Barack Obama's second term hasn't even started, but in a single stroke, thousands of Americans have fallen from the ranks of the wealthy. It's just like the dispossession of the Russian nobility under the Bolsheviks, except instead of being exiled to Siberia these former rich people are being reclassified as middle-class and getting an extension of the Bush-era tax rates.
For years, Obama and his fellow Democrats have insisted that couples making more than $250,000 a year should pay taxes at Clinton-era rates. But under the terms of the fiscal cliff deal adopted last night, households will have to earn $450,000 before a single dollar is taxed at the 39.6% rate. Knowing whether or not you're rich can be difficult under Obama's brand of Sharia socialism! Let this handy questionnaire be your guide.
I'm a single earner making less than $200,000 or married and jointly earning less than $250,000. Am I rich?
Rich in spirit, maybe. Rich in money, no. You're officially a member of the 98% and your prize is an expiring payroll tax holiday.
What if I earn more than $450,000 and live in a very expensive real estate market with other rich people?
According to Roberton Williams, a senior fellow at the Tax Policy Center, "Rich depends on where you live and with whom you are comparing yourself."
According to reality, you don't stop being rich just because you spent all your money on an expensive apartment. New York City and San Francisco are very desirable places to live. You don't become poor by choosing to live in Manhattan instead of Montana any more than you can claim poverty by buying a Maybach instead of a Honda Civic and pointing to your depleted bank account.
But New York is REALLY expensive. I don't FEEL rich.
About six percent of New York City households earn more than $200,000 per year. Far fewer earn over $450,000. Please settle down.
OK, but what if I do something really awesome with my money like build NASCAR racetracks or make Hollywood films?
Technically you might be rich, but Congress is still willing to give you a break on your taxes. The fiscal cliff deal renews special expensing rules for certain film and television productions and an accelerated depreciation allowance for racetrack construction. In other words, lucky you!
What if the really awesome thing I do with my money is building a new headquarters for Goldman Sachs?
There's a tax break for that, too, as long you built it in lower Manhattan, which I know you did.
This is great, but I earn between $250,000 and $450,000 and just want to know if I'll ever be rich again or if my class demotion is permanent?
Don't hold your breath, but there's always the chance a future Congress will decide to give you an upgrade.
In any case, life isn't so grand at the top. Just ask Butch Yamali, a "Long Island entrepreneur," who complained of the coming tax hike and explained the predicament of the rich thusly: "We have problems — with more zeroes — problems that don't let you sleep at night." Personally, I prefer the Notorious B.I.G. version of this song.
Photo by Jan Cobb Photography Ltd/Photographer's Choice/Getty Images
Tags: Fiscal Cliff, House of Representatives, Money, Senate, Taxes