Few in county will feel fiscal cliff's top earner pinch
Increase affects households earning more than $450K
Thursday, January 3, 2013
The fiscal cliff deal that raises taxes on top earners begs the question: Who earns that much around here?
Not many — perhaps less than 0.5 percent of Clark County's 425,000 residents.
It's hard to get a handle on exact numbers. The most recent available data doesn't split income brackets quite the same way as in the cliff deal, which raises income taxes on households with annual incomes greater than $450,000.
In all of Washington state, 16,899 out of 3.2 million household tax returns -- or 0.5 percent -- listed incomes greater than $500,000 in 2009, according to IRS data.
"When you look at the state, especially if we take all the Microsoft people out, it's a pretty small number," said Scott Bailey, a state regional
economist for Southwest Washington. "Clark County's income structure tends to have more people in the middle and fewer at the bottom and the top compared to other areas."
U.S. Census data lumps incomes higher than $200,000 together, and only 3.4 percent of Clark County's 160,000 households fall into that category. That would be about 5,400 households.
Which isn't to say people here won't be affected by the deal.
Although the deal extends the Bush tax cuts for households below the $450,000 mark, most workers will see their paychecks shrink. The deal doesn't include an extension of President Obama's Social Security payroll tax holiday, so workers' checks will again be taxed at 6.2 percent instead of 4.2 percent.
The tax holiday was intended to stimulate the economy by providing a slow infusion of cash to workers, money they would be more likely to spend than if they received one check. With the payroll tax expiring, economists predict consumers' disposable income will shrink by $115 billion nationwide. For households with incomes below $75,000, that hit could reach close to $1,000, according to the nonpartisan Tax Policy Center.
Southwest Washington will feel the pinch.
"That's going to take a bite out of retail sales, for example," Bailey said. "We should expect to see some slowing, going ahead."
The income tax hike among the highest earners, however, will reach the tens of thousands of dollars.
That will have an effect, too, said David Nierenberg, a prominent philanthropist among Clark County's wealthy.
While middle class families affected by increased payroll taxes might cut back on trips to Burgerville, Nierenberg said he will have less to give away.
"The philosophy of our family is that we wish to give away to philanthropy the overwhelming majority of what we have during our lifetimes -- and we are already doing it," he said. "To the extent that income goes down, there's less money to give away. Have I calculated it? No."