NYT: HRC and "middle class" taxes

[Deleted]

$250,000 a Year Is Not Middle Class

By BRYCE COVERTDEC. 28, 2015 1173 COMMENTS




HILLARY CLINTON has vowed not to raise taxes on the middle class.




It’s a pledge that has worked well for others on the campaign trail before her, a resonant assurance to voters who saw themselves as middle class or aspired to be. But it’s a bad promise.




Mrs. Clinton is using a definition of middle class that has long been popular among Democratic policy makers, from her husband to Barack Obama when he was a candidate: any household that makes $250,000 or less a year. Yet this definition is completely out of touch with reality. It also boxes her in.




The most recent Census Bureau data showed that median household income — what people in the exact middle of the American spectrum earn — is $53,657.




Those families who make $250,000 a year, on the other hand, belong to an elite group: Americans who earn enough to be in the highest 5 percent of the income distribution. That top stratum captures anyone who makes $206,568 or more — not everyone in the so-called middle class that Mrs. Clinton says she is dedicated to protecting, but too large a chunk of it.



This doesn’t matter just because the math is so off. In an era of deepening income inequality, those people in the top 5 percent who are being classified as middle class are pulling further away from the rest of us. Americans at the bottom or in the middle have experienced five years of falling or stagnating income; those in the top 5 percent have generally seen their incomes increase. Between 1967 and 2014, median household income went up by $9,400 while those 5 percenters are now making $88,800 more, all adjusted for inflation.




A policy response should give those who are sliding backward a hand up, most likely funded by the people who are doing so well. But under Mrs. Clinton’s pledge, some of the well off won’t be called on to help out, and are in fact lumped in for receiving a boost. (I should note that my spouse works on the technology team for the Clinton campaign, but is not involved in policy.)




Mrs. Clinton’s pledge also blocks her from backing policies that would almost certainly benefit middle-class Americans, even if it raised their taxes slightly.




Take paid family leave. As things stand, Americans are not legally guaranteed any pay when they take time away from work for the arrival of a new baby or to care for a sick family member. According to a 2012 survey, about a third of people who get no or partial pay when they take time off for a new child end up doing things like borrowing money, dipping into savings or putting off paying bills. Fifteen percent enroll in public benefits.




Senator Bernie Sanders also wants to help the middle class, but he wants to do it in a way that could mean raising its taxes, even if he promises that most of an increased burden will fall on the wealthy. This has made him a target of the Clinton camp, which is telling voters that Mrs. Clinton is the only candidate pledging to shield the middle class.



Mr. Sanders, as well as Martin O’Malley, who is also running for the Democratic nomination, have avoided any pledge against middle-class tax increases. The paid family leave program both support is
designed as social insurance much like Social Security, funded by a 0.2 percent payroll tax increase.



Households earning $250,000 are well above the threshold to join the richest 5 percent of Americans.





Top 5%


95th percentile

$206,568


90th

$157,479


Median income

$53,657


$21,432

Bottom

20%


More than one-fifth of households earn less than the poverty rate for a family of four: $23,850.

Figures for 2014.

Sources: Census Bureau; Dept. of Health and Human Services (poverty)


By The New York Times

www.nytimes.com/2015/12/28/opinion/campaign-stops/250000-a-year-is-not-middle-class.html?_r=0

[Deleted]

I agree with this. I don't think HCOL expenses or whatever are a justifiable way to defend NOT asking people in the top 5-10% to pay more in taxes. It'll be interesting to see where she goes with this because while I do think it's the right thing to do, it is definitely not the popular thing. And yikes to the comment section. "Do you know what real estate costs in Brooklyn?" "Do you know what private school costs these days?" lol. Valid concerns but they do not justify not paying more in taxes.

Do you think it will seriously hurt her campaign if she promises to raise taxes on people making, say $150k plus?

