On not being in the middle (class) of anything

One of the more interesting quotes in the news this week comes from George Stephanopoulos interviewing Mitt Romney. When the question of tax policy enters the discussion, Mitt clarifies where he thinks the middle class ends (emphasis mine):

MITT ROMNEY: Well, I said that there are five different studies that point out that we can get to a balanced budget without raising taxes on middle income people.  Let me tell you, George, the fundamentals of my tax policy are these.  Number one, reduce tax burdens on middle-income people.  So no one can say my plan is going to raise taxes on middle-income people, because principle number one is keep the burden down on middle-income taxpayers.

GEORGE STEPHANOPOULOS: Is $100,000 middle income?

MITT ROMNEY: No, middle income is $200,000 to $250,000 and less.  So number one, don’t reduce– or excuse me, don’t raise taxes on middle-income people, lower them.  Number two, don’t reduce the share of taxes paid by the wealthiest.  The top 5% will still pay the same share of taxes they pay today.  That’s principle one, principle two.  Principle three is create incentives for growth, make it easier for businesses to start and to add jobs.  And finally, simplify the code, make it easier for people to pay their taxes than the way they have to now.

As several people have already noted, the notion that middle-income (or by the more common vernacular — middle-class) somehow ends at 200-250,00 thousand dollars a year is an odd view to take. Of course Romney isn’t the only candidate to assert that families earning under that ceiling should be described as middle-class. Either way it doesn’t make sense to me given the distribution of household income in this country:

Indeed, the same Census report (see Table A-1) puts the real median income $50,054. Describing the 96th percentile in income-earners as the middle-class strikes me as a little too far right on the scale. Perspective: 50 percent of earners make less than than $50,000 and 79 percent make less than $100,000. Only four percent of household income clears the line for both Romney and Obama’s cut-off for middle-class.

This matters because both sides consider tax rates (read – hikes) below this cut-off as policy persona non grata. So when they talk about “broad-based tax reform” but not “raising taxes on the middle-class” they have narrowed any possible changes down to four percent of income earners. Something tells that you’re not going to get broad-based anything if you’ve already excluding 96 percent of the income population.

*Update – Dylan Matthews over at WonkBlog chimes in his breakdown of income-class structure by mean income (the top bar represent Romney and Obama’s upper class):

This breakdown seems pretty reasonable (using the same Census data as the first graph). Remember, more than three-quarters of household income is less than $100,000 a year. For Obama is this is about getting the Bush-era tax cuts on income over $250,000 to expire, for Romney this about making a magic tax plan make sense.


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