Hillary Clinton's Strange Definition Of "Middle Class" - MoJo

[WillyT]

Hillary Clinton's Strange Definition of "Middle Class"
The Democratic candidate promises to not raise taxes on people who are well within the top 5 percent.
By Patrick Caldwell - MoJo
Fri Nov. 20, 2015 8:36 AM EST


A member of the middle class? aastock/Shutterstock

<snip>

Hillary Clinton's campaign has spent much of the past week trumpeting her pledge to protect the middle class from tax increases. Clinton has "proposed a bold, aggressive agenda," campaign press secretary Brian Fallon said in a statement this week, "but when it comes to paying for it, she will make sure the wealthiest Americans finally start paying their fair share, not force the middle class to pay even more than they already do."

The former senator and secretary of state hasn't been shy about using that pledge to bludgeon her Democratic opponents, Sen. Bernie Sanders and former Gov. Martin O'Malley, as too eager to take money away from the middle class. "If you are truly concerned about raising incomes for middle-class families, the last thing you should do is cut their take-home pay right off the bat by raising their taxes," Fallon said. "Yet Bernie Sanders has called for a roughly 9-percent tax hike on middle-class families just to cover his health care plan, and simple math dictates he'll need to tax workers even more to pay for the rest of his at least $18-20 trillion agenda." Twitter accounts affiliated with Clinton's campaign have eschewed subtlety to attack Sanders and O'Malley on this point.

At the #DemDebate, only one candidate pledged to raise middle-class incomes and not their taxes: Hillary Clinton. pic.twitter.com/6LdKjWyx8N

— The Briefing (@TheBriefing2016) November 16, 2015

There's a problem with Clinton's line of attack: She is promising to exempt a lot indisputably rich people from paying more in taxes. Clinton pledged last week that, should she become president, she wouldn't allow taxes to be raised on households earning less than $250,000 per year—by any measure a very high ceiling for the middle class.

The middle class is one of those nebulous terms with no clear-cut definition. But a glance at the distribution of income across the country makes it hard to argue that that anyone earning close to $250,000 a year could be considered part of the "middle" of the income range.

The median household income for 2014, according to the US Census Bureau, was $53,657, about where it has been for the past three years (though still down quite a bit from the $57,357 mark in 2007, before the recession hit). To get into the top 20 percent, a family needs to make more than $112,000 per year. Entry into the top 5 percent requires more than $206,000 in annual income. A typical definition of the middle class wouldn't include the top 5 percent of earners, who took in more than half the money earned nationwide in 2014. And yet Clinton's bar is even higher.

The overwhelming majority of Americans like to think of themselves as belonging to the middle class, even when they have far more buying power than the average resident. With wealth growing increasingly concentrated at the very top tier of the super rich, it's easy for someone making $150,000 to look up the chain and feel less than wealthy, even while liberated from many of the concerns of those closer to the actual middle bracket of annual income.

Clinton didn't draw her number out of thin air...



<snip>

More: http://www.motherjones.com/politics/2015/11/hillary-clinton-middle-class

[BlueJazz]

1. So a family that makes almost 700 dollars a day is "middle class"? That's interesting.

[MineralMan]

2. Where to set the cutoff point for the middle class is always

a little difficult. I have known a few people who earned in the $200-250,000 range during my lifetime. They all certainly had more and better stuff than I did, but not really different stuff. Their houses were larger (along with their mortgages), they drove more expensive cars, had larger boats, traveled to more distant and international destinations, etc. Their kids wore more expensive and more stylish clothing than I did and went to private colleges, instead of the state college I attended. Those kids got a brand new car when they turned 16, instead of the clunker I had. They made many choices that I could not afford to make.

In the end, though, they were still in debt, due to the higher cost of the assorted crap in their lives and really lived no better than I did on my far, far lower income. Their stuff was just newer, more expensive, bigger, and had a few more features than mine. None had things like household employees, villas in Europe, or any of the trappings of the actual wealthy people.

