Dems grapple with ?rich? By Jessica Holzer
July 13, 2007
Leading Democrats in Congress and on the presidential campaign trail are having a difficult time agreeing on what it means to be wealthy.
House Speaker Nancy Pelosi (D-Calif.) has said it means earning $500,000 or more annually. Sen. Charles Schumer (D-N.Y.) contends that raising the tax rate on families making more than $400,000 could offset legislation to slash taxes on the middle class.
Sens. Barack Obama (D-Ill.) and Hillary Rodham Clinton (D-N.Y.) support scrapping tax cuts on those earning $250,000 or more, while former Sen. John Edwards (D-N.C.) has advocated raising taxes on families making more than $200,000.
Other Democrats decline to define ?wealthy? in numerical terms even though they have decried President Bush?s tax cuts as giveaways to the rich.
The White House hopefuls are quick to emphasize that the tax hikes are necessary medicine to remedy what they see as unjust tax policy and to pay for policies that will help the poor and the middle class.
The price tag for such sweeping goals is high. Edwards?s reforms on poverty could cost as much as $140 billion annually, and the ex-senator has acknowledged that balanced budgets would not be his first goal.
Though most of the 2008 Democratic candidates have made clear whom they would target with tax increases, they stop short of defining the wealthy or the middle class in concrete terms. A spokeswoman for Obama said that the senator ?feels that wealth or the lack of it is defined not by a number, but by the ability of a family to provide food, pay for healthcare and afford to send children to college.?
Being middle-class is ?about a lot more than money? but is ?anybody who has to work for a living,? New Mexico Gov. Bill Richardson, who is also vying for the Democratic nomination, told The Hill. He supports rolling back the Bush tax cuts for the wealthiest two percent of Americans and keeping them for the middle class.
Edwards ducked the question ?What is a rich person?? in a recent presidential debate. ?I don?t know if I know what a rich person is,? the multimillionaire replied.
Setting a national standard for the wealthy is a tall order due to the disparity in pay across the country as well as huge discrepancies in housing and other costs. These regional differences are vexing Democrats who are working on a fix to the Alternative Minimum Tax (AMT), a parallel tax system that was designed to ensure the wealthy paid enough in taxes but is ensnaring more and more of the middle class.
Democrats on the House tax-writing committee have said they will propose raising taxes on a swath of wealthy households in order to shield middle-class families from the tax. But people from rural areas and those from high-cost urban or suburban districts tend to have different views of wealth. ?A police officer and a nurse could be making well over $100,000 ? but in New York City, they?d be struggling,? said Rep. Joseph Crowley (D-N.Y.), who represents parts of Queens and the Bronx.
Clearly defining who is wealthy can be politically risky. Many of the rich consider themselves middle-class; meanwhile, many in the middle class believe they?ll be rich someday.
In the 2004 presidential race, Sen. John Kerry (D-Mass.) ran into trouble with his pledge to increase taxes on those making $200,000 or more, according to Paul Weinstein, the chief operating officer of the Progressive Policy Institute.
?Even though it is a small percentage of people who actually make that amount,? Weinstein said, ?a lot of people aspire to that.? He pointed out that Kerry had more success when he would make the roughly equivalent claim that he would raise taxes on about two percent of households.
?The number defining what is wealthy ? the number where you phase out a lot of tax breaks ? that number has moved up,? Weinstein said. ?It was roughly $100,000 in the 1990s, it?s at least $200,000 now and some would move it higher.?
Rep. Rahm Emanuel (Ill.), the House Democratic Caucus chairman, speculated that most in his party would agree that households earning at least $500,000 to $1 million a year were rich: ?That?s their range.?
Aiming tax increases at such a rarified group is a safer bet politically. But then there?s the risk of generating too few funds to pay for middle-class tax relief and ambitious policy goals.
?Anytime you want to do something substantial, you?ve got to reach down into the rates that are in some parts of the country middle-class,? a Senate Republican tax aide said.
Rep. Richard Neal (D-Mass.) recently floated a proposal to levy a surcharge on families making $500,000 or more a year in order to shelter those making $250,000 a year or less from ever paying the AMT and to provide relief for the households in between. The plan is just the starting point for what is bound to be a protracted debate over which taxpayers can afford to foot the bill and which deserve relief.
That debate may well move Democrats closer to consensus on what it means to be wealthy versus middle-class. But for the moment, lawmakers are holding their cards close to the vest.
Rep. Chris Van Hollen (Md.), chairman of the House Democratic Congressional Campaign Committee, said he ?wouldn?t draw any particular line? dividing the middle and upper classes. ?The cost of living has increased so much that the range has gotten bigger,? he explained.
House Ways and Means Committee Chairman Charles Rangel (N.Y.) was blunt: ?I have no clue who the wealthy are,? he said. ?That word is not going to be under consideration with tax issues.?
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