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Saturday, June 11, 2005

Definition of Middle Class

I love it when people making hundreds of thousands of dollars a year are said to be middle class. Middle means middle, as in, in the middle. So lets say the middle is the middle 60%. In other words, we'll divide up the population 20-60-20. The middle 60% of household incomes are middle class. Fair? I think so. So what numbers do we get?



Well, looking at the above chart, that would mean people earning from $13,478 to $79,562 are middle class.

Listen! Do you hear it?

As expected, I hear the right-wingers screaming that defining the middle as the middle 60% is too narrow. OK, let's do the middle 80%. In other words, we'll divide up the country 10-80-10. The middle class will be everyone but the bottom 10% and the top 10%. In accommodating our right-wing friends, I think that's about as far as we can go in stretching what the middle means. So what numbers do we come up with here? Well, the chart doesn't divide up the bottom 20%, but that's really irrelevant here, because the right-wingers really object to the upper figure. So what would the upper figure now be? Anyone earning $117,001 and below is the middle class. So remember that the next time the right-wing or the corporate media tries to pass off one of the wealthiest (top 10%) in the country as middle class. They try this all the time in their attempt to paint transfer of wealth to the rich as pro-middle class. No it's not. It's anti-middle class.

As Bob Herbert writes
The privileged classes, with the Bush administration's iron cloak of protection, avoid their fair share of taxes, are reluctant to pay an honest dollar for an honest day's work (the federal minimum wage is still a scandalous $5.15 an hour), refuse to fight in their nation's wars, and laugh all the way to their yachts.
They don't need tax cuts or any other economic aid. They already have way too much of the nation's wealth, so much so that there's not enough left for everyone else.


Jack Clark 5:26 PM [+]
Post #111853630923374832


Comments:


I'd love to see a revision of this with current numbers. I think the top quintile of households are now above $88K.

 


Although your chart has some relevancy, I have a couple of comments and questions. First, "Universal" health care, the highly emotional issue of the day, will cost 4% of GDP (500B) a year according to Paul Krugman (liberal scholar). Do you expect the top 10% to pay that entire amount while tax cuts are given to the middle 80%? This is the rhetoric coming out of the Democratic camp. Universal health care and tax cuts for the middle class at the same time.

The top 10% do in fact see a dollar amount decrease in their taxes, but what about the percentages? An extra million saved for a billionaire is far less meaningful than 3,000 dollars saved for a family making 45,000.

Lastly, in 2007 charitable contribution's totaled 300+ billion. 90% of that money comes from the top 10%, not the middle 80%, so the wealthiest Americans make the largest charitable contributions, thus lowering their overall tax liability. You fail to mention that the majority of tax dollars saved by the rich are donated to charity.

 


$300 Billion in charitable contributions by the top 10% sounds like a lot to charities. Remember this, for example, under tax codes, a family foundation can qualify as a "charitable organization." So...when the tax laws allow the very wealthy to protect their money tax-free (until it is spent or paid out in salaries)and eventually pay no, or lower taxes than would have been assessed for the amount "donated" to "qualifying" charity! And, as a bonus, the foundation can earn tax-free money!

 


Probably wont get posted. Cause it ends the discussion.

Our Tax System Explained: Bar Stool Economics

Suppose that every day, ten men go out for beer and the
bill for all ten comes to $100. If they paid their bill the
way we pay our taxes, it would go something like this:

The first four men (the poorest) would pay nothing.
The fifth would pay $1.
The sixth would pay $3.
The seventh would pay $7.
The eighth would pay $12.
The ninth would pay $18.
The tenth man (the richest) would pay $59.
So, that's what they decided to do.

The ten men drank in the bar every day and seemed quite
happy with the arrangement, until one day, the owner threw
them a curve. 'Since you are all such good
customers,' he said, 'I'm going to reduce the
cost of your daily beer by $20.' Drinks for the ten now
cost just $80. The group still wanted to pay their bill
the way we pay our taxes so the first four men were
unaffected. They would still drink for free.

But what about the other six men - the paying customers?
How could they divide the $20 windfall so that everyone
would get his 'fair share?'

They realized that $20 divided by six is $3.33. But if they
subtracted that from everybody's share, then the fifth
man and the sixth man would each end up being paid to drink
his beer. So, the bar owner suggested that it would be fair to
reduce each man's bill by roughly the same amount, and
he proceeded to work out the amounts each should pay.

And so:
The fifth man, like the first four, now paid nothing (100%
savings).
The sixth now paid $2 instead of $3 (33% savings).
The seventh now pay $5 instead of $7 (28% savings).
The eighth now paid $9 instead of $12 (25% savings).
The ninth now paid $14 instead of $18 (22% savings).
The tenth now paid $49 instead of $59 (16% savings).

Each of the six was better off than before. And the first
four continued to drink for free. But once outside the
restaurant, the men began to compare their savings.

'I only got a dollar out of the $20,' declared the
sixth man. He pointed to the tenth man, 'but he got
$10!'

'Yeah, that's right,' exclaimed the fifth man.
'I only saved a dollar, too. It's unfair that he got
ten times more than I got!'
'That's true!!' shouted the seventh man.
'Why should he get $10 back when I got only two? The
wealthy get all the breaks!'

'Wait a minute,' yelled the first four men in
unison. 'We didn't get anything at all. The system
exploits the poor!'

The nine men surrounded the tenth and beat him up.

The next night the tenth man didn't show up for drinks
so the nine sat down and had beers without him. But when it
came time to pay the bill, they discovered something
important. They didn't have enough money between all of
them for even half of the bill!

And that, ladies and gentlemen, journalists and college
professors, is how our tax system works. The people who pay
the highest taxes get the most benefit from a tax reduction.
Tax them too much, attack them for being wealthy, and they
just may not show up anymore. In fact, they might start
drinking overseas where the atmosphere is somewhat
friendlier.

David R. Kamerschen, Ph.D.
Professor of Economics
University of Georgia

For those who understand, no explanation is needed.
For those who do not understand, no explanation is
possible

 
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