the heart of Mr. Sealander's question. It was actually somewhat odd that both Obama and Edwards didn't really have an answer for Mr. Sealander. One might've expected that people as smart and ambitious for the presidency as Obama and Edwards would have thought about this question which is so central to the idea of making the "rich" pay their fair share.
Obama reduced the question to talking about whose taxes he would raise by reversing President Bush's tax cuts. Increasing taxes on those who make over $250,000 is an important part of funding his new proposed health-care plan.
But why $250,000? That's obviously an arbitrary figure. And while it puts an income earner at the top end of the national income scale, it doesn't necessarily make him or her "rich."
Even if Obama's talking about $250,000 in taxable income after deductions that may make one person "rich" in Springfield, Ill. or Birmingham, Ala. but not necessarily so in New York City; Washington, D.C. or Los Angeles.
And the economic reality is that many income earners who make $250,000, especially in households where both parents work, are among those whose incomes have stagnated in recent years. They don't feel "rich" which was Mr. Sealander's point.
And perhaps they're largest asset, their home, has stopped significantly appreciating in value in many places if it hasn't fallen in price.
They're also not the truly wealthy who have seen their incomes explode over the past decade relative to the rest of Americans.
Obama suggested that he understood Mr. Sealander's point about feeling the financial pressures of saving for college, the costs of aging parents, rising gas prices and the like. He said he wanted to restore fairness to the tax code.
But if Mr. Sealander has taxable income of $250,000 and his taxes rise to fund Obama's health care proposal, my guess is that wouldn't feel fair to him.
So Obama didn't really give a satisfactory answer to the question of who is rich.
Edwards, who is truly among the nation's wealthy, gave an curious answer, saying "I don't know if I know what a rich person is..."
He had opened himself up to the other candidates, who could've scored some easy points by saying, "John, look in the mirror."
Actually, given Edward's reputation as self-obsessed about his looks, that would have been a devastating line.
Of course, that line could have applied to most of the candidates on the stage whose financial situations would have easily qualified them as very "rich" and therefore could've backfired on them.
So we're still looking for an answer to Mr. Sealander's question. Who is rich?
Comments
Sure, they don't know what a rich person is. Here's a clue guys, look in the mirror and you'll see one.
Love the new Swamp guys!
Posted by: Jeff | June 4, 2007 10:58 AM
Interesting that Wolf called on Obama, the least rich of the major candidates, first to answer the question. So his answer should have been "all the other candidates but me."
Posted by: GW | June 4, 2007 11:38 AM
Frank, it's impossible to put an exact number on "rich". And to call obama's and Edwards' answers "poor" is ridiculous. What do you expect them to do, quantify something that's unquantifiable?
"Rich" is subjective. One person's rich is another person's poor. An 18-year old voter who works after school for $7.00/hr might think someone who makes $40,000 a year is "rich". A 50 year old voter with his income at it's peak and a decent, if not decadent, retirement savings who makes $100,000/year definately won't think he's "rich".
When these candidates talk about "tax breaks for the rich", and the question is asked "what do you call rich", and then they give an exact dollar amount of income at which they'll roll back the tax cuts, they're answering the question as directly as is humanly possible.
Posted by: david k | June 4, 2007 12:06 PM
You won't find all the rich white Republicans candidates talking about helping the poor.
They're to busy trying to figure out a way to convince people that W.'s tax breaks for the 1% wealthiest Americans is a good thing.
Posted by: John E | June 4, 2007 12:56 PM
John E. and David K. I can't believe you are still harping on the "tax cuts for the rich" slogan. You guys lost that argument years ago.
I thought you were supposed to be "Progressive?"
Sounds like you're still hanging onto dinosaur arguments.
Oh, I'm sure you'll throw a liteny of "Paul Krugman" type statistics, so knock yourself out.
Posted by: JD | June 4, 2007 1:20 PM
John E: history lesson. EVERONE received a tax cut under Bush. The rate most people pay, 28.5 percent, was dropped to 25 percent. Those makingu under 20,000 a year were REEMOVED from the federal income tax rolls (you should know that yourself). The child deduction was DOUBLED. Marriage penalty tax REMOVED.
While 200,000 and 250,000 is a nice sum of money, that is not rich. That is upper middle class and in CHicago area, more like middle class.
It's funny though that millionaires like Edwards and Obama would consider 200,000 a year as being "rich."
