Taxing the rich - what is the cutoff?

[Schneed10]

Being a financial analyst by trade, I put together a quick budget for a couple, with 3 kids, living in Maryland around the DC area, making $250,000 per year. I calculated their Federal Income Tax liability, their tax return assuming they're susceptible to the Alternative Minimum Tax, their Maryland State Income tax liability, and made a bunch of other assumptions shown in the table below.

As you can see, this couple can afford to put away 10% of their income towards retirement, save $300 per month per child for each of their 3 kids' college education, take a $5000 vacation each year, spend $5000 on Christmases and Birthdays, spend $400 per month on fun stuff, pay someone to take care of their yard, make $5000 in annual upgrades to their home, drive two very nice cars without worrying about gas, and spend $200 per month eating out. It even assumes that the youngest of the 3 kids needs daycare.

Even after all that, this couple saves money. You're going to tell me they can't cut out some of that lavish spending to give 3% more to the US Government? I tell you one thing, I wouldn't feel sorry for them at all, they can cry me a river.

PreTax Income $250,000

Expenses
Federal Taxes (61,229)
State Income Tax: Maryland (11,948)
Healthcare Insurance: PPO @ $120 per Paycheck (3,120)
Dental Insurance: $20 per Paycheck (520)
Mortgage: $750K House, $600K Mortgage @ 6.0% (43,168)
Childcare (8,000)
Car Payment 1: $30,000 Car (6,453)
Car Payment 2: $40,000 Van/SUV (8,604)
Car Maintenance (2,000)
Gasoline @ $300 per Month Per Car (7,200)
Groceries for Family of 5: $1200 per Month (14,400)
Electricity & Heat (2,400)
Water (540)
Cable TV, Phone, Hi Speed Internet, Cell Phone (3,000)
Home Maintenance (5,000)
Groundskeeping (2,000)
Total Expenses (179,581)

Discretionary Income before Federal Tax Return 70,419
Federal Tax Return: Assuming AMT Kicks In 21,407
Discretionary Income 91,827

Discretionary Spending
Retirement Savings @ 10% of Income (62,500)
College Savings: 3 Kids @ $300 per Month Per Child (10,800)
Vacation (5,000)
Christmas, Birthdays, and Gifts (5,000)
Entertainment & Merchandise @ $400 per Month (4,800)
Eating Out @ $200 Per Month (2,400)
Discretionary Spending (90,500)

Annual Savings (Loss) $1,327