Are you rich when you make over $250,000?
Prof. Todd Henderson at the University of Chicago got probably more Web traffic than he anticipated when he wrote about the effect the expiring Bush tax cuts might have on his family. There's a bit of "who knows best how to spend your money, you or the politicians?" tendentiousness. But mostly it's a straightforward description of his family's finances -- $15,000 in property taxes, big mortgage, $500,000 in education debt for Henderson and his doctor wife etc. -- and how they might respond to higher taxes.
Henderson doesn't specify his family's exact income. He says only that's over $250,000 but not by a lot. Tyler Cowen quoted someone else saying it was $455,000, but has since recanted. Henderson:
If our taxes rise significantly, as they seem likely to, we can cut back on some things. The (legal) immigrant from Mexico who owns the lawn service we employ will suffer, as will the (legal) immigrant from Poland who cleans our house a few times a month. We can cancel our cell phones and some cable channels, as well as take our daughter from her art class at the community art center, but these are only a few hundred dollars per month in total. But more importantly, what is the theory under which collecting this money in taxes and deciding in Washington how to spend it is superior to our decisions? Ask the entrepreneurs we employ and the new arrivals they employ in turn whether they prefer to work for us or get a government handout.
I suspect the Henderson household will find a way to adjust without canceling the cell phones and cable if the Bush tax cuts expire. Nevertheless it seems to be a family without much in the way of net worth, the traditional measure for "rich."