Obama’s tax plan hits D.C. burbs hard

More than a few well-heeled lobbyists in the greater Washington area will be paying higher taxes by 2011 thanks to President Obama.

Three congressional districts in the Washington suburbs of Virginia rank among the five districts with the highest median household incomes, according to Proximity, an Alexandria firm that analyzed census data.

{mosads}Defense contractors, lawyers and others earning seven-digit incomes in Northern Virginia, as a result, would feel the pinch of Obama’s proposals, which would raise rates for the top two tax brackets in 2011.

The more you make, the more you’ll pay under Obama’s plan. While a couple earning $250,000 would see a $1,000 annual hike in taxes, Deloitte Tax found a couple with two children earning $500,000 annually would see their tax bill rise by about $1,000 per month.

Rep. Gerry Connolly’s (D) Virginia district, formerly held by GOP Rep. Tom Davis, has the highest median household income, at $103,664. It’s the only one in Congress above $100,000. No. 3 on the list is Republican Rep. Frank Wolf’s ($93,701), and No. 5 is Democratic Rep. Jim Moran’s ($90,662).

Seven districts in New Jersey, New York and California round out the top 10. Rep. Chris Van Hollen’s (D) seat in the Maryland suburbs of D.C. ranks 11th.

While Republican presidential candidate John McCain lost Virginia in 2008 partly because of the NoVa vote, the Bush years weren’t bad for incomes in the ’burbs. A decade ago, Connolly’s was the only NoVa district in the top 10. His district ranked eighth in 1999, while Wolf’s was 15th and Moran’s was No. 18.

At the other end of the spectrum is Rep. José Serrano (D-N.Y.), whose district in the Bronx has a median income of $23,291. Many of his constituents would benefit from Obama’s tax plan, which includes a make-work-pay credit of up to $800 per family.

What does $250,000 get you?

Not every Democrat agrees with Obama’s $250,000 marker for who can afford to pay higher taxes.

A quarter of a million means different things to different people, and buys a bigger house in Fargo, N.D. than New York City.

“Two hundred fifty thousand dollars is certainly well in excess of the household income in my district, but $250,000 goes an awful lot further in the suburban Midwest than in Fairfield County, Conn.,” said freshman Democratic Rep. Jim Himes (Conn.), whose district includes the leafy suburbs of Greenwich, home to many of Wall Street’s finest.

The debate over who can afford to pay higher taxes is likely to intensify later this year as Congress considers Obama’s budget. Besides raising tax rates in 2011 on the highest income brackets, this year’s budget would lower the deductions families earning $250,000 can make from their income.

“In my district, we have a high household income, but I would say two things about that,” Himes said. “No. 1, there’s huge diversity in my district. It includes some of the poorest families in the country and some of the wealthiest.

“And second, income has to be held against expenses. We have one of the highest costs of living in the country as well, which is problematic for all sorts of things,” Himes said.

The median sales price for a home in Greenwich, according to the real estate website Trulia, is $735,000, but that’s down significantly. Bloomberg reported in February that home sales in Greenwich, where the nation’s hedge fund industry generally lives, plunged 84 percent in January 2009 compared to a year earlier.

It’s still cheaper to buy a home in Fargo, where the average listing price is $192,436, according to Trulia. It’s also safe to say that wages are a little lower in the Red River Valley.

Himes’s district is only the 17th wealthiest in Congress by median household income ($84,047), according to Proximity’s analysis of census data. It also has a poverty rate of 6.8 percent.

Other Democrats also said they weren’t ready to jump on board with a $250,000 threshold.

Rep. Earl Blumenauer (D-Ore.), a Ways and Means lawmaker, would only say that it’s a starting point for discussion.

“I have to study it, but I really don’t take presidents’ recommendations that seriously,” said Rep. Charles Rangel (D-N.Y.), the chairman of the Ways and Means Committee.

Rangel, who spoke to The Hill the day the budget was released, said he knows Obama and Democrats will have to raise funds to pay for healthcare reform and a tax cut on lower- and middle-income Americans. But he said he doesn’t feel obligated to move his committee in a specific direction yet.

Financial reform will wait

Don’t look for legislation on financial regulatory reform to be completed anytime soon.

While lawmakers and the new administration agree on the importance of overhauling Wall Street’s rules, they don’t appear anywhere close to agreeing on how to do so.

At a news conference last week to unveil the New Democrat Coalition’s plan for regulatory reform, it was clear the New Democrats, centrists who have staked out a leadership position on the issue, themselves don’t agree as to how to reform the system.

For example, who should pay fees to Moody’s Corp., Standard & Poor’s and other credit ratings agencies, criticized for rating securities too highly?

“We do not have a firm position but … we’ll be looking,” said Rep. Melissa Bean (D-Ill.), a co-chairman of the New Democrats’ Financial Services Task Force.

“We’re aware of the conflict of interest involved, but where the right answer is is [the next month’s work],” said Himes, the other co-chairman.

Bean said she hopes Democrats can agree by the end of the year to rules and a framework for a “systemic risk regulator” to oversee the financial system, something that falls short of legislation.

“This regulatory structure’s been around for a long time too, and I think we’re going to have to set priorities for what we do first,” Bean said. “I couldn’t give you a firm timeline on how we’ll approach the rest of it, but we’ll be taking it on in manageable components.”

Betsy King contributed to this column.

On the Economy appears on Wednesdays in The Hill. Send questions, comments and ideas to iswanson@digital-release.thehill.com.

  Representative                                         Highest Household Income   
  Rep. Gerry Connolly, D, (VA-11)                            $103,664   
  Rep. Rodney Frelinghuysen, R, (NJ-11)              $97,009   
  Rep. Frank Wolf, R, (VA-10)                                  $93,701   
  Rep. Anna Eshoo, D, (CA-14)                                $92,091   
  Rep. Jim Moran, D, (VA-8)                                    $90,662   
  Rep. Leonard Lance, R, (NJ-7)                              $90,093   
  Rep. John Campbell, R, (CA-48)                           $89,759   
  Rep. Steve Israel, D, (NY-2)                                     $89,368   
  Rep. Scott Garrett, R, (NJ-5)                                    $87,936   
  Rep. Pete King, R, (NY-3)                                         $87,490  
 
 
Representative                                           Lowest Household Income   
  Rep. José Serrano, D, (NY-16)                               $23,291   
  Rep. Hal Rogers, R, (KY-5)                                     $26,824   
  Rep. Bennie Thompson, D, (MS-2)                       $30,040   
  Rep. G.K. Butterfield, D, (NC-1)                              $30,441   
  Rep. Carolyn Kilpatrick, D, (MI-13)                      $30,842   
  Rep. Artur Davis, D, (AL-7)                                     $31,934   
  Rep. Rubén Hinojosa, D, (TX-15)                         $31,952   
  Rep. Robert Brady, D, (PA-1)                                  $32,140   
  Rep. Nick Rahall, D, (WV-3)                                  $32,487   
  Rep. James Clyburn, D, (SC-6)                               $33,214  

Source: Analysis by Proximity based on date from the 2007 American Community Survey.