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Sun Dec 30, 2012, 04:30 PM

I remember the old definition of "Middle". You know, like the 50 yard line in football.

Mid field has as much turf extending to the right as it does to the left. And when a team runs a fullback up the middle he plows into the center of the opposing line. Middle still means middle in football, but obviously not in American politics. Families earning $250,000 or more per year fall into the top 2% of income earners in America today, yet many talking heads insist (with strong Republican and some Democratic backing) that income level still falls within "the Middle Class". WTF? Since when does sitting on the two yard line place you in the middle of the field?

I hear the arguments that emanate from a privileged bubble. It’s true that a really nice home costs a lot more in some areas than in others. So do really nice restaurants. Areas that are desirable to live in for one reason or another often have higher costs than less desirable areas, all of this is true. So? The vast majority of Americans are priced out of living in nice homes in those areas; that is a fact of life. Have we gotten to the point where being wealthy in America is defined as the ability to write unlimited blank checks, and everyone who can’t gets called “Middle Class”?

Watching TV earlier today I was told about the challenges facing a “Middle Class” family earning $250,000 annually while living in a nice neighborhood in an expensive city with two kids in college each costing them $30,000 a year in tuition. The message, I assume, was that “these people are not rich.” Maybe yes and maybe no; rich to an extent is a subjective marker. Here is what is not subjective though. They still earn more than 98% of American families. If they can’t easily afford everything they want, what about the rest of us? There are parents working full time in the exact same expensive cities, in jobs paying at or near the minimum wage. How many families in America have kids who can’t afford to go to college at all, not even to public universities, without first being burdened with a life time of college loan debts?

Really, what is the point of language anyway when we gladly make a mockery of a words obvious meaning? The top 2% equals the 98th percentile. Perform that well in school and an A+ grade is assured, even if two people in a hundred might score a fraction higher. Yet when it comes to personal incomes middle essentially is being defined as less than a rarified maximum. That’s like saying that the Rockies can’t be mountains because the Himalayas are higher.

And here’s the thing. Even under Obama’s initial proposal everyone gets a tax cut on the first quarter million they make each year. If 98% of us really fall into the “Middle Class”, we all will keep our tax cut on that “middle class” income. That means for anyone out there having to scrape by on just $285,000 a year, Uncle Sam would only get another small nibble on $35,000 of that total figure. The total average annual income for seniors on Social Security is barely over a third of that. Yet Social Security may remain at risk for budget cuts next year, while we worry about the fortunes of families only making $300,000 a year, because we can’t ask them for more sacrifices; they are the “Middle Class”.

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Arrow 19 replies Author Time Post
Reply I remember the old definition of "Middle". You know, like the 50 yard line in football. (Original post)
Tom Rinaldo Dec 2012 OP
MADem Dec 2012 #1
zbdent Dec 2012 #4
Tom Rinaldo Dec 2012 #5
Tom Rinaldo Dec 2012 #14
MADem Dec 2012 #15
JHB Dec 2012 #2
Tom Rinaldo Dec 2012 #3
JHB Dec 2012 #16
downandoutnow Dec 2012 #6
Tom Rinaldo Dec 2012 #18
renate Dec 2012 #7
Tom Rinaldo Dec 2012 #10
limpyhobbler Dec 2012 #8
Igel Dec 2012 #9
Tom Rinaldo Dec 2012 #11
SoCalDem Dec 2012 #12
TheKentuckian Dec 2012 #13
Tom Rinaldo Dec 2012 #17
Tom Rinaldo Dec 2012 #19

Response to Tom Rinaldo (Original post)

Sun Dec 30, 2012, 04:39 PM

1. WTF? Since when does sitting on the two yard line place you in the middle of the field?

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Response to MADem (Reply #1)

Sun Dec 30, 2012, 05:08 PM

4. Since George W. Bush was born on third base and the "liberally-biased media"

allowed him to gloat about hitting a stand-up triple ...

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Response to zbdent (Reply #4)

Sun Dec 30, 2012, 05:13 PM

5. Actually his father was born there before him n/t

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Response to MADem (Reply #1)

Sun Dec 30, 2012, 07:44 PM

14. Thanks. I usually don't do football analogies...

Actually that line didn't even occur to me untill after I wrote the header, but it kind of makes the point, doesn't it?

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Response to Tom Rinaldo (Reply #14)

Sun Dec 30, 2012, 08:15 PM

15. I normally am not a real fan of 'em either--but yours was a GEM!

Again....

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Response to Tom Rinaldo (Original post)

Sun Dec 30, 2012, 04:47 PM

2. For historical perspective, in 1955 there were 24 tax brackets. Adjusting for inflation...

For a married couple filing jointly:
16 of the 24 brackets affected incomes over the equivalent of $250,000
11 of those affected incomes over the equivalent of $500,000
The top bracket kicked in for incomes over the equivalent of $3.3 million.

That's setting aside what the rates were, and just looking at where they fell.

