jueves, 7 de enero de 2016

jueves, enero 07, 2016

$250,000 a Year Is Not Middle Class

By BRYCE COVERT


HILLARY CLINTON has vowed not to raise taxes on the middle class.

It’s a pledge that has worked well for others on the campaign trail before her, a resonant assurance to voters who saw themselves as middle class or aspired to be. But it’s a bad promise.

Mrs. Clinton is using a definition of middle class that has long been popular among Democratic policy makers, from her husband to Barack Obama when he was a candidate: any household that makes $250,000 or less a year. Yet this definition is completely out of touch with reality. It also boxes her in.
 
The most recent Census Bureau data showed that median household income — what people in the exact middle of the American spectrum earn — is $53,657.

Those families who make $250,000 a year, on the other hand, belong to an elite group: Americans who earn enough to be in the highest 5 percent of the income distribution. That top stratum captures anyone who makes $206,568 or more — not everyone in the so-called middle class that Mrs. Clinton says she is dedicated to protecting, but too large a chunk of it.


People waited in line at the post office to file their taxes before the April 15 deadline. Credit Spencer Platt/Getty Images    

        
This doesn’t matter just because the math is so off. In an era of deepening income inequality, those people in the top 5 percent who are being classified as middle class are pulling further away from the rest of us. Americans at the bottom or in the middle have experienced five years of falling or stagnating income; those in the top 5 percent have generally seen their incomes increase. Between 1967 and 2014, median household income went up by $9,400 while those 5 percenters are now making $88,800 more, all adjusted for inflation.
 
A policy response should give those who are sliding backward a hand up, most likely funded by the people who are doing so well. But under Mrs. Clinton’s pledge, some of the well off won’t be called on to help out, and are in fact lumped in for receiving a boost. (I should note that my spouse works on the technology team for the Clinton campaign, but is not involved in policy.)
 
Mrs. Clinton’s pledge also blocks her from backing policies that would almost certainly benefit middle-class Americans, even if it raised their taxes slightly.
 
Take paid family leave. As things stand, Americans are not legally guaranteed any pay when they take time away from work for the arrival of a new baby or to care for a sick family member.
 
According to a 2012 survey, about a third of people who get no or partial pay when they take time off for a new child end up doing things like borrowing money, dipping into savings or putting off paying bills. Fifteen percent enroll in public benefits.
 
Senator Bernie Sanders also wants to help the middle class, but he wants to do it in a way that could mean raising its taxes, even if he promises that most of an increased burden will fall on the wealthy.
 
This has made him a target of the Clinton camp, which is telling voters that Mrs. Clinton is the only candidate pledging to shield the middle class.

Mr. Sanders, as well as Martin O’Malley, who is also running for the Democratic nomination, have avoided any pledge against middle-class tax increases. The paid family leave program both support is designed as social insurance much like Social Security, funded by a 0.2 percent payroll tax increase.
 
Yet Mrs. Clinton’s pledge rules out supporting such a proposal. While she has frequently talked about paid family leave, she says her plan will call on only the wealthiest to pay for it.
 
Mr. Obama, who also made a pledge not to raise middle-class taxes, has seen how limiting it can be. 
 
It was a doomed idea. Some families with closer to median income do use 529 accounts. So adding a tax would, technically, increase some middle-class people’s burden, thus violating Mr. Obama’s promise. Backlash erupted not just from Republicans, but fellow Democrats, and he dropped the idea less than a week after floating it.
 
Even Mr. Sanders, who often talks about income inequality, isn’t entirely immune from the allure of the $250,000 threshold. He’s ruled out middle-class tax increases except to fund paid family leave, promising to somehow get the needed revenue for his platform from banks and the very rich. And in other areas — top tax rates, Social Security payroll taxes — he adopts the $250,000 cap for no clear reason related to the policies themselves. That speaks to the spell this arbitrary limit has cast over the Democratic Party. 

It’s one it needs to break. The middle-class pledge has not just been outpaced by Democrats’ policy ambition. It’s been outpaced by voters’ reality.
 
Over the last decade and a half, fewer and fewer Americans are identifying as middle class, and a growing share says it is working or lower class. Income inequality compresses many downward and lifts up the sliver already at the top.
 
That shifting identity should relieve candidates of the sense that there is a political urgency in spouting the phrase “middle class,” and it demands a new framework — one that is honest about the class divisions in the country.
 
 
Bryce Covert­ is the economic policy editor at ThinkProgress and a contributor to The Nation.

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