Friday, May 20, 2011

"This really isn't about the hunting, is it, Bob?"* -- more on just scraping by on a quarter mil

Comments to my recent post on getting by on $250,000 (which was itself basically a comment on this excellent piece by Felix Salmon) picked up on the fact that, for people making a little over 250K in taxable income, the actual increase in taxes paid under the Obama plan would be remarkably small. This raises an obvious question: why do we keep hearing about the hardship on people making less than 300K when hardly any of the increase falls on this bracket?

The answer I suspect has less to do with math and more to do with marketing.

Sympathy for financial hardship is almost always inversely related to wealth and income. It's hard to feel all that sorry for someone who makes more money than you and yet has trouble keeping the bills paid.

For most of us, a quarter million in income takes you to the far outer edge of the sympathy zone. It seems like a lot of money but you might be able to convince some people (particularly, say, well-paid Manhattanites) that it was possible for a non-extravagant family to have a combined income of 250K and still not have much of a buffer at the end of the year.

Unfortunately for people lobbying to keep the Bush tax cuts, that 250K family wouldn't actually pay any additional taxes if the cuts expired. Neither would a 260K family or a 270K family (assuming those numbers are gross). Because we're talking about taxable income and marginal rates, a family's gross would have to be closer to 400K than to 250K in order to see anything more than a trivial increase.

If you're trying to make an emotional pitch for the Bush tax cuts this creates a problem: the only people significantly affected by the increase are those well outside of the sympathy zone. You can't expand the zone (the suggestion that many families making a quarter of a million were just getting by was met with considerable derision. Upping the number by another hundred thousand is a no starter). The other option is to focus on families making between 250K and 300K while downplaying the actual magnitude of the increase on these families.

Of course, that second option does require an overly compliant press corps that will simply parrot the releases of various think tanks without attempting to correct the false impressions they give. Fortunately for the tax cut supporters, that doesn't seem to be a problem.

* punchline to an old and very dirty joke.

1 comment:

  1. I wonder if the counter might to to talk about raising taxes on "income earned above 250K". That not only true but it really focuses the discussion.