In their debate last night, Hillary Clinton and Barack Obama wandered deep into George H.W. Bush land by pledging never to raise taxes on “middle-income” taxpayers making less than $250,000.
It was enough to make me wish I was watching American Idol instead. On what planet are people who make $250,000-a-year middle-class? The median household income in the United States is about $48,000. Let’s be generous and say the Democrats are talking about singles making $125,000 and couples earning $250,000. TPC figures about 4.7 million households, or less than 3% of all filers, do that well. Probably not too many of them are living in Erie or Lancaster.
To be fair, only Clinton actually set the bar at $250,000. Obama was a lot squishier. After dancing around for a while, he finally concluded “it depends on how you calculate it, but it would be between $200,000 and $250,000.” Obama also muddied the waters a bit more by repeating an earlier campaign proposal to fix Social Security’s shortfall by increasing the payroll tax cap for those making more than about $100,000. This, to him, is apparently not a tax increase.
Of course neither candidate was finished. Both have also proposed billions in tax cuts for the middle-class. Clinton would fix the Alternative Minimum Tax, cut taxes for married couples, and families with kids. Obama would do the same for seniors, homeowners, and working families.
And, being Democrats, they have lots of new programs they want to spend on. Clinton has a $150 billion alternative energy program and a costly health care reform plan. Obama has his own pricey plans for health care, infrastructure, and job training.
How are they going to pay for all this? Both candidates also promised to roll back the Bush tax cuts for those making more than $250,000. According to TPC estimates, that would raise about $1.2 trillion over 10 years. It sounds like a lot, but it would barely pay for AMT relief.
Beyond the individual numbers, there is a bigger problem here. I’m the last guy to defend the Bush tax cuts, especially for high earners. Many of these tax breaks should be rolled back. But it is neither politically nor economically sensible to think you can solve all of the nation’s fiscal problems or pay for all your campaign promises on the backs of 3% of households. We are all in this mess, and we all need to contribute something to cleaning it up. Even those middle-class families struggling to get by on a mere quarter of a million dollars-a-year.