[msmerymac]

People are short-sighted. In the long run, many people can save if we increased taxes. Then we could do things like invest in education, subsidize child care, keep health care costs lower. You know, things that are massively large bills for many people.

[marriedfilingjoint]

So, do the idiots who write tax articles for the NYT recommend we have the IRS throw resources at taxpayers who can potentially net the government $80k-$100k in taxes max as opposed to multi-billion dollar corporations?

This shit here is why I can't even with the NYT anytime they write about tax. Why are we squabbling over what is or isn't middle class? It isn't going to change anything. Fix corporate taxes.

[cookiemdough]

I don't really get the outrage. If we want to focus on income inequality, I don't think leveling out the playing field for those with income of 250 or less will help. Especially while ignoring the tax breaks / loopholes with those earning substantially more than that but get a greater tax break by calling it "capital gains".

[Deleted]

The thing is, because our tax structure is progressive wouldn't it result in a lot more revenue if we did raise taxes on 100k plus or whatever? Because the people up at the tippy top would be paying a much higher percentage at EVERY level now not just higher at the top.

[sangria]

DAFUQ??

"Between 1967 and 2014, median household income went up by $9,400 while those 5 percenters are now making $88,800 more, all adjusted for inflation."

Read more: pandce.proboards.com/thread/502941/nyt-hrc-middle-class-taxes#ixzz3veNC5YfS

[Deleted]

Dec 28, 2015 15:38:27 GMT -5 cookiemdough said:

I don't really get the outrage. If we want to focus on income inequality, I don't think leveling out the playing field for those with income of 250 or less will help. Especially while ignoring the tax breaks / loopholes with those earning substantially more than that but get a greater tax break by calling it "capital gains".

Yeah those have to go too. I don't know how her campaign specifically deals with this but I can't imagine she is in favor of keeping them?

[marriedfilingjoint]

Dec 28, 2015 15:38:27 GMT -5 cookiemdough said:

I don't really get the outrage. If we want to focus on income inequality, I don't think leveling out the playing field for those with income of 250 or less will help. Especially while ignoring the tax breaks / loopholes with those earning substantially more than that but get a greater tax break by calling it "capital gains".

Yes, this is the other big thing. Candidates talk about "not raising taxes" on the middle class, which presumably means marginal tax rates. Changing marginal tax rates is not going to get us out of deficit!

[downtoearth]

Let's revisit what the top 1% make in each state...


www.washingtonpost.com/news/get-there/wp/2015/01/26/what-the-top-1-percent-makes-in-every-state/

Now let's not pretend that $250k is not upper class, HRC. The COL is not the same everywhere, but most households making $250k (and I'd say less) can handle raising some taxes in order to provide services and subsidies to make our communities stronger for those struggling.

I'd venture to say that over $100k in general you're mostly out of the middle class in most states and they can support a tax increase. By $150k you're out of the upper middle class according to this...



www.businessinsider.com/middle-class-in-every-us-state-2015-4

[marriedfilingjoint]

Dec 28, 2015 15:41:24 GMT -5 CheeringCharm said:

The thing is, because our tax structure is progressive wouldn't it result in a lot more revenue if we did raise taxes on 100k plus or whatever? Because the people up at the tippy top would be paying a much higher percentage at EVERY level now not just higher at the top.

That's true but that mostly applies to earned income. Capital gains and qualified dividends are taxed at much lower rates, and who is more likely to have a portfolio with capital gains and dividends? High net worth and high income often go hand in hand. That's how you get people who are extremely wealthy with crazy low effective tax rates. Well, one of the ways.

[Deleted]

Dec 28, 2015 15:51:13 GMT -5 marriedfilingjoint said:

Dec 28, 2015 15:41:24 GMT -5 CheeringCharm said:

The thing is, because our tax structure is progressive wouldn't it result in a lot more revenue if we did raise taxes on 100k plus or whatever? Because the people up at the tippy top would be paying a much higher percentage at EVERY level now not just higher at the top.

