People who make $250,000 or more a year can afford a tax hike. - By Daniel Gross - Slate Magazine

People who make $250,000 or more a year can afford a tax hike. - By Daniel Gross - Slate Magazine:

As I argued in an article in August 2008, now reprised and updated, I have two pieces of bad news for the over-$250,000 crowd. First, the reversal of some of the temporary Bush tax cuts is probably inevitable, given the appalling mismanagement of fiscal affairs between 2001 and 2008. (It's rich when Bush-era economic officials, like Edward Lazear, Greg Mankiw, and Keith Hennessey, carp about the fiscal situation.) Second, for those of you making more than $250,000, I regret to inform you yet again: Yes, you are indeed rich—any way you slice it...

But people in Georgetown mansions don't necessarily compare themselves with fellow Washingtonians in Anacostia. Relative income works mostly at the neighborhood level. As we know from the work of Cornell economist Robert Frank, people assess their well-being not so much on how much they make and consume, but on how much they make and consume compared with their neighbors. After all, you have to compete with them for status and for important positional goods such as housing and schools. And here the $250,000-isn't-rich crowd has a point. In a few ZIP codes and neighborhoods, to be sure, brandishing a $250,000 salary is like bringing a knife to a gunfight. There are significant numbers of rich people—including a healthy contingent of filthy rich people—in places like New York City and San Francisco. If you want to live in a neighborhood where starter homes cost $1 million, and you want to send your kids to private schools, and you want to go on great vacations and have a beach house, then $250,000 likely won't cut it. When the investment banker down the street just got a $2 million bonus, the knowledge that you're doing better than 98 percent of your fellow Americans is little solace...

Once again, I await the tidal wave of e-mails, blog posts, and comments from hardworking, self-made people who earn $250,000 a year but don't feel financially secure and don't consider themselves rich, especially compared with the venture capitalist next door. Having spent my entire adult life in and around Washington, Boston, and New York, I feel your pain. I'm eager to listen and empathize. Tell me all about how insanely expensive housing is in any area with good public schools. Tell me about how many seemingly undeserving neighbors make so much more than you do. Tell me about how you want an income tax system that accounts for geographic differences in the cost of living (the Alternative Yuppie Tax?). Just don't tell me you're not rich.