I wonder why we never hear about this during these debates?

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Response to JHB (Reply #2)

Sun Dec 30, 2012, 04:57 PM

3. *Cough* They SIMPLIFIED the tax code. It's GOOD to make things simpler.

And a flat tax is the simplest of them all.

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Response to Tom Rinaldo (Reply #3)

Sun Dec 30, 2012, 08:21 PM

16. We almost had that back at the end of Reagan

For three years (1988, 1989, and 1990) we only had two brackets: 15% on income up to ~$30,000 (the equivalent of a little over $50,000 today) and 28% on all income above that.

Even Poppy Bush and Republicans of his ilk recognize that was unsustainable, and added another bracket in 1991 (at $82,000, equivalent today of $135,000). But by that time, the rising stars in the conservative movement openly promoted extremism (Gingrich, Limbaugh, Norquist) and crucified Bush for going back on his "read my lips, no new taxes" line.

Every time they talk about "simplifying" the tax code it involves taking a chain saw to the top rates, and then they come back the next year complaining about how complicated the tax code is (wait! what happened to all that simplicity that supposedly compensated for the tax cut?).

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Response to Tom Rinaldo (Original post)

Sun Dec 30, 2012, 05:19 PM

6. Excellent point. 98th percentile is NOT "middle class" -

 

And no, to the well-off objectors who want to moan that you can "barely survive" in NY/LA/San Fran on $250k a year, bullshit! The vast majority of people even in those cities survive on less year after year.

Of course there are other well-off objectors who want to chime in with the idea that "but as long as I have to go to WORK to get paid $250k, $400k, a million a year rather than be able to rake in that much just from investments, I'm just "working class" like the rest of you poor schlubs who shop at Wal-Mart and mow your own lawns. Solidarity forever!"

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Response to downandoutnow (Reply #6)

Mon Dec 31, 2012, 07:45 AM

18. "Solidarity forever". Had that been true most of us would be a lot better off.

Too many honest to god middle class Americans turned their backs on Unions after they won them the lifestyle that they had come to take for granted.

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Response to Tom Rinaldo (Original post)

Sun Dec 30, 2012, 05:23 PM

7. very well written!

I think the $250,000 number was probably chosen because some of the families who are not in the 2% themselves may reasonably aspire to that level of income for themselves or their kids. (That's an enormous number for an individual but for a two-income family who's in the right part of the country and especially in the right fields of employment, two six-figure incomes might not be completely out of reach, especially in the long term. And again, parents making $25K a year might have aspirations for their children.)

And with regard to sending two kids to college at $30K a year each--there was a time not that long ago when a middle-class family could send two kids to college simultaneously without anybody having to go into crushing debt. So that particular benchmark of "rich" still feels like a middle-class thing to me. Of course, now it really is out of the reach of anybody but the very well off, but still, I think that might explain why people with that ability can still honestly feel that it's not part of the definition of rich.

You wrote a thought-provoking post; I wonder whether feeling rich has more to do with the safety net or financial cushion a person has than with the house they live in or the car they drive. My family's income has vacillated wildly over the past few years (all the way down to zero for a long time after the crash of 2008) and since we didn't move or buy new cars (or do anything different) during the ups, our material condition has stayed exactly the same (or worse, since the cars just keep getting older); the real and crucial difference between the ups and the downs was whether we had a financial cushion. That's what makes it possible to take a deep breath and feel at least at ease, if not rich. People who are earning $250,000 a year and spending all of it probably genuinely do not feel rich. That's due to their own choices, of course, and their life is a world away from that of someone who doesn't feel rich because they don't have a house or a car. But if they're locked into excessive mortgage payments and car payments they might feel just as stuck as a person whose payments and income are both lower. (Personally, I think that anybody in the former position has made short-sighted choices. But I'm just talking about the definition of "feeling rich," not of "being sensible.")

Anyway, very well written as always, Tom!

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Response to renate (Reply #7)

Sun Dec 30, 2012, 06:03 PM

10. There's an old fashioned term; "Well to do" (or "well off" for a less archaic alternative).

Families making $250,000 a year anywhere in America are at the very least "well to do". That may not be the same thing as "very rich" and it clearly isn't the same thing as "super wealthy", but the term still has a common sense meaning, and that meaning is not the lifestyle of the true "Middle Class". I agree with most all of what you wrote about aspirations and almost all of us can relate to those desires - they are not excessively greedy, but reaching that plateau still means reaching the 98th percentile. Though in every case it might not equate with not having a financial care left in the world, it still is a status that precious few people in America, as born out by statistics, ever reach.

I think most people who get to that level of income don't see themselves as having become filthy rich, because they aren't. But they do feel a sense of accomplishment that they have broken through the level of having to worry about basics on a day to day basis that the overwhelming majority of Americans remain mired in. That is why making it to that level of affluence is the stuff that most people dream of.