That's true but that mostly applies to earned income. Capital gains and qualified dividends are taxed at much lower rates, and who is more likely to have a portfolio with capital gains and dividends? High net worth and high income often go hand in hand. That's how you get people who are extremely wealthy with crazy low effective tax rates. Well, one of the ways.

Supposedly she wants to raise rates on medium-term capital gains (investments held for less than six years) to between 24% and 39.6%.

taxfoundation.org/comparing-2016-presidential-tax-reform-proposals

[marriedfilingjoint]

Dec 28, 2015 15:57:20 GMT -5 CheeringCharm said:

Dec 28, 2015 15:51:13 GMT -5 marriedfilingjoint said:

That's true but that mostly applies to earned income. Capital gains and qualified dividends are taxed at much lower rates, and who is more likely to have a portfolio with capital gains and dividends? High net worth and high income often go hand in hand. That's how you get people who are extremely wealthy with crazy low effective tax rates. Well, one of the ways.

Supposedly she wants to raise rates on medium-term capital gains (investments held for less than six years) to between 24% and 39.6%.

taxfoundation.org/comparing-2016-presidential-tax-reform-proposals

Good.

[Deleted]

What do you think about comments like this? A lot of people "liked" this on the NYT website. On the one hand, I don't think you can give people a pass for choosing to live in HCOL areas but otoh you can't deny that they have a point and that there is some truth to what they are saying.

"The problem isn't that people who make $250K a year are rich, it is that the people who make the median of $50K are not middle class.

If you define middle class as the ability to own a home, pay your bills, pay for college, and still be able to retire at 65 - well, retire and have food and shelter well into your eighties - $250K is middle class in metropolitan areas in which a three bedroom home costs $500 - $600K. People at $250K are rich in Syracuse, and nicely comfortable in San Jose. If you look at income maps, people earning the highest salaries are mostly living in areas where the cost of living is 1.5X to 3X the national average.

The problem is that $50K, the median, is *not* middle class in most metropolitan regions. It is close to poor. Homeownership and rent are huge parts of income; and retirement and helping to pay college debt may be out of the question.

We don't have enough people earning $250K for taxation to solve many of our problems. We need to move the middle *off* the $50K mark. Otherwise, we can raise the taxes on the comfortable to make the uncomfortable feel a sense of justice, but we still won't have enough revenue to run the country.

Our problem is that living middle class costs about $100K, and we have deflated the value of our productivity to half of that."

[marriedfilingjoint]

Has HRC or President Obama ever even said "$250,000 and under is middle class" or anything to that effect? I just don't understand needing to draw a line in the sand as to what is or isn't middle class. Yes, people who make between $100,000 and $250,000 a year are significantly better off financially than median income American families. They are also statistically more likely to make more of their income from salary and wages than investments, unlike those who make above $250k, and they probably pay 25%-42% of their income in taxes every year if their state has income tax. Raising the tax rate on this small population because we have deemed them "not middle class", right or wrong, is not going to solve major financial shortfalls. Corporate tax reform will.

[marriedfilingjoint]

Dec 28, 2015 16:08:06 GMT -5 CheeringCharm said:

What do you think about comments like this? A lot of people "liked" this on the NYT website. On the one hand, I don't think you can give people a pass for choosing to live in HCOL areas but otoh you can't deny that they have a point and that there is some truth to what they are saying.

"The problem isn't that people who make $250K a year are rich, it is that the people who make the median of $50K are not middle class.

If you define middle class as the ability to own a home, pay your bills, pay for college, and still be able to retire at 65 - well, retire and have food and shelter well into your eighties - $250K is middle class in metropolitan areas in which a three bedroom home costs $500 - $600K. People at $250K are rich in Syracuse, and nicely comfortable in San Jose. If you look at income maps, people earning the highest salaries are mostly living in areas where the cost of living is 1.5X to 3X the national average.

