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Are you middle class?

"A massive tax increase on job creators and on small business.....another kick in the gut to the middle class in America." Mitt Romney on Barack Obama's plan to extend the Bush tax cuts only for taxpayers earning less than $250,000 per year.(1)

Since the Small Business Administration defines "small business" as one with less than 500 employees, the category includes businesses worth millions of dollars. Even so, only 3% of owners of small businesses have incomes over $250,000 per year, so Romney could have noted that about 97% of small businessmen would not be affected by the Obama plan. Even granting that bigger businesses are likely to create more jobs, that leaves plenty of jobs to be created by this 97%.

But would the plan hurt the middle-class too? Most Americans, from factory workers to neural surgeons, consider themselves "middle class," so a tax hike on this huge group would be ballot-box poison. But the median family income in this country is about $60,000, and about 20% of all families earn between $50,000 and $75,000. (2) This is the true middle class: about 39% of families earn less and another 41% make more. Only about 3% exceed $250,000, as noted above. To include this most affluent group in something called the "middle class" is a stretch

Most wealthy Americans consider themselves "middle class" for two reasons: it sounds snooty to say you are rich, and the affluent consider themselves part of a class that includes the super-rich Trumps, Bloombergs, Gateses, Buffets and the like. If you are not in the league of the latter group you feel "middle class" by comparison. At the same time, working class people (those that have jobs with family income below $50,000 per year) feel better about themselves if they are "middle class" rather than "working class" or (worse yet) "poor." As a result, an appeal to the "middle class" resonates with nearly all voters.

Republicans use this terminology to scare the vast majority of people about taxes that will never affect them directly.

Gerald S Glazer

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(1) "Everyone can get into the small business game" by Gail Collins in the NY Times, July 13, 2012.

(2) US Census Bureau, 2010.

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Jimmy_Jones | July 17, 2012 at 5:11 p.m. (report)

We should eliminate taxes so we can create the most jobs... wait... that doesn't seem quite right.

People always talk about the good ol' days, when normal people could find a good job & families could support themselves & still save for a rainy day. Those good old days had much higher taxes on the wealthy.

Taxes on the wealthy are at an 80 year low & we should lower them? Riiiight. We need to tax the wealthy more & eliminate the tax breaks for investment income (Why should millionaires pay less % in taxes than their secretary?) Use the money to pay down our debt from Bush's wars & bailouts.

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solitarius | July 13, 2012 at 3:06 p.m. (report)

The issue is not splitting hairs on defintions it is what is the right economic policy. Raising taxes leads to increased unemployment and reducing taxes decreases unemployment. The only times in the past 100 years this has not been true is during war times when employment is always up, but this is artificial and temporary.
The issue is also what is the problem with our economy: too much spending or too low taxes. The problem is that we spend too much and much of this is wasted on stupid programs that do not work like the Department of Education.
The other issue is will raising taxes on those making more than $250,000 solve any problems. This new tax will only raise about 85 billion dollars which about two weeks of spending by Obama. So Obama and Glazer want to risk increasing unemployment in order to pay for 15 days of out of control spending.
I suggest that both Glazer and Obama stick to fixing the problem and forget about failed programs and ideas.

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