Posted by: John D | June 4, 2007 1:54 PM
One more thing I'd like to add... any couple who makes $250,000/year+ in this country and doesn't feel "rich" have a very skewed sense of entitlement (doesn't matter if it's Springfield or New York). If you can't feel somewhat "rich" at that point, then you just never will, regardless of how much you make. And if you are going broke while making $250,000/yr, then you're just materialistic to a fault and obviously addicted to spending money.. with that attitude you'll go broke whether you make $250,000/yr or $5,000,000/yr.
As of 2005, only 1.5% of American households were making $250,000 or more. If you can't feel "rich" when you make more money than 98.5% of the rest of the country, then you truly deserve pity, because you are just an extremely negative person (and probably poor where it matters most).
Posted by: david k | June 4, 2007 2:28 PM
John D...
So if your income is in the top 1.5% of the total populace, you're now not only out of the upper middle class, but firmly middle class?
So what does that make the other 98.5% of us? Poverty stricken third-worlders?
It's laughable how delusional some people are... $250,000/yr = "middle class". LOL. Only in Republican-reality-world.
Posted by: david k | June 4, 2007 4:00 PM
One more thing I'd like to add... any couple who makes $250,000/year+ in this country and doesn't feel "rich" have a very skewed sense of entitlement (doesn't matter if it's Springfield or New York). If you can't feel somewhat "rich" at that point, then you just never will, regardless of how much you make. And if you are going broke while making $250,000/yr, then you're just materialistic to a fault and obviously addicted to spending money..
Posted by: david k | June 4, 2007 2:28 PM
David K, maybe you should tell that to the residents of San Francisco. In SF, its considered bad manners to tell people you "own" versus rent. Most people (many who's household income is greater than $250,000) can't afford a home there. And no, this isn't right-wing retoric. This comes from a friend of mine who lives there, who is a hardcore liberal (but can afford a house with her husband). Most interesting to me is that in a liberal utopia like San Fran, as you infer, most people are just "negative" because $250,000 doesn't afford them a house.
Posted by: Troy | June 4, 2007 5:04 PM
You won't find all the rich white Republicans candidates talking about helping the poor.
They're to busy trying to figure out a way to convince people that W.'s tax breaks for the 1% wealthiest Americans is a good thing.
Posted by: John E | June 4, 2007 12:56 PM
Interesting..... however, 20/20 (is it liberal or right wing???) did a study during the holiday season. They put a Salvation Army collection pot in the main district of San Francisco, and another in Souix Falls SD. The Souix Falls buck took in over 3 times the amount the San Fran bucket took in. Despited the huge desparity in population. Last I heard, San Fran was a liberal bastion while Souix Falls was a Republican stronghold. I'm sure the explaination from you revolves around the stupid Rebublican white trash blindly following their rich white masters.
Posted by: Troy | June 4, 2007 5:09 PM
$250,000 - adjusted gross income or taxable income? I notice how the amount was above a congressman's pay.
How much would they increase the taxes on the most productive in society?
Posted by: Terry | June 4, 2007 5:45 PM
One more thing I'd like to add... any couple who makes $250,000/year+ in this country and doesn't feel "rich" have a very skewed sense of entitlement (doesn't matter if it's Springfield or New York). If you can't feel somewhat "rich" at that point, then you just never will, regardless of how much you make. And if you are going broke while making $250,000/yr, then you're just materialistic to a fault and obviously addicted to spending money..
Posted by: david k | June 4, 2007 2:28 PM
David K, maybe you should tell that to the residents of San Francisco. In SF, its considered bad manners to tell people you "own" versus rent. Most people (many who's household income is greater than $250,000) can't afford a home there. And no, this isn't right-wing retoric. This comes from a friend of mine who lives there, who is a hardcore liberal (but can afford a house with her husband). Most interesting to me is that in a liberal utopia like San Fran, as you infer, most people are just "negative" because $250,000 doesn't afford them a house.
Posted by: Troy | June 4, 2007 5:04 PM
Funny you say that Troy... I LIVED in the east bay area in 1999-2000. And I made a middle-wage income (roughly $40,000/yr) even there. And the middle class either rented or lived over the Oakland hills in the valley. Those who lived in San Francisco were the rich. Just like those that live in the Gold Coast here in Chicago are the Rich, or Manhattan in New York... Just because you can't afford to buy a house in some of the most expensive enclaves of the world (Manhattan, San Francisco) doesn't mean you're not middle class.
Posted by: david k | June 4, 2007 5:49 PM
How much would they increase the taxes on the most productive in society?