The problem is that $50K, the median, is *not* middle class in most metropolitan regions. It is close to poor. Homeownership and rent are huge parts of income; and retirement and helping to pay college debt may be out of the question.

We don't have enough people earning $250K for taxation to solve many of our problems. We need to move the middle *off* the $50K mark. Otherwise, we can raise the taxes on the comfortable to make the uncomfortable feel a sense of justice, but we still won't have enough revenue to run the country.

Our problem is that living middle class costs about $100K, and we have deflated the value of our productivity to half of that."

Yeah, that makes sense logically. I'm not sure how much of that is considered in federal tax reform. I imagine it is, though.

[sangria]

That list above with what you need to earn to be middle class in different states- are all those numbers household income rather than individual? Does it matter how many kids you have?

Because I think I take issue with where H and I fall on that chart LOL

[NitaX]

Dec 28, 2015 16:08:06 GMT -5 CheeringCharm said:

What do you think about comments like this? A lot of people "liked" this on the NYT website. On the one hand, I don't think you can give people a pass for choosing to live in HCOL areas but otoh you can't deny that they have a point and that there is some truth to what they are saying.

"The problem isn't that people who make $250K a year are rich, it is that the people who make the median of $50K are not middle class.

If you define middle class as the ability to own a home, pay your bills, pay for college, and still be able to retire at 65 - well, retire and have food and shelter well into your eighties - $250K is middle class in metropolitan areas in which a three bedroom home costs $500 - $600K. People at $250K are rich in Syracuse, and nicely comfortable in San Jose. If you look at income maps, people earning the highest salaries are mostly living in areas where the cost of living is 1.5X to 3X the national average.

The problem is that $50K, the median, is *not* middle class in most metropolitan regions. It is close to poor. Homeownership and rent are huge parts of income; and retirement and helping to pay college debt may be out of the question.

We don't have enough people earning $250K for taxation to solve many of our problems. We need to move the middle *off* the $50K mark. Otherwise, we can raise the taxes on the comfortable to make the uncomfortable feel a sense of justice, but we still won't have enough revenue to run the country.

Our problem is that living middle class costs about $100K, and we have deflated the value of our productivity to half of that."

I agree with this comment. I recently made a pretend life spreadsheet for m 13 yr old based on her career and city of choice. She wants to be a teacher and at the salary base I gave her - a little under $50K, she discovered that she couldn't own the car she wanted and she wanted to get a roommate to share the costs. 

This is why folks have come to believe they need two incomes to get by comfortably. When I made $45K 10 years ago with a kid, I had a part-time job for extras. Basic costs have gone up considerably so that you feel the pinch more. God forbid you have kids to go along with the $50K income. Childcare ain't cheap, nor is food.

[Deleted]

Dec 28, 2015 15:46:09 GMT -5 downtoearth said:

Let's revisit what the top 1% make in each state...


www.washingtonpost.com/news/get-there/wp/2015/01/26/what-the-top-1-percent-makes-in-every-state/

Now let's not pretend that $250k is not upper class, HRC. The COL is not the same everywhere, but most households making $250k (and I'd say less) can handle raising some taxes in order to provide services and subsidies to make our communities stronger for those struggling.

I'd venture to say that over $100k in general you're mostly out of the middle class in most states and they can support a tax increase. By $150k you're out of the upper middle class according to this...



www.businessinsider.com/middle-class-in-every-us-state-2015-4

What is this assuming is middle class? 25%-75%?

I've seen a lot of different numbers of what is the top end of middle class and it's annoying when they don't say what definition they are using.

[downtoearth]

Dec 28, 2015 17:42:30 GMT -5 @kcpokergal said:

Dec 28, 2015 15:46:09 GMT -5 downtoearth said:

Let's revisit what the top 1% make in each state...


www.washingtonpost.com/news/get-there/wp/2015/01/26/what-the-top-1-percent-makes-in-every-state/

Now let's not pretend that $250k is not upper class, HRC. The COL is not the same everywhere, but most households making $250k (and I'd say less) can handle raising some taxes in order to provide services and subsidies to make our communities stronger for those struggling.

