![]() “Our priority has to be the working poor and those struggling to make it into the middle class,” Khanna told me. Ro Khanna, a Silicon Valley congressman who co-wrote Brown’s tax plan, has a useful way of thinking about this. The tax cut from Sherrod Brown, who’s a potential candidate, is likewise focused on the middle class and poor. The housing plans from Harris and Cory Booker give all their benefits to the bottom 90 percent, according to the Center on Poverty and Social Policy. Elizabeth Warren’s child-care proposal delivers 99 percent of its benefits to the bottom 90 percent of earners, according to Moody’s Analytics. Kamala Harris’s big tax cut applies only to families making less than $100,000. So here’s some good news: The 2020 Democratic candidates are moving in this direction. Its taxes should remain roughly constant, just as its share of economic output has. The top 1 percent deserves a substantial tax increase. The bottom 90 percent of Americans does deserve a tax cut, to lift its stagnant incomes. Politicians should recognize that there are three broad income groups, not just two. In the 2016 campaign, Clinton and Sanders used the same definition.Ī better approach exists. (Even in the New York area, $250,000 in pre-tax income puts a household in the top 10 percent.) Obama then delivered a tax cut for everyone below that cutoff. In the 2008 campaign, Barack Obama and Hillary Clinton both used $250,000 as the upper limit of the middle class. No wonder so many feel frustrated.Īnd for too long, the country’s economic policy, even under Democrats, has blurred the distinction between the upper middle class and the actual middle class. They aren’t receiving their fair share of the country's economic growth. These households aren’t making six-figure incomes, and they have received only meager raises over the past few decades. You probably have big mortgage payments, rising medical costs and perhaps eye-popping tuition bills.īut I’d ask you to spend a minute thinking about how much more challenging life is for the bottom 90 percent. If you, dear reader, happen to be in this group, I’m not trying to dismiss your economic anxieties. ![]() Since 1980, the incomes of the upper middle class have been growing at almost the identical rate as the economy. Their income path doesn’t look like that of either the first or second group. Over time, their share of the economy’s bounty has shrunk.įinally, there is the upper middle class, defined here as the 90th to 99th percentiles of the income distribution (making roughly $120,000 to $425,000 a year after tax). Even so, the incomes of the bottom 90 percent have trailed G.D.P. The numbers here take into account taxes and government transfers, like Social Security, financial aid and anti-poverty benefits. ![]() Then there are the bottom 90 percent of households, who are in the opposite position. They are now capturing an even greater share of the economy’s bounty. Their post-tax incomes (and wealth) have surged since 1980, rising at a much faster rate than economic growth. The first is indeed the top 1 percent of earners, and especially the very richest. To make grand pronouncements about the American economy, you need to talk about three groups. It shows that both sides have a point - but that it’s a mistake to divide the country into only two groups. I think the chart above helps to resolve the debate. Richard Reeves’s recent book, “Dream Hoarders” made this case, as did Matthew Stewart’s well-titled Atlantic article: “The 9.9 Percent Is the New American Aristocracy.” To them, the upper middle class is on the happy side, enjoying rising incomes, longer lifespans, stable marriages and good schools. On the opposing side are people who believe that the country’s defining class line is further down the economic ladder.
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