Taxes: A Question for Kerry Supporters

[sam h]

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Wrong Sam you have to look at net worth, a household making 200K a year could be in debt enough that a increase in their taxes could have a substantial effect on their lifestyle at the margins, the change in income effects them a lot. It's bullsh*t IMO to state categorically that anyone making over a certain amount of money is upper class instead of middle class.

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Of course income generated in the last year is only a proxy for total wealth/well-being and may not be an accurate one in individual cases. But that doesn't take away from my argument, which is fairly simple:

1) By any reasonable definition of the words "middle" and "class", a group of households cannot be middle-class if they make more than 97% of other households.

2) However, many people that make this much money do still consider themselves middle-class, because they are benchmarking their own welfare against a vision of prosperity that holds that to be upper class means you essentially don't have to worry about money.

3) This is an absurd definition of prosperity, one that ultimately reflects how out of touch many of these people making 200K are with how most of the country - much less the world - lives.

4) This is just a position on what a reasonable definition of upper and middle class might look like when we examine income distribution. It's not an argument for rolling back the tax cuts on those making over 200K, which I do support and I know you don't.

[Daliman]

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As for the single mother making $12,480, if my expenses go up $11,600, yes, she might have to go. A sidenote: Why is it always a single mother?? For effect???

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For exactly the same reason why its ALWAYS the "small businessman".

[MMMMMM]

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1) By any reasonable definition of the words "middle" and "class", a group of households cannot be middle-class if they make more than 97% of other households.

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Ordinally ranked items in a database can still have little real difference or spread between them. If all incomes in the U.S. were betweeen, say, $95,000 and $100,000, there would still be those at the 97th percentile but it wouldn't mean much at all in terms of life differences.

However if the top 1% had incomes or assets far above those in the 97th percentile, then it would make sense to assign them a different label (or "class").


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2) However, many people that make this much money do still consider themselves middle-class, because they are benchmarking their own welfare against a vision of prosperity that holds that to be upper class means you essentially don't have to worry about money.

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Well if "upper-class" doesn't mean a large difference in lifestyle and assets over "middle-class" then there is no point in having the distinctive class terminology, is there?


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3) This is an absurd definition of prosperity, one that ultimately reflects how out of touch many of these people making 200K are with how most of the country - much less the world - lives.

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If the difference is only a matter of gradation then there is no point in defining two different classes. If the difference is large in real terms (life, lifestyle) then there is a point to using different labels.

This doesn't mean upper-class has to be defined as having, say, a net worth of tens of millions of dollars, but IMO it should be defined as more than just being a well-paid working stiff.


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4) This is just a position on what a reasonable definition of upper and middle class might look like when we examine income distribution...

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It's not a really reasonable (or meaningful) definition because you are arbitrarily assigning an ordinal demarcation point, whereas a meaningful demarcation instead should have to do with major lifestyle gaps. Again, if merely a matter of gradation or percentile, then why assign a different label that implies there is a major lifestyle gap?

[Daliman]

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Maybe they shouldn't have joined the reserves. Is thier Country more important, or thier buisness? I think they made thier choice and I respect them for it, and thank them for it.
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so if Kerry is re-elected

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That's my favorite part.

I'm not trying to belittle your opinion, but I am trying to make a point.
The decisions we make can't all, always be perfect, or even the best.
People on this forum seem to all be one sided, and not think that, "hey, maybe that guy had a good point"
Seems to be a lot of closed minded people here.

Daliman, I apologize for using your post to respond to when it is a generalized response.

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As far as whether the country is more important than the business, i didn't realize our country was going to be annihilated if Uncle Phil doesn't shut down the General Store to go over to Iraq. Completely incorrect comparison.

Ya, you got me on the mistype there. Wishful thinking, i guess.

point as far as the reservists is they DID join willfully, but not to be used in the fshion they are. Don't get me wrong, back when there were alot of people bitching about going to war in the first gulf war, saying they just joined the Army, Navy, etc for the college, i had little to no sympathy for them. Yeah, i think the military used to oversell the college/life skills aspect of it, but if you're too stupid to realize what the military is for, you don't really deserve to bitch.

Anyways, reservists are now being made to stay longer than their normal tours in situations and conditions they are not trained for. Most of these people are ex-military who wanted a continuation of benefits but also wanted to "give a little back to their country". This war is hurting their families, business, and in many cases, killing them. IF this were Afghanistan, no problem, but its not. Afghanistan is now over 50% GNP herion, and we have created for more terrorists than were ever in operation before with our reckless and misguided attack on a muslim state that made no attack against us.

[Daliman]

Well, this one i'm not sure about, but I don't think it's "family" that makes over 200k, it's individual. If so, and that # goes to 400k, we're DEFINITELY talking upper class.

My wife and I will make ~200k this year, and I consider us upper middle class.

[adios]

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Of course income generated in the last year is only a proxy for total wealth/well-being and may not be an accurate one in individual cases. But that doesn't take away from my argument, which is fairly simple:

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Let's stop right here. That's a major problem with taxing income, defining income for a diverse set of income earners is not a simple matter and in fact it is very far from being simple. What constitutes a legitimate business expense for one earner that can be offset against their revenue may simply be consumption of an item for another earner just as an example. Even for someone making $300,000 on a W-2, if their obligations take up a significant portion of that $300,000 they can be far worse off than someone making $80,000 or even $40,000.

