NITA LOWEY FOR CONGRESS

Is $250,000 the new middle-income standard?

A group of House Democrats representing some of the wealthiest congressional districts is trying to redraw the line between middle-income Americans and the rich to prevent many of their constituents from paying higher taxes when Congress gets around to extending the 2001 and 2003 tax cuts.

The loose legislative coalition organizing itself as the Tax Equity Caucus includes lawmakers from New York, Connecticut, New Jersey and California who represent affluent families living in communities where both incomes and the cost of living are well above the national average.

President Obama is proposing to extend current tax rates, which are scheduled to increase atyear’s end, for low- and middle-income families. But he would allow the increases to take effectfor individuals earning at least $200,000 a year and couples earning $250,000 or more.

New York Democrats Nita M. Lowey, Jerrold Nadler, Steve Israel and like-minded colleagues argue for an expanded view of the middle class, at least in particularly expensive areas.

“In Westchester County, when the median cost of a home is $666,000, with $200,000 income you’re not feeling very rich,” Lowey said.

“Tax cuts have to be equitably distributed,” said Democrat Rush D. Holt of New Jersey.

Israel said the new caucus would focus on language similar to a bill by Nadler (HR 1943) that would require regional cost-of-living adjustments for tax rates. The proposed $200,000 ceiling for extension of the George W. Bush administration tax cuts, for example, could be multiplied by a factor reflecting how the cost of living in a region, county or city compares with the national average.

The proponents of such indexing hope for the backing of some tax writers in each chamber, including Rep. Chris Van Hollen of Maryland, chairman of the Democratic Congressional Campaign Committee; and Sen. Robert Menendez of New Jersey, chairman of the Democratic Senatorial Campaign Committee — the campaign arms of both chambers.

House Ways and Means Chairman Sander M. Levin, D-Mich., said he was unfamiliar with the details of any specific tax equity proposal and questioned how it would be implemented.

Other tax writers expressed doubt Tuesday about extending the tax cuts for additional taxpayers, noting the cost of such a step.

Democrat Max Baucus of Montana, chairman of the tax-writing Senate Finance Committee, said that for now, the issue of tax equity for residents of high-income and high-cost communities was not on his short list of priorities for tax cut extensions.

“There are several things we have to balance,” he said. “I think middle-income families deserve to have middle-income tax cuts extended. Then there’s the deficit. We have to be very concerned about the deficit. We have to find the right balance.”