I'd venture to say that over $100k in general you're mostly out of the middle class in most states and they can support a tax increase. By $150k you're out of the upper middle class according to this...



www.businessinsider.com/middle-class-in-every-us-state-2015-4

What is this assuming is middle class? 25%-75%?

I've seen a lot of different numbers of what is the top end of middle class and it's annoying when they don't say what definition they are using.

The article is based on 2015 Pew data and says this, "In this analysis, Pew defined middle class households as those earning 67%-200% of a state's median income."  So it's higher than the median income for that state.  I believe, it's pretty reasonable data from Pew and well tested, but someone else can confirm that.

[LoveTrains]

Part of the issue is that everyone wants to define as "middle class" and there many definitions as to what constitutes middle class (versus middle income).

I think we need more brackets at the top. I also would be happy to pay more in taxes and H and I don't make $250k combined. But we have very high state taxes and I'm about to go on the warpath about my property taxes going up and the car tax.

[fumbalina]

If people would spend more time fighting for a higher minimum wage instead of arguing that $250k is middle class, then I suspect that the lower end would go up. As long as companies can get away with paying as little as they do, those that are earning a significantly larger amount should be paying more. This does not mean that we do not need corporate tax reform or lowering of the military R&D budget. It is just one of many steps that is necessary to put the country on the right financial track.

[kadams767]

Dec 28, 2015 17:51:45 GMT -5 LoveTrains said:

Part of the issue is that everyone wants to define as "middle class" and there many definitions as to what constitutes middle class (versus middle income).

I think we need more brackets at the top. I also would be happy to pay more in taxes and H and I don't make $250k combined. But we have very high state taxes and I'm about to go on the warpath about my property taxes going up and the car tax.

We are right around the $250k HHI mark and while I do not claim that we are middle class and are certainly well-off, I will be totally honest in that I wouldn't really support a tax increase for my bracket unless something was being done simultaneously on the corporate tax issues and the capital gains and other factors which have been raised in this thread.  Not counting sales or property taxes, which are very high in NY state as well, DH and I already pay roughly 30% to federal and state income taxes.  I don't think that whatever threshold they could raise my bracket to is the solution here, unless the plan is a drastic increase (in which case, it would be tough to swallow).  I am fine paying my share of taxes and I try not to complain about it, but it's really hard to imagine that households in my situation as the target for tax reform.  

[decemberwedding07]

Dec 28, 2015 15:41:24 GMT -5 CheeringCharm said:

The thing is, because our tax structure is progressive wouldn't it result in a lot more revenue if we did raise taxes on 100k plus or whatever? Because the people up at the tippy top would be paying a much higher percentage at EVERY level now not just higher at the top.

I don't see a reason to punish people on the lower end of the spectrum as a way to get those at the top. I still think we need to be creating more tax brackets. They created one a few years ago, but it's $400,000ish and up? There should be another level for people making millions each year and another for people making billions. Those peop actually do exist! Why does our tax code act like they don't?

[decemberwedding07]

Dec 28, 2015 16:08:29 GMT -5 marriedfilingjoint said:

Has HRC or President Obama ever even said "$250,000 and under is middle class" or anything to that effect? I just don't understand needing to draw a line in the sand as to what is or isn't middle class. Yes, people who make between $100,000 and $250,000 a year are significantly better off financially than median income American families. They are also statistically more likely to make more of their income from salary and wages than investments, unlike those who make above $250k, and they probably pay 25%-42% of their income in taxes every year if their state has income tax. Raising the tax rate on this small population because we have deemed them "not middle class", right or wrong, is not going to solve major financial shortfalls. Corporate tax reform will.

