Are the Rich Getting Worried About Taxes?

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A Democrat of my acquaintance, who makes something, but not a huge something, over $200,000 a year while living in Manhattan, was recently grousing to me about the surtax.  "My taxes on a marginal dollar are going to go up almost 1000 basis points!" said he.

This is true, I agreed.  And just what, I wondered, had he thought was going to happen if he elected Obama?  Not clear.


Our subject had listened to Obama talk about taxing people who made more than $250,000, which seemed entirely reasonable; he hadn't realized that being single, his tax hikes would start much lower than that--that he, too, was "the rich".  Mentally speaking, the rich don't live in eight hundred moderately roach-infested square feet in an unfashionable neighborhood of New York.

A few readers emailed to ask me about the proposed 4% income tax surcharge on incomes over $250,000, and what I think is that this experience will eventually be renacted down the income chain.  What's really astonishing is how little money the thing is expected to raise:  less than $100 billion a year over the next ten years.  That's not even enough to cover the current static estimates of the health care plans on the table.

Needless to say, I don't think the plan will cost as little as it is projected to, since virtually no US government health care plan in history ever has.  Meanwhile, the gaping maw of Medicare opens ever-wider.  Obama is going to have to push much farther down the income ladder to pay for it all, taking money out of the pockets of ordinary folks--people who thought that by electing a Democrat, they were going to get relief, not more bills.  He may end up far enough down the income ladder to scoop money out of the pockets of the journalists and wonks who have been enthusiastically pushing his plans.  Old people are expensive, and they don't have much income.

This hardly dooms his electoral chances--my acquaintance remains a die-hard Democrat.  But it sure won't be popular.

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Megan McArdle is a columnist at Bloomberg View and a former senior editor at The Atlantic. Her new book is The Up Side of Down.

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