The Publishers Clearinghouse (remember them?) has a promotion going on now where the big prize winner will be guarenteed $5,000 a week for life - and when they die they can will that income to someone else $5,000 a week is $260,000 a year - in 2012 dollars, and this is the one in a million pay off being dangled as a lure to sign up new subscribers. Statistics aside even, how can anyone try to pass off that income level as simply "Middle Class"?

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Response to Tom Rinaldo (Original post)

Sun Dec 30, 2012, 05:28 PM

8. k/r

So true.

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Response to Tom Rinaldo (Original post)

Sun Dec 30, 2012, 05:48 PM

9. Middle class =/= middle income.

Perhaps at one point it did. "Middle class" certainly doesn't mean what it did in 19th century England. Nor what it meant in 1950s America.

But nobody said $250k/year income for a household was middle income.

Nobody said $250k/year income for a household was the mid-point for middle class. In fact, it's pretty clear that it's the upper boundary of a rather large interval. Perhaps too large, but that's a different kind of argument.

If $50k/year is "middle income," then we need to decide where the "middle" starts and ends. One standard deviation? One month's income? Are $60k/year or $45k/year "rich" and "poor" by comparison? Or do we want to limit it to a $2k interval? Or less? How rigorous and exclusionary do we want to be?

And when you do decide on the break point between "middle" and "poor" or "rich," are they really justifiable on some sort of principle? Do they mean something economically true for people living in Manhatten and Westwood as well as in Walla-Walla, WA or Victoria, TX?

And once you've worked out the numbers for "middle income", you get to relate that back to families and "class". Is "middle income" $48k-$52k/year really middle class even though with your family of mother, father, and three kids that's barely scraping by?

Hard questions. One that Obama doesn't want to deal with, and involving definitions that economists decide on just so they have labels for things.

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Response to Igel (Reply #9)

Sun Dec 30, 2012, 06:43 PM

11. Those are all good and fair questions, I agree

And the word "middle" in "middle class" is an elastic social concept because it is not tied to any precise formula, with no one really holding the authority to establish such a formula anyway. But even though elastic stretches, it can't be infinitely strectched without snapping and ceasing to be useful. At some point common sense has to be applied even without a precise formula. It just seemed to me that calling the top 2% part of "the middle class", even acknowledging all the variables you mentioned above, is too much of a stretch. It is true that people at the $250,000 a year income level in many ways have more in common with people making $50,000 a year than they do with people making $50,000,000 a year, but I would argue that's sort of like saying a dog has more in common with a cat than it does with a parrot, but it still is not a cat.

And in this case we are not having a theoretical abstract discussion, we are defining acceptable levels of imposed fiscal austerity based on a equally undefined concept of "shared sacrifice". Common sense has to be applied because real decisions must be made and standards are being defined in hard terms in Washington DC as we speak. You are absolutely correct that this discussion is about the upper boundary of a rather large interval, and in short my point is to agree with your observation that it's "Perhaps too large,"

It's being argued for policy purposes that people earning at the 98th percentile need a continuing tax break because, among other things, "the middle class has suffered enough". But their proposed tax break reduces federal revenues and thus increases by that same amount the funds that will need to be cut from budget items that millions of people far below the top 2% depend on. That type of reasoning fails the sniff test.

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Response to Igel (Reply #9)

Sun Dec 30, 2012, 06:55 PM

12. If 50K is the "true" middle, and we accept that people

should at the very least BE "middle", then :

levy NO federal income tax on the 1st 50K
and at 50K intervals take it up 5% until the tax level reaches 60%..

EVERYTHING GETS TAXED TOO..dividends, stock shenanigans, etc..
(most folks at 50K or below do NOT live on dividends, cap gains, interest etc.. they live on paychecks

with NO DEDUCTIONS

For those making less than what's diagnosed as "poverty-level", send them a check

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Response to Igel (Reply #9)

Sun Dec 30, 2012, 06:57 PM

13. Currently "middle class" in America is defined from full time hours at minimum wage

to a quarter million up to about a million a year depending on who you ask.

Middle to me is middle, so the folks in the middle two fifths seems about right. You can divide the top 20% into the upper class, rich, wealthy, and super wealthy. The next fifth is upper middle/professional class. The bottom fifth is poor and lower class.

We should have more tax brackets, I believe "simplification" just allows the super wealthy to slide the burden down and those at the bottom that do have to pay get hosed.

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Response to TheKentuckian (Reply #13)

Sun Dec 30, 2012, 09:39 PM

17. The term "middle class" is distorted the same way the term "small business" is distorted

And it is done for the same political reasons. Well off Republicans and those who think like them want the political cover of being grouped in with those of lesser means when there is a financial advantage for them in doing so. When Romney kept saying he was so concerned about the fate of small business in America he wasn't thinking mom and pop.

Your groupings make intuitive sense, that's why Washington can't use them while defending the status quo.

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Response to Tom Rinaldo (Original post)

Mon Dec 31, 2012, 07:52 PM

19. One kick in remembrence of prior Democratic Party campaign pledges. n/t

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