The nice thing about writing a post on tax increases is that you can dust it off in ten years later and be confident that most people still won’t understand marginal tax rates.

And with another Democrat again trying to roll back Republican tax cuts, we are likely to see another wave of just-scraping-by stories.

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 (Read more...)