Mike Allen gives details on the contours of the upcoming fight over how to extend the Bush tax cuts:
Hill sources tell us an income of up to $250,000 a year "is dead as the dividing line" for distinguishing the middle class in extending the Bush tax cuts, based on input from wounded returning Dems. Instead, negotiations will begin around a figure like $500,000 or $1 million. The administration play is to try to "decouple" the middle- and upper-class extensions, with a permanent extension for the middle class and a temporary extension for the top tier (maybe one or two years). "That gives us a better message," said a key Dem. aide. "Otherwise it's like the AMT, where we have to have this debate every year and then punt for another year."
Politically, decoupling middle- and upper-class tax cuts is the best choice; Republicans would love nothing more than to vote on a package deal, so that they could profess concern for the middle class -- "We gave you tax cuts!" -- while redistributing wealth up to their actual constituency among the top 1 percent of income earners. Anything that forces Republicans to eat crow by showing their slavish devotion to rich people is a good thing.
That said, I'll be disappointed if the "dividing line" for middle class and rich begins around $500,000, much less $1 million. Regardless of where or how you choose to spend your money, a six-figure income of $500,000 means that you are rich, period. You make more than 10 times the median household income, and given your most likely occupation -- financial services -- you have been the chief beneficiary of economic growth for at least the last decade. If this were a sane country, we wouldn't even consider giving you a tax cut, because you don't need it.
Of course, given the choice between tax cuts for some of the nation's rich people and tax cuts for all of them, I'll take the former without question. Still, let's not delude ourselves into thinking a half-million dollar income isn't rich. Without question, it is.
-- Jamelle Bouie
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