General Discussion
In reply to the discussion: Arguments stupid people use [View all]haele
(12,692 posts)Middle class isn't "median income", middle class is a sociologically defined lifestyle, whether they're making "median income" or six figures. And most middle class people make six figures.
Middle class people don't take standard deductions on their taxes, they itemize.
Here's the rule of thumb or "accepted" idealization of a middle class household:
A middle class family owns their house (mortgage and tax deductions). A middle class income earner might own their own business or works as a professional somehow (business deductions). A middle class income earner typically has a degree or requires training that must be maintained - or sends their kids to school (student loan/educational loan deductions/child care deductions). A middle class income earner tends to have a retirement plan (retirement savings deductions) and long-term investment tax shelters (more deductions).
A middle class income earner will make whatever deductions they can pre-tax, to lower their income to a more median wage earner where they might be able to take advantage of tax credits to offset the income as well as the itemized deductions. Most middle class households end up paying taxes on stated incomes that are at least a quarter less than they actually make as "take home", and a lot of their income is deferred or set aside for specific expenses that are also tax deductible later on in life - set aside in educational funds, health savings accounts, and various types of trusts.
The ability to set aside at least half your income after the basic food/clothing/shelter/utilities/transportation/insurance bills and other household or profession debts are paid tends to set the demarcation of working class to middle class.
And most people who can put half their income aside for entertainment and/or savings also know how to drop their tax liabilities to a level that they can deduct a large amount of that "extra money" and not pay as much for the privilege of using the public resources and infrastructure to support the lifestyle their income provides for them - unlike most working households whose income basically just pays the bills every month and leaves very little left over.
Most economists identify the middle class - if they can agree on the metrics - as starting with the top 15 - 10% of income wage earners in this country. The wealthy start at the top 5%.
Everyone else is either identified as "average taxpayer" - working class, working professionals (my bracket), working poor, or poor. The group of wage earners who can't afford to set aside enough savings for interest earnings to start kicking in. Who live paycheck to paycheck, with maybe only 10% left over after all the bills are paid, who depend on credits and the standard deductions rather than itemizing and deferring to lower their tax liabilities in April; who depend on their refunds to be able to "break even" on their outstanding debts, or if they have been able to keep their budgets manageable, replace an appliance or make that one repair they've been putting off because they've just not been able to save the money over the year.
Haele