Sympathy for Families Making $250,000 a Year

When tax rates not seen since the 1990s come for the Working Wealthy, who will speak out for them? CNN's John Avalon finds a new niche: sympathy for the $250,000 families scraping by in costly urban areas.

It is the gap between the "super rich" -- who really do have more money than they know what to do with -- and what might be called the "working wealthy," who are taxed as though they're rich enough to able to give away half their money.

These are individuals whose household income might bring them into the top tax bracket of $250,000 a year but who, with two parents working, might still find themselves struggling to stay in the stability of the upper-middle class* in the expensive urban areas where they often work.

Much of the anger about the scheduled sunset of the Bush tax cuts for the increase in top-bracket taxes comes from this productive group of Americans.

I don't doubt it can be challenging to put two kids through private school and pay a mortgage on $250,000 a year in an expensive urban area, but I'm not convinced that those families' experience should guide our tax policy. Six million tax filers, or four percent of the country, bring home between $200,000 and $500,000 in cash income, according to the Tax Policy Center. They earn 15 percent of total income and pay 18 percent of total taxes.

And this: Since 1979, the top five percent of the country has increased its share of total income from 17 to 22 percent, but effective tax rates for this group have fallen by about two percentage points in that same period. To be sure, much of that income increase went to the richest three million rather than to families in the 96-99 percentiles. But there's little evidence that this group requires special consideration, especially when you consider a map of concentrated income gains like the one leading off this article.

Avalon's piece strikes me as an argument for more income brackets. If we acknowledge the country is getting ever more stratified between the wealthy, the super-wealthy and the sweet-lord-they-must-use-their-money-as-napkins wealthy, why not build an attic on top of income tax system to catch extra money at higher rates? You wouldn't want to jack up the rates so high that rich folks start shielding millions in taxable income from IRS, but there might be a sweet spot.

* I know it's polite to say we're all middle class until our yearly income adds a seventh digit, but really. If the 95th percentile is the middle class, does that make the median income earner upper-lower class? Or is America's middle class more like the stuffing in a three-story Oreo?