Daniel Gross goes on at some length simply to prove what everyone already knew: that people who earn about $250,000 a year are in the top few percentage of income EARNERS. Which doesn't do a thing to prove his central premise: that people who make $250,000 a year are RICH. Because, of course, anyone attempting to make that point would be wrong.

Anyone who lives in New York or San Francisco and makes $250,000 is almost certainly not rich by any conventional US standard, unless they have a pot of inherited wealth; that salary, with a family of four, will probably pay the mortgage on an middle class house, and maybe allow for some 401(k) savings. The fact is that the "average" incomes in those areas is somewhat lower is misleading, because quite a few local people are sitting on a lot inherited or accumulated wealth, and are either retired, or are underworked and simply clipping coupons (think Paris Hilton before her infamous video made her a celebrity: she had probably never seen a W2 in her life).

Adding another insult to injury is that investment income is not subject to FICA tax: the 12.4% super tax that supposedly pays for social security, but actually is just another income tax. Obama and the Democrats want to extend this tax to infinity above the current cap at around $100,000 (which everyone would agree is just another increase in the income tax, as there is no possibility of a high-earning payer of the FICA tax getting a commensurate return for those taxes paid in the form of social security). So, Kathleen Kennedy, Warren Buffet, and all the other coupon-clipping billionaires out there are perfectly happy to extend this tax to people who actually work for a living.

I would never dispute that the wealthy (and the higher income earners) among us should pay more taxes to provide social benefits to less fortunate or productive, and even for the raw purpose of income redistribution. This need is especially acute in the expensive parts of the country: New York, San Fransisco. But when talking about tax rates, if one adds a 39% federal rate to a 10% state rate, plus 12.4% FICA and around 3% medicare etc., you are getting to a tax rate on earned income of 55% or so. I don't think that even Democratic analysts would believe that it is wise to have a tax rate that high on earned income.

Finally, this is for me personally another reason why we should focus on retaining an estate tax in order to prevent the transfer of massive, untaxed wealth from generation to generation. Instead, as usual, we focus on taxing the hell out people who are the higher wage earners, while the coupon clippers cry "poverty" due to their lower earned (and taxable) incomes. So, when discussing tax rates, let's try to be honest. If anyone really wants to advocate a 60% tax rate, well, at least be upfront about it.

You know, by the "conventional US standard" of my 1970's childhood, a middle-class family may have pulled in under $40,000 per annum, but it also usually did so with only one wage-earner in the family. If you're an individual making $250,000 a year, you might be doing A-OK, especially if you're single. If you're the head of a household of four, you still have a big advantage over the more common middle-class household of four of today, wherein both parents need to work to make ends meet. By their standard, you're a cigar-chomping plutocrat if you can pay the mortgage, keep the lights on, feed the kids and fuel the Ford on a single income... especially one of a quarter-million a year. YOU might not feel like Mr. Rich Bastard Fancy-Pants, but the "conventional US standard" ain't what it used to be. You don't need a chauffered Duesenberg and a vacation house to be rich anymore. All you need is to not have to wonder if you can afford to pay the mortgage payment and the child care on the same week.

Hey, don't be ashamed. When the day comes that I realize I never again have to choose between having a daughter who doesn't see either of her parents for nine hours a day five days a week or having a daughter I can't afford to feed and clothe... well, on that day I will proudly proclaim myself a richer man than you.

plus, you haven't contradicted anything that I've said in my post. The issue isn't whether $250,000 is a large salary (it is, even if earned by two people), the issue is whether a $250,000 salary MAKES YOU RICH.

The subsidiary issue that I raise is whether it is wise to raise the effective tax rates on these so-called rich to close to 60% as Democrats have proposed. In your own post you've defined rich as "being able to pay the mortgage", which makes absolutely no sense, especially if you are implying that if one can pay the mortgage, we should tax the hell out of them.

Finally, this isn't about me, it's about the point I'm making, so please don't try to personalize it.

If you earn more than 98% of the population, one i rich. If one can't figure out how to spend it so that there's some left over, that just means one has no clue.

You're talking about paying mortgages. Many of us can't imagine having enough to buy a house ....

"Wealth" is a question of assets. Income is a question of income. The two are not that highly corralated.

By the way, it took me many years to save for enough to make a down payment on a house, so I know where you are coming from.

Someone earning 250,000 a year is extremely rich and extremely wealthy. I'm using the words `rich' and `wealth' in the colloquial sense, not in a technical economic sense.

There's no explanation for such a person to have any problem paying the bills except poor management of personal finances.

The notion that `wealth' and `income' are not that highly correlated may have sense in some technical economic sense, but in an ordinary common sense way, it is a silly distinction - someone earning 250,000k a year can attend to all personal and family necessities and have money left over for leisure - I am sure of this because I do so with a combined family income less than 1/5 of that (and I have several children) - one can dither on and on not wanting to call oneself rich, and one can lament how one has wasted one's truck loads of money, and one can wonder about one's choices of how to live, but even having choices about how to live is part of being rich, and such a person is rich, whether they find it convenient to admit or not.

You can't just go around re-defining words any way that suits you. Whether the definition is 'colloquial' or 'textbook', to be wealthy or rich requires assets. Having a good salary doesn't mean that one has a lot of assets - that was the first point of my post. Adding the modifier 'extremely' just makes the point more wrong.

The second, and most significant, point of my post was that the US taxes earned income - which is how most non-wealthy people get their money - much higher than unearned income - which is how the wealthy earn their cash. This is the fundamental problem with the tax system and the flaw in the logic that Daniel Gross was espousing. A person who makes $250,000 a year who loses his or her job is just as unemployed as someone who made $50,000 a year. And even at $250,000 per year, at tax rates of 60% it would take a long time to accumulate enough wealth to be considered 'rich'.

"there is no possibility of a high-earning payer of the FICA tax getting a commensurate return for those taxes paid in the form of social security"

Social Security is not a retirement program. Social Security is a safety net.

Anyone earning a significant amount of money would be a fool to expect Social Security to provide for a survivable retirement.

It is Right, and Fair, for those better-off to pay their fair share for Social Security solvency, and expect no direct return when they comfortably retire.

That is simply wrong. The entire concept of social security, the manner in which it was and is sold, is of a contributation based retirement fund. It is explicitly not a welfare program, and it was necessary for it not to be such in order for it to get past Congress in 1936.

There IS a safety net component of it, SSI, which pays out on retirement regardless of the amount of pay - but that is a small amount of the benefit. Most people get a sliding scale of benefits based on the amount paid in.

Which brings me back to my point: if what is being advocated is another 12.4% tax (which is, truly, what is now on the table) - it needs to be admitted upfront because what is now happening is that higher wage earners would be taxed at rates approaching 60%, which everyone agrees is unhealthy for the economy; while the truly rich (non-wage earners) pay taxes at less than half that rate.

There is little "right" or "wrong" in tax policy - if you want to soak the high income earners while allowing the truly rich to skate, then by all means advocate that policy. But we all need to understand what policy is truly being advocated.