A lot of those people I knew would have been in deep, deep trouble if their income disappeared to the corporation they worked for scaling back or outsourcing their jobs. That actually happened to a couple of the ones I knew. A couple more had business failures at the small businesses they owned. When that happened, they were actually in more trouble than I was if my income decreased.

Some number has to be set, where tax liabilities aren't raised. I don't know what the right number might be. $250,000? I'm OK with that, but I'd also be OK if it were $100,000. The difference in the actual tax revenues collected wouldn't be that significant in the grand scheme of things. Removing the cap on Social Security and Medicare taxation, though, would be something I supported for people earning in that income range and higher. That would make a big difference, to be sure.

[Rose Siding]

5. good points, and I do not think it would be fair to force

those in the upper middle class to downsize in order to improve the lives of those at 100k.

Earning 2-250k, you have more for retirement savings and some other savings maybe, but as you noted, the lion's share of income in that bracket is circulated back into the economy.

[starroute]

9. I don't think we're talking about downsizing

The Social Security cap is currently $118,500. Since that applies separately to each individual, it means a two-income family is already paying on everything up to $237,000. So assuming their combined income is $250,000, raising the cap would apply to an additional $13,000, which at the current FICA rate of 6.2% would hit them for $806 a year. That's hardly enough to break the bank.

It would admittedly have more of an impact on single-paycheck families bringing in higher amounts -- but I suspect a majority of those families already have other sources of income, such as investments. I can't readily come up with any scenarios where it would force a family making under $250,000 in salaries to downsize.

[Rose Siding]

10. Can you confirm that the increases

only pertain to SS cap hikes? I haven't seen that his plan excludes income tax hikes. In fact, he referenced Ike's income tax rate in the debate, not FICA.

[starroute]

17. The income tax is already progressive

The current top rate is 39.6% for all income (after deductions) over $413,200 for a single filer and $464,850 for married joint filers. If anyone is talking about raising income taxes for the top brackets, it would involve adding additional brackets above that to get things closer to where they were before Reagan.

[erronis]

14. I'm not understanding how the "lion's share of income is circulated back into the economy"

While many families earning 200-250K are more profligate with their spending, I think a lot of this goes into making large mortgages to pay for McMansions.

Their net worth is frequently in the house. We all know what a secure place to stuff cash is the real-estate market (I hear of another bubble pop coming soon.)

[EndElectoral]

8. Here's the problem with indexing income.

The IRS has simply NEVER done this for differing geographical incomes.

To try and set an indexing income means test creates its own set of major problems. For example, one could say that the average middle class income in New York is higher than in West Virginia, but it doesn't tell the whole story. The average middle class income of say Elmira, New York may be significantly lower than Westchester, and more in line with say Charleston, WV. Even among a city like NYC there is great disparity of income among boroughs.

One may be able to create a geographic inflation deducter which could be used to adjust income in excessive situations, but I think a standard rate has to be established.

[Romulox]

20. LOL at the ponderous attempt at deflection. nt

[MineralMan]

23. Just an LOL, eh?

Well, OK then...

[Romulox]

24. I didn't *really* laugh out loud. But the derision is there! nt

[MineralMan]

25. Thanks for the excellent discussion, then.

Derision is so effective as a discussion method, I have always found. Please proceed.

[Romulox]

26. There's nothing to "discuss" with you. You're here to speak soothing words to power, nothing else.

Derision is so effective as a discussion method, I have always found. Please proceed.

It's more than sufficient to deflate your self-regarding claptrap, at that!

[JaneyVee]

3. Below $250k sounds great.

And if you look at DU during those debates on the Bush tax cuts, $250k seemed to be the overwhelming consensus.

[Scuba]

4. When you earn $250,000 for a half-hour speech you might not be able to relate to the rest of us.

[Fuddnik]

6. Matches her definition of "broke".

[EndElectoral]

7. "Bernie Sanders has called for a roughly 9-percent tax hike on middle-class families"

It is this kind of obfuscation that is beneath the Clinton campaign.

