Middle Income is Not $250,000!

The Tax Policy Center’s Howard Gleckman points out the 10 biggest differences in President Obama and Mitt Romney’s tax plans in his newest piece. At the end, he points out a couple of ways that the candidates are similar:

And both apparently believe that households making up to $200,000 or $250,000 are middle-income.

It’s amazing that we just gloss over this like it’s okay. Gleckman is right here. Romney deems the high-end of middle-income Americans to be $250,000 while Obama has continually pushed to raise taxes on high-income Americans, starting at $250,000.

In what world is making $250,000 a year middle class? Or $230,000? Or $200,00?

Here’s the Census Bureau’s 2011 estimates for household income and where that falls across America:

United States
Estimate Margin of Error
Quintile Upper Limits:
Lowest Quintile 20,585 +/-48
Second Quintile 39,466 +/-89
Third Quintile 63,001 +/-119
Fourth Quintile 101,685 +/-108
Lower Limit of Top 5 Percent 187,087 +/-436

The 95th percentile of Americans makes $187,087 a year! And yet, we’re okay saying that earning $250,000 a year is the upper limit! Once you look at the numbers, it’s crazy but we’ve grown to accept it.

Why? I’d hypothesize that people making $250,000 really do believe that they’re in the middle class. They hear all about these millionaires and billionaires and don’t put themselves in the same category as them. And it’s true, they aren’t in the same category: those billionaires and millionaires are at the high level of upper class, but households making $250,000 a year are certainly still upper class.

But this also works in the opposite direction as well. People at the other end of the spectrum dream of making it to the middle class. They want to believe that making $250,000 a year is middle class because that sounds attainable for them. If we were to drop the upper limit of middle-class down to the 80th percentile – $101,685 – people in the lowest 20 percent would probably find themselves disheartened. Yes, low-income households dream of making $100,000 a year but they also dream of a lot more. If we lower the upper limit of the middle class, we may cut back their dreams.

Of course, that’s just a hypothesis. But it doesn’t make it okay for the media to let this lie permeate across every campaign, tax proposal and policy statement. It’s tough to make arguments about the tax code when we are so clueless about what income level constitutes the middle class.


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s