Getting By on $250,000 a Year

Todd Henderson is a University of Chicago law professor; his wife is a physician at the prestigious university’s hospital.  Although the family earns more than $250,000 a year, lives in a pricey house in the upscale Kenwood neighborhood, employs a nanny and sends their children to private schools, Henderson is upset with President Barack Obama’s plan to end Bush-era tax cuts on high-income families. Writing recently on the “Truth in the Market” blog, Henderson said that “A quick look at our family budget, which I will happily share with the White House, will show him that, like many Americans, we are just getting by despite seeming to be rich.  We aren’t.”

The blog entry, which Henderson hoped would spark a debate about taxes, turned into a firestorm in which he was accused of being out of touch and arrogant.  It also kicked off a discussion of what being rich means, especially in an economy where many people are unemployed and hurting financially.  Eventually, Henderson deleted the blog entry and says he will no longer contribute to “Truth in the Market”.  One of the people angry with Henderson is Michael O’Hare, a professor of public policy at University of California – Berkeley, who said “It’s just rude to be worrying in public about whether you have to fire the maid.  That didn’t used to be acceptable behavior, for people who were that much better off than the rest of us to complain about their misfortunes.”

Geoffrey Stone, a former University of Chicago law school dean, offered this criticism, “People are reasonably focused on the view that this is absurd for somebody who lives a relatively privileged life to define himself as not rich because there are people who are richer.  The way he wrote it opened him up to that.”  Even Nobel Prize-winning New York Times columnist and Princeton economist Paul Krugman got in on the act, calling Henderson the “whining Chicago professor.”

This story leads to the question of exactly what is the definition of being rich?  According to the Tax Policy Center, defining rich is a matter of analyzing income distribution.  Roberton Williams, senior fellow, said the top three percent of Americans have gross incomes in excess of $250.000.  That is the income bracket that President Obama is targeting with the tax increases.  As to the Hendersons, Williams said “They are spending what they are making.  They don’t feel like there is any fat in the budgets.  But the average person would take a look at their budget and say ‘Wow’.”