by Frank James
One of the most interesting moments in last night’s Democratic presidential candidates’ debate was when an audience member asked one of the most nettlesome questions that can ever be put to Washington lawmakers or policymakers.
The question was essentially, what’s their definition of rich?
Here’s the passage.
MR. SEALANDER: Well, good evening, everyone.
My wife and I have two daughters — middle school age. And we do reasonably well financially, but the vast majority of our spare income goes toward funding our retirement, putting aside money for their college education. And we don’t have tax shelters. We hear an awful lot about new spending — all wonderful-sounding programs — with the answer for funding being elimination of tax cuts that were geared toward the rich. And I was wondering what the definition of “rich” is on the part of the candidates, with using perhaps an income level.
MR. BLITZER: Senator Obama, what is a definition of “rich”?
SEN. OBAMA: Well, the definition that I’m using with respect to paying for my health care plan is those making over $250,000 a year. Keep in mind that all we’re talking about is going back to the tax levels — the marginal tax rates that existed when Bill Clinton was in office. So we’re not talking about going back to huge marginal rates.
But you tell a larger story that I hear as I travel all across the country, and that is that folks are feeling hit from all sides. They’re trying to save for the next generation’s education.
They’re trying to save for their own retirement. In some cases, they’re looking after an aging parent. Gas prices are hitting them. And one of the things that we’ve seen in our economy is that the burdens and benefits of this new global economy are not being spread evenly across the board, and that’s why as the next president one of my first priorities is to make sure that we institute some fairness in the system: We institute in our tax code —
MR. BLITZER: All right.
SEN. OBAMA: — we institute it with respect to making sure that Social Security is preserved, we institute it in giving working people an opportunity to save where they don’t have it right now, and we make sure that — as Chris said; and I think Chris made an excellent point — that college education is simply too expensive at this point.
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MR. BLITZER: So give us a number, Senator Obama. At what number would you tell us that there’s lower taxes or what number people can afford higher taxes?
SEN. OBAMA: I’m sorry, I don’t understand the question.
MR. BLITZER: It’s income. Income — $200,000 a year, $150,000?
SEN. OBAMA: Well, as I said before, I would roll back the Bush tax cuts for those making over $250,000. In some cases, I’d like to see lower taxes. But when I was in the state legislature, one of the things that I introduced was a state-earned income tax credit that provided millions of dollars of tax breaks to folks who can least afford it. And keep in mind, my starting point is not how do I tax people; my starting point is: Are we spending the money that we have wisely and which we’re not always doing.
And if you’re progressive, you should be just as concerned by this huge spike in earmarks that have been taking place under the Bush administration as any so-called fiscal conservative is.
MR. BLITZER: What’s a rich person, Senator Edwards?
MR. EDWARDS: Well, I don’t know if I know what a rich person is, but what I’d do for my health care plan is roll back the tax cuts for people who make over $200,000 a year, so $200,000 is a big value.
These answers didn’t really address the heart of Mr. Sealander’s question. It was actually somewhat odd that both Obama and Edwards didn’t really have an answer for Mr. Sealander. One might’ve expected that people as smart and ambitious for the presidency as Obama and Edwards would have thought about this question which is so central to the idea of making the “rich” pay their fair share.
Obama reduced the question to talking about whose taxes he would raise by reversing President Bush’s tax cuts. Increasing taxes on those who make over $250,000 is an important part of funding his new proposed health-care plan.
But why $250,000? That’s obviously an arbitrary figure. And while it puts an income earner at the top end of the national income scale, it doesn’t necessarily make him or her “rich.”
Even if Obama’s talking about $250,000 in taxable income after deductions that may make one person “rich” in Springfield, Ill. or Birmingham, Ala. but not necessarily so in New York City; Washington, D.C. or Los Angeles.
And the economic reality is that many income earners who make $250,000, especially in households where both parents work, are among those whose incomes have stagnated in recent years. They don’t feel “rich” which was Mr. Sealander’s point.
And perhaps they’re largest asset, their home, has stopped significantly appreciating in value in many places if it hasn’t fallen in price.
They’re also not the truly wealthy who have seen their incomes explode over the past decade relative to the rest of Americans.
Obama suggested that he understood Mr. Sealander’s point about feeling the financial pressures of saving for college, the costs of aging parents, rising gas prices and the like. He said he wanted to restore fairness to the tax code.
But if Mr. Sealander has taxable income of $250,000 and his taxes rise to fund Obama’s health care proposal, my guess is that wouldn’t feel fair to him.
So Obama didn’t really give a satisfactory answer to the question of who is rich.
Edwards, who is truly among the nation’s wealthy, gave an curious answer, saying “I don’t know if I know what a rich person is…”
He had opened himself up to the other candidates, who could’ve scored some easy points by saying, “John, look in the mirror.”
Actually, given Edward’s reputation as self-obsessed about his looks, that would have been a devastating line.
Of course, that line could have applied to most of the candidates on the stage whose financial situations would have easily qualified them as very “rich” and therefore could’ve backfired on them.
So we’re still looking for an answer to Mr. Sealander’s question. Who is rich?