I suspect it's picked frequently because it's in the middle of a bracket, so it's kind of hard to tell what they really mean. Do they mean the bracket below that? The entire bracket that includes $250,000 (which goes up to something like $450,000)? Do they mean they want to create a new bracket? Who knows!

[alleinesein]

Dec 28, 2015 16:08:06 GMT -5 CheeringCharm said:

What do you think about comments like this? A lot of people "liked" this on the NYT website. On the one hand, I don't think you can give people a pass for choosing to live in HCOL areas but otoh you can't deny that they have a point and that there is some truth to what they are saying.

"The problem isn't that people who make $250K a year are rich, it is that the people who make the median of $50K are not middle class.

If you define middle class as the ability to own a home, pay your bills, pay for college, and still be able to retire at 65 - well, retire and have food and shelter well into your eighties - $250K is middle class in metropolitan areas in which a three bedroom home costs $500 - $600K. People at $250K are rich in Syracuse, and nicely comfortable in San Jose. If you look at income maps, people earning the highest salaries are mostly living in areas where the cost of living is 1.5X to 3X the national average.

The problem is that $50K, the median, is *not* middle class in most metropolitan regions. It is close to poor. Homeownership and rent are huge parts of income; and retirement and helping to pay college debt may be out of the question.

We don't have enough people earning $250K for taxation to solve many of our problems. We need to move the middle *off* the $50K mark. Otherwise, we can raise the taxes on the comfortable to make the uncomfortable feel a sense of justice, but we still won't have enough revenue to run the country.

Our problem is that living middle class costs about $100K, and we have deflated the value of our productivity to half of that."

Where I live $50k a year is enough for a single person to live paycheck to paycheck if they have a 1 bedroom apartment.  When rent and utilities take up over 50% of your take home pay it leaves you with very little to survive on once you pay for basic bills (food, gas/car insurance, cell phone).  

[cookiemdough]

This whole argument reminds me of this meme on FB (no I don't know how to do pics but here is text)..."An immigrant, a worker and a banker are sitting at the table with 10 cookies. The banker takes 9 and then tells the worker "watch out, the immigrant is going to steal your cookie"."

To me the middle class vs $250k feels like this for politicians in the tax debate. We will leave hedge fund managers, corporations, and the truly wealthy that have actual ways to devise tax shelters off the table and let the little wage earners parse thorough what is middle class or not as if the $250k incomes can truly change the landscape.

[Deleted]

Dec 28, 2015 23:12:26 GMT -5 decemberwedding07 said:

Dec 28, 2015 15:41:24 GMT -5 CheeringCharm said:

The thing is, because our tax structure is progressive wouldn't it result in a lot more revenue if we did raise taxes on 100k plus or whatever? Because the people up at the tippy top would be paying a much higher percentage at EVERY level now not just higher at the top.

I don't see a reason to punish people on the lower end of the spectrum as a way to get those at the top. I still think we need to be creating more tax brackets. They created one a few years ago, but it's $400,000ish and up? There should be another level for people making millions each year and another for people making billions. Those peop actually do exist! Why does our tax code act like they don't?

I think this is true and I strongly agree that we should add brackets (at the moment they pay 40% on all income over 400k which isn't bad, it used to be less). But I also don't think that making people pay more at the lower end is meant to "punish" them. The programs that we want to have in this country - UHC, longer paid parental leave, universal prek, possibly subsidized daycare and free CC - are going to be really, really expensive. Everyone will need to pay more, not just people at the very top. People in the top 20% by definition are not middle class. They can afford to pay more.

[cookiemdough]

"They can afford to pay more". Is based on what? I am not disputing it but I am trying to understand. They can afford it in comparison to others or they can afford it based on current economic environment and purchasing power?

[jeaniebueller]

I think its weird to focus on this somewhat small group of taxpayers who earn between $100,000 and $250,000 when we could look to closing some of the corporate loopholes that would bring in far more revenue.