First, let's look at the bottom line. If a family makes 100K a year and pays 15K in taxes, and medical insurance of 5000K in medical cost per year. They're essentially paying 20K in taxes and medical costs. So, let's say there is a 9% increase in taxes. 9% of the 15K is 1,350, so the tax load is now 16,350 rather than 15,000. However, you are now getting Medicare for All. Part A +B runs 120 a month this upcoming year. That's a cost of 1,440 in Medicare. This brings your taxes and medical costs to 17,790 giving you 2200 to buy a supplemental plan if you desire and an affordable prescription drug plan. So, the bottom line financially is better or essentially unchanged except your're now enjoying the same privilege seniors get on Medicare.

Second, this 9% is only on the highest of "middle class" earners. Frankly, the bulk is paid by those in the upper 10% and secondarily by those in the second 10%. Those under 100K are seeing massive tax and insurance relief.

Third, this is a comprehensive plan that has been around since the mid 60's under Johnson, so the administrative aspect is ALREADY in place.

Fourth, it's the ethical thing to do to provide everyone health coverage.

What's she is doing is playing the old Republican "we're raising your taxes fears" and not telling the full gain to the bottom line of the American worker. It's dishonest, and self serving.

[dsc]

13. There would be winners and losers under Sanders plan

I would be a fairly substantial loser, at least right now. I have expenses of less than 1k a year and would pay about 5k in taxes. yes, my employer pays around 5k in costs but they aren't going to raise my salary by an eqivalant amount. I work for the state of NC and I can absolutely, positively, tell you any savings they get would go to tax cuts for the rich. On edit, that doesn't mean I would necessarily oppose this, but the fact is I would lose financially under this scheme and I am not alone and I sure am not rich.

[Hiraeth]

11. oh dear me. According to that chart, I am so fucked.

[bvar22]

12. She hasn't "evolved" on this issue....

...at least since 2008 when Candidate Obama gave Hillary lessons on WHO is the Middle Class.

[99th_Monkey]

15. Great reminder. I find it odd, people making $250,000 calling themselves 'middle class'

and whining about getting a slight tax increase to help level the playing field for
all truly middle-class and poor Americans.

[winter is coming]

16. K&R. n/t

[EndElectoral]

18. Biden defined Middle Class as difficult to miss two pay checks. Seems 250K is a little high for that

[Vinca]

19. Yikes. I feel like a peasant.

[Romulox]

21. $250,000 a year isn't middle class, and it's embarrassing for her supporters to argue that it is.

[Doctor_J]

22. It's her base

[aidbo]

27. That definition of middle class is a little crass.

[WillyT]

28. Evening Kick...

[Adrahil]

29. I'll be honest.... My household income is top 5% (barely)

I am NOT floating in dough. I have cars... one 11 years old (Accord) and one 6 years old (Odyssey). I don't live a mansion. I don;t take multiple vacations a year. I'll cop to upper middle class, but honestly, I'm not lighting cigars with twenties....

[MrMickeysMom]

30. Huge K&R, WillyT...

Mean, median, mode

And, let us not forget the expense side of that formula.

Proportionally, the median income earners pay more than people making 300 times their income. Often, there is too much debt in the form of school loans, home, cars, and the means to get to two jobs, if you're not hired full time (which is more likely).

Who are these people kidding?

[Hydra]

31. The truth is that there isn't much of a middle class left

Most of the people who are being referred to as "middle class" were the upper middle class to lower upper class of yesteryear. There's a huge gap down from there to working class and then working poor to screwn.

This used to be a GOP talking point, because lots of working class people think they are middle class and will ascend to upper class (soon). Now our party is leading the charge against the people at the bottom while pretending to have their interests at heart.

...And here I thought we couldn't go further down the rabbit hole...

[raouldukelives]

32. Sounds a lot like how they like to view small businesses.

Walmart and under.