We all knew that President Barack Obama would have trouble passing the American Jobs Act. But the political drama has taken an interesting turn. Apparently some Senate Democrats have balked at Obama’s strategy to pay for the legislation by raising taxes on households making more than $250,000 per year.
Senate Majority Leader Harry Reid, D-Nev., apparently is drumming up a plan to pay for the jobs bill with a 5% surtax on incomes of more than $1 million per year. Democratic senators from high-income states (i.e. New York, New Jersey and California) have privately objected that the $250,000 income threshold is much too low and would affect too many households in their states. While Reid’s plan has no chance of being written into law, it does underscore the increased salience of class politics. (“Class warfare” just seems a little to extreme to me.)
Do these senators have a point? Yes and no. Of course, the cost of living varies widely among different regions and cities. For example, a $250,000-per-year salary in Birmingham, Ala., translates to $595,814 per year in Manhattan. Read