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  • ‘Middle class’

    In talk about whom to tax, both parties fudge the demographics of income

    Somewhat oddly, one of the main points of contention during “fiscal cliff” negotiations was where the line for tax increases would be drawn.

    The initial gambit by GOP Sen. Mitch McConnell, R-Ky., specified a limit of $750,000 per family. President Barack Obama had campaigned on a $250,000 figure, drawing mockery from many Americans who said anyone earning that amount was well above the middle class. Eventually, senators and the president met at $400,000 for individuals and $450,000 for families, and the House, with insufficient time and leverage to change the deal, reluctantly approved it. That number is somewhat nearer the president’s target, but even farther beyond the comprehension of the average wage earner.

    Part of the problem has been an ongoing apples-and-oranges discussion, during which the phrase “middle class” was used frequently and imprecisely. If by “middle” one means some segment of the income bell curve that isolates a certain percentage of the population at the left end as “low income” and an equal percentage on the right as “upper income,” drawing the line at $400,000 means that many people who cannot afford the basic necessities land in the middle class. Does anyone believe that fewer than 1 percent of the individuals in America are poor? No specific figure has been announced for how many Americans earn more than $400,000, but only 0.9 percent top $350,000 – emphasizing just how few people this argument really affected.

    But the limit being negotiated during the last few months has not been intended primarily to define the middle class. The purpose was – or at least should have been – to pick the point at which raising taxes reduces the federal deficit as much as possible while harming the economy as little as possible. That need not mean that the threshold be placed at the upper boundaries of the middle class.

    Still, that phrase, and the demographic it represents, are important, perhaps more because of its lower reaches than its more comfortable members. Tuesday’s deal deferred any meaningful discussion of cutting costs, and when Congress takes up that debate, Americans are going to be focusing on one particular cost: entitlements.

    That word, too, is bandied about in ways that render it nebulous and hurtful, but along with what voters perceive as fair taxation of the rich, they have also expressed clearly the desire that people should not be allowed to collect taxpayer benefits that they do not deserve or do not need.

    Although Social Security and Medicare must be significant components of any plan to reduce spending, taxpayers have been equally specific in demanding close scrutiny of those who take advantage of the system, and they do not mean senior citizens. They do not even necessarily mean people whose jobs have been outsourced to another continent. They mean those who could work although perhaps cannot find jobs that pay more than the benefits they would lose by earning a paycheck. They mean those who have made poor decisions and who have depended on the government to compensate.

    They have an opinion about whether government checks should be a ticket into the middle class – which, of course, depends on where the lower limit lies.

    Those words need to be much better defined, so that elected officials and constituents are talking about the same things – so that Congress cannot claim it has not heard, and so that Americans can begin to understand what the reforms they are asking for will mean to the economy of their communities and the nation. That part of the problem is not complex math, just a vocabulary lesson.