Election Issues II: Tax Breaks for the Middle Class

In an election year, we hear a lot about the rich and the middle class and usually thrown into the discussion is the word “tax” and lots of rather heated rhetoric concerning how heavily the government should lean on people. One of the reasons this has become an issue this election is that Democratic candidate Barack Obama’s economic platform includes a plan to scale back tax breaks for people making over $250,000 a year while John McCain’s plan preserves tax breaks for anyone making under $5 million per year.

So, somewhere between $250,000 and $5 million is an imaginary line drawn in the economic sand that separates the middle class from the flat-out wealthy.

The million dollar question is, precisely where is that line located?

Newsweek columnist Dan Gross points out in an engaging column on the topic that an informal poll conducted by CNBC found that only 35% of the people making over $250,000 a year considered themselves rich, even though the median household income as of 2007 was only $50,233. Only the top 1.2% of U.S. households report incomes of $250,000 or better, and only 20% of all U.S. households report household incomes greater than $100,000. In some states, such as Mississippi, the median annual household income is closer to $36,000. That means in Mississippi, half of all household incomes reported are lower than that.

Statistically speaking, these figures suggest “middle class” technically ends just shy of $100,000 per year per household, with some leeway this way or that depending on the specific state. This also feels intuitively right to me, speaking as a person who has for the past five years lived right in that income ballpark. Most of the working people I know in West Michigan have an annual household income in the $40,000 to $80,000 range, and most of the people who make more than that are people that we (at the lower income level) would consider rich.

But statistics and emotions are two very different things. In some of the priciest cities in the nation, a household income of $250,000 will not buy you a home in a really nice neighborhood. That’s obscene, but we have to ask ourselves if that fact alone means that a household placed squarely in the top 1.2% of all working American households is really experiencing the kind of distress that warrants tax relief. Certainly the family that can’t buy the house they want would say yes. And yet, a family in Mississippi getting by on $20,000 each year would say, “Give us a break.”

I recall as a child assuming my family was more or less “middle class.” My father was the sole breadwinner for a family of four kids and my stay-at-home mother. We had a small house in a city neighborhood inhabited mostly by factory workers.

By the time I entered high school I’d become painfully aware of an entire income class several rungs above us; the families of attorneys, dentists, accountants, and other white collar workers. These families also considered themselves to be “middle class.” Their lifestyle was so much more upscale, their problems so seemingly high-class (from my vantage point as a teenager in hand-me-downs), that I started to refer to our family as “lower middle class” or “working class.”

The blue collar/white collar distinction became a big deal in high school and an even bigger deal in college, where my blue collar roots branded me an interloper on campus and a traitor inside my old neighborhood: the worst of both worlds. It seemed to me that the fight over ownership of the middle class label was being won by white collar workers, with blue collar families by that time widely seen as uneducated and slightly more brutish by nature.

That was 35 years ago. Now, my husband and I have three jobs between us and worry about our health and our retirement. We seem to work all the time, and we’ve already accepted that we likely will never retire. We won’t be able to afford it, even though we’ve worked for our entire lives. A single healthcare crisis could sink us in a very short time, even though we both have insurance through our jobs. (We are still paying off about $7,000 in medical debt accrued for three days in a hospital over a year ago. That was what was left after insurance, for only three days’ admission.)

Our combined income is greater than $50,000 but nowhere near $100,000, and we do not look or feel rich. We feel stressed. We feel worried. We feel tired. Most people, looking at his truck-driving job and my entry level clerical job and freelance moonlighting work, would consider us “working class” even though we are both educated. The jobs we have are the jobs we have been able to get in the area in which we live. I worked my way through college (twice), and my kids had to do that, too.

Looking at the world today, it does seem to me that 1.2% of the population has successfully co-opted the “middle class” label. What’s more, the middle class label seems to me to have been floating upward for nearly forty years now, and if it floats any higher, it will turn in on itself, and we will all be living in some absurd economic farce. Perhaps that is how we are living now, and I just tire of thinking about it.

Whatever your feelings, whatever number you personally would choose to define the folks in the middle, it’s a pretty good bet you will include yourself in the category, and that you will feel strongly that you deserve more tax breaks. That much we know for certain.

But $5 million? How many houses does McCain own?

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