Posted by: Terry | June 4, 2007 5:45 PM
Interesting leap you make there Terry. Do you really believe that the highest paid are the most productive?
Is Tiger Woods one of the most productive americans?
Johnny Depp?
Is the highest paid person in a company always the most productive. Is the lowest paid person always the least productive?
Posted by: Tony | June 4, 2007 6:43 PM
There's a presumtion here that the definition of rich somehow affects our tax policy. But it's the wrong question.
Last year there were more than a thousand IRS bills before Congress. More than a thousand! That is not about raising funds to run the government.
Those with influence (that is, those who contribute to political war chests) get to go to the head of the line with petitions for tax loopholes. And given the volume of bills, tax legislation is political currency - an easy way for legislators to scratch one another's backs.
Rich or not, we need tax law that doesn't allow this kind of traffic and that guarantees that those who make more pay more every year. I don't know of a single legislator who would want to get on that wagon.
Posted by: Philip Cain | June 4, 2007 8:08 PM
I got mine & Democrat you!
Posted by: Rich Republican White Guy | June 4, 2007 9:23 PM
Yes Tony, I do. Supply and Deand, it's how the market works.
Posted by: Terry | June 4, 2007 11:15 PM
Yes Tony, I do. Supply and Deand, it's how the market works.
Posted by: Terry | June 4, 2007 11:15 PM
The market is imperfect Terry. It works on a macroscale not laways at a microscale.
The rich aren't necessarily better than everyone else. They aren't necessarily more productive than everyone else, they're just richer than everyone else.
Posted by: Tony | June 5, 2007 7:00 AM
The market is "imperfect", I guess it depends on what you measure it against?
As far as Tiger Woods being overpaid - look at his winnings on the PGA and then look at what he has done for attendance - he could be considered underpaid. As far as Nike and other sponsors, look at what has happened to Nike golf since he became its face.
Johnny Depp - whatever his salary is for say Pirates, as compared to the take of the movie. I think the movie investors are pretty happy.
Market works pretty well.
Posted by: Terry | June 5, 2007 6:58 PM
Terry-
But does that make Johnny Depp one of our "most productive citizens"? I gues it depends on what you mean by "productive".
Is a teacher a productive member of our society Terry? They don't get paid very highly.
Or, in an example that will, i'm sure, make you choke, is a successful personal injury attorney "one of our most productive citizens"?
Is a doctor who chooses to work in the ER at a county hospital less productive than a doctor who chooses to practice elective cosmetic surgey? Certainly the guy who does tummy tucks gets paid alot more by the market than the guy who is providing life saving care to the poor.
I guss the market works pretty well if the only measure you look at of the worth of someones work is the money they make. If you look at the value of what they actually do, not so much.
Posted by: Tony | June 6, 2007 7:08 AM
Tony,
Trot out the "poor ol' teacher" argument. First, supply and demand - theie are thousands upon thousands of people that teach or could teach, therefore the pay for teachers does not have to be as high as compared to a Johnny Depp who generates tens of millions for the investors of the movies he stars in.
Second, please look at www.thechampion.org and seen the salaries of the ubnderpaid public school teachers and administrators of the state of illinois.
You are confusing "productivity" with "nobelity". That slime bucket of a trial lawyer was very productive for his client if he won the case - he gets paid more than if he was less productive by not winning the case.
Posted by: Terry | June 6, 2007 9:10 PM
I personally find educating the future workers and leaders to one of the most intensly productive functions in the economy.
You are confusing "productivity" with "profitablity".
Posted by: Tony | June 7, 2007 7:04 AM
Since the original topic was definition of rich for tax purposes, let's discuss the economic definition of productivity -
"a measure relating a quantity or quality of output to the inputs required to produce it."
In terms of economic productivity, I think Tiger Woods and Johnny Depp produce more economically than do teachers. What they get paid is just a matter of supply and demand.
Not knocking what teachers do, since I have been on that side of the classroom before.
Posted by: Terry | June 7, 2007 8:34 PM
I beg to differ Terry.
You're only looking at quantity, not quality.
Woods and Depp produce little of any real long term value. They help to produce (don't forget to include the massive support costs associated with their work) a short term, transitory positive.
If Tiger Woods does his job very well he wins a golf tournement this week. There is almost zero lasting benefit to society or the economy from what he produced.
If Johnny Depp does his job very well he makes a good movie. There is an economic impact on the economy that lasts, what a year at most? There is some long term benefit to the society in the production of a cultural artifact that will be appreciated by later generations.