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1) By any reasonable definition of the words "middle" and "class", a group of households cannot be middle-class if they make more than 97% of other households.

2) However, many people that make this much money do still consider themselves middle-class, because they are benchmarking their own welfare against a vision of prosperity that holds that to be upper class means you essentially don't have to worry about money.

3) This is an absurd definition of prosperity, one that ultimately reflects how out of touch many of these people making 200K are with how most of the country - much less the world - lives.

4) This is just a position on what a reasonable definition of upper and middle class might look like when we examine income distribution. It's not an argument for rolling back the tax cuts on those making over 200K, which I do support and I know you don't.

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Just because they make more than 97% of what other households make on a W-2, doesn't mean that their net income after obligations makes them better off than 97% of the households in the U.S. The operative equation is:

Income - Expenses

[adios]

If you file jointly and your income exceeds that $200 figure after your allowable deductions you'll pay the marginal rate for $200,000 and above on that income you made jointly above $200,000.

[sam h]

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Ordinally ranked items in a database can still have little real difference or spread between them. If all incomes in the U.S. were betweeen, say, $95,000 and $100,000, there would still be those at the 97th percentile but it wouldn't mean much at all in terms of life differences.

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The fact is that while household income percentiles are determined ordinally, income is still measured on a ratio-level scale, one that exhibits pretty significant variance. Were the situation you describe to hold, the use of income percentiles to demarcate classes would be quite faulty. But it doesn't.

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However if the top 1% had incomes or assets far above those in the 97th percentile, then it would make sense to assign them a different label (or "class").

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If the 97th percentile had incomes or assets far above the 50th percentile, wouldn't the same argument hold? Note that household income for the 50th percentile is about 43K.

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If the difference is only a matter of gradation then there is no point in defining two different classes. If the difference is large in real terms (life, lifestyle) then there is a point to using different labels.


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Here is the crux of our dispute. Do you not think that the difference is quite large in real terms between those households making around 200K and those making around 40K?

I come from a 200Kish background. My parents work very hard, they can't always have everything they want, but life is pretty comfortable, what with the two homes, three cars, vacations abroad, etc. My girlfriend's family is much more in 40K territory. Her parents have never owned a home, don't have health insurance, and are constantly trying to stay ahead of debt collectors.

Isn't there a difference here?

[sam h]

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What constitutes a legitimate business expense for one earner that can be offset against their revenue may simply be consumption of an item for another earner just as an example. Even for someone making $300,000 on a W-2, if their obligations take up a significant portion of that $300,000 they can be far worse off than someone making $80,000 or even $40,000.

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I understand this. But the percentage of people who fall into the 200K bracket who are small businessmen who cannot write off significant legitimate expenses against income must be fairly miniscule.

But say we do take "income minus legitimate business expenditures that you can't write off" as a better proxy. If this equation yielded a result of 200K for a given individual, wouldn't my argument still hold that they are in the upper class of American society?

[MMMMMM]

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Here is the crux of our dispute. Do you not think that the difference is quite large in real terms between those households making around 200K and those making around 40K?

I come from a 200Kish background. My parents work very hard, they can't always have everything they want, but life is pretty comfortable, what with the two homes, three cars, vacations abroad, etc. My girlfriend's family is much more in 40K territory. Her parents have never owned a home, don't have health insurance, and are constantly trying to stay ahead of debt collectors.

Isn't there a difference here?

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Yes there is a difference there, and I think that difference could be termed the difference between upper-middle-class and lower-middle-class incomes and lifestyles. Also don't forget that when you were a kid that was a lot more money.

A family of four earning say 120K jointly could be termed middle-middle-class. But it just isn't right to call a family income of 200K "upper class: or "rich". If you do, what would you call incomes of 500K, or what would you call those families worth tens of millions of dollars? At 200K you can live fairly well but you certainly aren't very rich and you are probably working quite hard. To me that sounds a lot more like a well-paid version of the middle-class lifestyle, than "rich". Thus I think it is disngenuous and divisive of politicians in general or Kerry to say that his tax cut rollback would only affect "the rich". At 200K a family still has plenty of bills to worry about and a lot of future to be planned for and saved for. It's really still working class and not even very luxurious working class.

A relative of mine and her husband earn jointly over 150K but under 200K, and have no kids. Damn near all they do is work to make the mortgage payments on a 300K home in Massachusetts and drive a couple nice late model Toyotas. They get a company vacation once a year and probably work 60 hours a week each. Would they be "rich" if they earned another 50-100K per year jointly? I don't think so. If they had kids they could earn that much more and it would all go on the kids, too. They are solidly upper-middle-class and just about all they do is work. No two homes, no vacations except the yearly prize vacation won by performance for the company, etc. Sorry but I don't see how that can be considered upper-class. An extra 50K or so per year would not be enough to greatly change their lifestyle for the better.