Obama's Tax Cut for the Rich (and Red)

This argument might have traction with those who live in high cost-of-living areas, but it's a non-starter for the rest of us out here in the hinterlands. I can point out for starters that tax rates in high tax jurisdictions aren't forced on them by the rest of us, as a matter of fact, they are subsidized by the rest of the country through deductibility in the federal tax code. I think there is little danger of mass migration from the northeast or Califonia or Hawaii into the Midwest. Those who live in New York or Boston will tell you how superior their cultural landscape is to the rest of the country. They may be right. California and Hawaii enjoy wuch better weather than most of us. These things have value to those who live there. And to those who live elsewhere. Witness the numbers of people who flock to these places on vacation. How many people long to spend time in Kansas, anytime of the year (no offense meant to Kansans). If we index income taxes for these areas for cost-of-living, we might also have to impute a certain amount of "hedonic income" to those who live there. I don't expect that many people from Washington D.C., New York, San Francisco, or Honolulu will be moving to the Dakotas soon (again, no offense to Dakotans of either stripe). from Mesa, Arizona

Excellent article. I'm sure the blue state wealthy agree totally with you, but they are out voted every election by the lower wage earners. Same thing happens in my state of Minnesota. I suppose since its nearly impossible to create a cost of living set of tax rates for each city in the US the next best answer would be to raise that $250,000 number to, say, $750,000 or something around there. But...if the Democrats and Obama did this then, of course, there would not be enough new revenue to "spread the wealth" to the 38 million tax filers who pay no income tax anyway. We all know, or should know, that the democrat's claim to "reduce taxes on the middle class" is just another election year lie or at best a large exaggeration to get votes.

After November 4th, if we have a Democratic House, Senate and White House taxes will be the least of our problems.

Before you get all teary eyed for the Boston family having to pay $1800 more in taxes every year, remember that the absolute dollars they will earn in appreciation on their house over the long haul is substantially more. If real-estate appreciates at an average of 3% a year in both markets, the Boston couple's net worth will increase $15,000 more than the KC couples EVERY YEAR. In 30 years the Boston couple could sell their home, move to KC, pay cash for the house next door to the KC couple, and still have 1.2 million left over. And that's if you assume real estate values in the two areas will appreciate at the same rate. Chances are that the Boston couple will see a higher rate of appreciation over the long haul than the Kansas City couple. But hey, if $1800 a year is that big a deal to you feel free to leave either coast and come to the midwest. We have plenty of room for you!

Brian, You are absolutely right. If this country votes for higher taxes, we will get what we deserve. Citizens should be up in arms about this and telling all their neighbors and friends. Obamalovers are a lost cause. When someone puts ideology above truth, it will take an act of God to help steer them back.

Any economic concept Barrack Obama proposes demonstrates his lack of education and experience in financial matters. Why should anybody expect a person with an education in law, a part time job as a state Senator, and an uncompleted first term as a U.S. Senator to understand complex economic issues? What's worse is how can so many people believe he can? People say they wish they were younger. I was 70 three weeks ago and I'm damn glad I it wasn't 40.

THE OBAMA TAX PLAN WILL RESULT IN A NEW SYSTEM OF THE PREVIOUSLY FAILED "WELFARE STATE". "SPREADING THE WEALTH" WITHOUT REGARD TO REGIONAL COST OF LIVING IS BAD POLICY AND WILL SIMPLY LEAD TO A NEW FORM OF INEQUITY WITHIN OUR TAX CODE. WE NEED TO WAKE UP AND DEMAND THAT OUR REPRESENTATIVES REDUCE THE SIZE AND COST OF GOVERNMENT AND PAY DOWN OUR NATIONAL DEBT. WE SIMPLY CANNOT AFFORD THE GOVERNMENT WE HAVE BUILT. IF YOU AGREE,PLEASE TELL TEN PEOPLE.PLEASE REMEMBER TO VOTE "EARLY AND OFTEN".

Extreamly well written. Most can't argue but will find a way to put holes in it. It seems you have given a lesson in economics 101....or is that really politics 101? Too bad people just don't understand due diligence. I have said all along this is always about class warfare. Not suprising that the poor vote democratic because let's face it, they are living hand to mouth in the countries biggest cities with the most delegates (thats another story you should write) and it's "seems" compelling when one is poor and someone wants to give you everything you need in exchange for a vote. Of course all this does is promote being lazy and complacent and all at the expense of hard working and risk taking and job providing citizens/small business owners like myself. Classic case of biting the hand that feeds them. It still comes down to interpretation of classes combined with demographics.

I fail to see the “incentive to hire fewer workers” by an increase of small business owners income taxes from 33% to 36%. A small business would of course rather have the lower tax rate, we all would. But I don’t believe it reasonable to say a small business owner who grosses say a million per year and nets $200,000 views the tax increase as an incentive to hire fewer workers. I’m a CPA, and I know business owners try to maximize profits. A business will hire a worker who will produce a pretax profit through his production. A business owner does not decide that he used to make about $30,000 profit by hiring another electrician or plumber, but now since the tax hike he makes 3% less or only $29,100 extra profit. So does he think that is so much less it’s not worth it? I don’t think so. If a business can make more profit, they will add a worker. Taxes are on profits, not on the number of workers you have on your payroll. There is no disincentive here. If a worker adds enough productivity to increase your pretax income, he will add to your after tax income.

Thank You Brian! It is about time someone explores the relativity of state economies. I live in California. It is frustrating to pay Federal Taxes compared to other states whose cost of living is half that of California. Why isn't this discussed more often? Equal standards of living with completely different costs and values demand different economic classifications. The cumulative state taxes in California are one of the highest in the US. Obama's simplistic plan to tax our way out of finacial problems and make the US population more dependent on our government to provide services scares me! We are taxed too much already! I would like to see more articles like this one that brings common sense analysis to "Dreams of Change".

YOU ARE SO RIGHT!!! I live in the Greater Boston area - my husband and I make close to $150K combined and have a small older home (built in 1954 $320K 2 years ago - 3 bed, 1 bath) and are barely saving a dime because of our cost of living - give me the same salary in Kansas and I'll be living LARGE!!!

You are exactly on the mark. The interesting thing will be - over a long period of time - to watch the migration to the "flyover" states. I suspect that the moderates in those states will move, leaving Northeast and West even more lopsidedly far left. Taken to the extreme, these areas of the country will become extremely stratified between very rich and very poor.