If a teacher does their job well, they help produce dozens of qualified educated workers and citizens. There is a long term impact to the economy and to society lasting the lifetimes of those people.
As to the supply and demand arguement, it's not a supply problem (too many teachers) it's a demand problem. American's do not value education enough to create the demand for as many high quality educators as we really need. We will tolerate overcrowded classrooms (especially if they are in a poorer neighborhood next door) rather than pay a little more in taxes.
That is itself, a failure of the market. The market does not recognize the value of the long term investment that education is, as opposed to the short term immediate gratification of sports or entertainment.
Posted by: Tony | June 8, 2007 7:26 AM
Tony,
You miss the supply and demand point. For example, if the salary of teachers doubled, I'll bet the supply of teachers would increase. The market sets an equilibrium price for teachers, just as they do with any other profession - such as left-handed pitchers that throw a 95 mph fastball with an awesome "unlce charlie".
Overcrowded classrooms??? I went thru first grade with 51 kids in my class.
Maybe American taxpayers, of which I am one, want more results from the public education system that we have been putting money into for decades. Also, here in Chicago-area, there are plenty of well-performing schools that do well on less money than the lower performing schools - I'm just talking suburbs.
The taxpayers are the market. Maybe the taxpers would like some results before they throw more of their hard-earned money at the problem.
If you are giving teachers the credit for producing well educated citizens that will produce in future generations, so you give them a proportionate of blame for those students that go thru their class and go on to welfare or prison.
Posted by: Terry | June 8, 2007 2:35 PM
"You miss the supply and demand point. For example, if the salary of teachers doubled, I'll bet the supply of teachers would increase."
That would be a good thing, wouldn't it? That's the point I'm making. the market, by underpaying teachers, keeps the supply artificially low, which in the end hurts the economy and society.
"Overcrowded classrooms??? I went thru first grade with 51 kids in my class."
At the school you walked 3 miles to in knee deep snow up hill, both ways. Right?
But seriously, do you really think a class of 51 kids is in any way ideal? Is that what you want for your kids?
If you are giving teachers the credit for producing well educated citizens that will produce in future generations, so you give them a proportionate of blame for those students that go thru their class and go on to welfare or prison.
Posted by: Terry | June 8, 2007 2:35 PM
Fair enough. But then you have to take into folks like Paris Hilton into account when you claim that the rich are the "most productive citizens."
Posted by: Tony | June 8, 2007 5:24 PM
Paris Hilton - as repulsive as she may be, has more wealth than income. However, I'm sure that her income is very good from all her reality based crap.
Remember, the market place has determined her value. The marketplace is the sum values of the American public. The American public was taught by the American Teacher.
Maybe the teachers are getting their just desserts?
Are you a teacher? Have you ever taught?
Posted by: Terry | June 9, 2007 8:06 AM
"Remember, the market place has determined her value. "
The ultimate proof of my point that the market does not always work.
I am not a teacher, noe have I taught. Even though, I seem to hold them in much higher regard than you do. Why are you so critical of the teaching profession? Why do you see so little value in thier work?
Posted by: Tony | June 9, 2007 2:14 PM
Tony,
I don't see little value. My point is, these adults have made a career choice knowing all the upsides of teaching and the downsides. The market place, thru supply and demand, has determined what they need to get paid.
Look at their upsides - good non-salary benefit package, job security - no corporate down-sizing, june, july and august.
Downsides -not great pay (not bad either), smart-butt kids.
It is their choice. If we have shortage of teachers, guess what, their pay will increase - see Las Vegas.
Once I wrap up my corporate gig, I look to get back in the classroom.
Posted by: Terry | June 10, 2007 10:05 AM
Terry, I think we're going in circles here.
You believe that by definition the market is infallible.
I believe, that just like any other human institution, tha market is imperfect, and can assign false values to things.
We're never going to bridge that gap.
Posted by: Tony | June 10, 2007 5:09 PM
The markets is the judgement of the sum of the individuals, which beats any one give individual or institution every time it is tried.
If youy think so highly of teachers, why aren't you one?
Posted by: Terry | June 10, 2007 10:03 PM
If youy think so highly of teachers, why aren't you one?
Posted by: Terry | June 10, 2007 10:03 PM
Because I'm realistic enough to know that I don't have some of the required skills to be a good teacher. I simply do not have the patience required.
Posted by: Tony | June 11, 2007 2:46 PM