Does a family making 250K-300K in Seattle really count as "rich"? I don't object to the tax in general, but I do object to the terminology. It is certainly a high level of income, but rich?.
This is targeting the top 20% of earners in Seattle. Time will tell if this is a sound policy. I think they could have achieved a similar level of tax by having a higher level of tax aimed at a much higher level of income (1 million plus). A family earning 200-250K in Seattle will definitely feel this tax. You still operate at a high level of privilege at that income level, but it isn't crazy. For comparison, according to cost of living indexes, if you earn 250K in Seattle you would need to make ~385K in SF, or only 140K in Atlanta. In Atlanta 140K is comfortable, but not "rich". I really think these sort of taxes should target the top 5% of earners only -- everyone below that actually feels it and is not "rich", especially in higher cost of living areas like Seattle.
Typically taxes like this are levied on the amount above the threshold. So someone making $250,000 / year will have to pay $0 in additional taxes. This is just like the federal income tax, where if you go into the next bracket you don't suddenly have to pay more on everything up to that bracket. It is only the additional income that is taxed at the higher rate. It's amazing how many intelligent conservatives don't understand this basic aspect of taxes in the US. If you make more you always keep more in the US.
Do you have a reference for this? I've honestly never heard of this and had no idea, even though I study politics and economics somewhat closely. I've never seen this brought up as a point on either side when talking about taxes, so I'm curoious if this is the case if there are exceptions that have become the rule and thus this might be technically true but not seen by most people?
A progressive income tax like this prevents situations where someone getting a small raise that moves them I i a higher tax bracket could actually leave them WORSE OFF than they were before the raise.
It's how tax brackets work. Notice the "+X% over the excess / of the amount over" wording in the documents. I'm not a CPA, so maybe one can chime in with a counter example of someone who would take home less if they made a larger salary. But I'm pretty certain this is how it works.
What about 500k ? Because that's what the Seattle city council tax says [1]. So no, a family earning 200-250k will definitely not feel this tax
Even if the limit was 250k, how would a family earning less than 250k feel the tax? It would literally cost them $0 per year since only income above 250k are taxed.
From [2]:
Tax Filing Status Total Income Rate
“single” Total income in the tax year up to $250,000 0%
Amount of total income in the tax year in excess of $250,000 2.25%
“married filing jointly” Total income in the tax year up to $500,000 0%
Amount of total income in the tax year in excess of $500,000 2.25%
The history of tax the rich gimmicks is simply the history of levying more tax on the middle class, and even eventually working class. Starting with the U.S. federal income tax, which was promised to be a tax only on the rich. In fact some states had no residents who had the minimum targeted income, at the beginning. How long do you think that lasted? Wait and see how long before Seattle adjusts the minimum down.
Yes, $250K counts as rich. You can "get by" on combined income of $150K extremely easily. Maybe you don't buy a new bmw every year or live in an untrendy neighborhood. Oh, no.
There are plenty of pretty affluent households in Seattle, but it's not quite 20% of them that make >$250k. What the linked article says is that the average (mean) income of all 60,000 households in the top quintile is $250k, not that $250k is the lower threshold for entering the top quintile.
I can't find detailed enough information to say what percentile a $250k household income in Seattle actually is. What I can find, from the 2015 census estimates, is that $200k is 87th percentile [1].
> Does a family making 250K-300K in Seattle really count as "rich"? ...A family earning 200-250K in Seattle will definitely feel this tax.
A family of 4 could live pretty well on half that in Seattle. Maybe they aren't "rich" as in "filthy rich", but I don't see how they'd actually feel it, other than savings goals having to be slightly less aggressive.
At $250,000 / year, your pre-tax monthly income would be about $28,833 and a tax of 2.25% would shrink that by $468. I don't see how I could honestly say I felt the tax if I made only half of 250k and they double it to 4.5%.
> Does a family making 250K-300K in Seattle really count as "rich"?
Yes, kinda. My family earns in the range of 20% lower than the lowest bound there and we live in the Bay Area. We're at the very least affluent. I would never say "rich", because I reserve that for folks who don't have to work (i.e. they could live off unearned income in perpetuity and readily absorb more than one significant shocks, such as medical expenses, if they chose to), but comparing our situation to even middle-class folks is a bit laughable.
Rich is as vague a term as "fair." To the 50% making $50k per year or less, yes, anyone making over $100k is "rich." And who isn't going to vote in favor of a tax when they lack the historical perspective and imagination that it might ever apply to their income?
It depends how you define rich. One guideline I use is that people are rich if they can afford their home outright in cash (not after 15 or 30 years). By those standards, 250-300k is not rich in Seattle. You'd still need to save for quite a few years to buy a home cash in the area.
No, it doesn't count as "rich". Source: lived in Seattle for 10 years. The actual rich folks don't live in Seattle, they live in Medina, aka BillG, Jeff Bezos, the Seattle Seahawks, etc.
250k a year can afford that. Private school is $50k, a vacation home is $24k, vacations are $15k, $50k savings is bs and you know good and well that no one does that while trying to make a presentation of themselves, fancy restaurants are $200 a night so 20k, expensive shows are $200 each so 20k, and a million dollar home is only 60k.
so 50+24+15+20+20+60=189 Oh shit look at that, there is room for savings/taxes too!
(numbers are yearly cost, not monthly or total cost)
http://blogs.seattletimes.com/fyi-guy/2014/10/06/as-seattle-...
This is targeting the top 20% of earners in Seattle. Time will tell if this is a sound policy. I think they could have achieved a similar level of tax by having a higher level of tax aimed at a much higher level of income (1 million plus). A family earning 200-250K in Seattle will definitely feel this tax. You still operate at a high level of privilege at that income level, but it isn't crazy. For comparison, according to cost of living indexes, if you earn 250K in Seattle you would need to make ~385K in SF, or only 140K in Atlanta. In Atlanta 140K is comfortable, but not "rich". I really think these sort of taxes should target the top 5% of earners only -- everyone below that actually feels it and is not "rich", especially in higher cost of living areas like Seattle.