Obama’s new tax initiative supposedly targets millionaires, but he is also proposing limits to deductions and exclusions for families making $250,000 or more. That would hurt average, hardworking families living in high-cost regions.
San Diego, Calif.
President Obama has rolled out a tax initiative supposedly aimed at the wealthy, whose key feature is the "Buffet tax." But the details of his total package reveal that average, hardworking families are also affected. Mr. Obama's proposed limits to deductions and exclusions for families making $250,000 or more effectively raise taxes on families in areas with a high cost of living. And these households can hardly be considered wealthy.
How could a family earning $250,000 be an “average” family? That seems like a great deal of money. And it is. It is six times the national earnings average, and for 46 million Americans living in poverty, it is an unimaginable sum. But, research has shown that the illusion of wealth for average families living in high-cost areas is just that – an illusion. For many families in expensive regions of the country, $250,000 is actually is the average salary for an average family. And families earning $250,000 in these areas spend every cent just to meet their daily needs.
A May study by the accounting firm BDO USA for the Fiscal Times found that in 7 of the 8 high-cost areas included in the study, a family of four, earning $250,000 a year, with an average mortgage and average additional debt did not have enough money to meet their daily needs and still save for retirement.
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