*Rich* *Middle Class* definitions??

[OliverTwistofLime]

From a financial point of view, it appears that Kerry draws the magic line that you are * Rich* if you make 200,000 dollars (net?) per year or more.

And *Middle class* must refer to anyone from proverty level high mark to199,999 dollars/year net.

What category does one fit in if he/she has for example 3 million in assets but makes 70,000 per year? Is this guy rich? or middle class?

In summary, what makes one family middle class and another financially rich so that we know what these politicians are talking about?

[blowero]

Since the issue is how much these people are taxed, the determining factor would be how much income they receive. The word "asset" is too vague for the purpose of this discussion. Investments earn income; people rarely just put their cash under their mattress and let it sit there. If you have 3 million dollars, it had to come from somewhere.

[BrainGlutton]

It's not just about money. There are also cultural aspects to the question. From Class: A Guide to the American Status System, by Paul Fussell (Summit Books, 1983):

My researches have persuaded me that there are nine classes in this country, as follows:

Top out-of-sight
Upper
Upper middle
------------------------
Middle
High proletarian
Mid-proletarian
Low proletarian
------------------------
Destitute
Bottom out-of-sight

One thing to get clear at the outset is this: it's not riches alone that define these classes. . . . "Economically, no doubt, there are only two classes, the rich and the poor," says George Orwell, "but socially there is a whole hierarchy of classes, and the manners and traditions learned by each class in childhood are not only very different but -- this is the essential point -- generally persist from birth to death. . . . It is . . . very difficult to escape, culturally, from the class into which you have been born." When John Fitzgerald Kennedy, watching Richard Nixon on television, turned to his friends and, horror-struck, said, "The guy has no class," he was not talking about money.
* * * *
Not that the three classes at the top don't have money. The point is that money alone doesn't define them, for the way they have their money is largely what matters. . . . The main thing distinguishing the top three classes from each other is the amount of money inherited in relation to the amount currently earned. The top-out-of-sight class (Rockefellers, Pres, DuPonts, Mellons, Fords, Vanderbilts) lives on inherited capital entirely. . . .

"When I think of a really rich man," says a Boston blue-collar, "I think of one of those estates where you can't see the house from the road." Hence the name of the top class, which could just as well be called "the class in hiding." Their houses are never seen from the street or road. They like to hide away deep in the hills or way off on Greek or Caribbean islands (which they tend to own), safe, for the moment, from envy and its ultimate attendants, confiscatory taxation and finally expropriation. . . .
* * * *
The next class down, the upper class, differs from the top-out-of-sight class in two main ways. First, although it inherits a lot of its money, it earns quite a bit too, usually from some attractive, if slight, work, without which it would feel bored and even ashamed. It's likely to make its money by controlling banks and the more historic corporations, think tanks, and foundations, and to busy itself with things like the older universities, the Council on Foreign Relations, the Foreign Policy Association, the Committee for Economic Development, and the like, together with the executive branch of the federal government, and often the Senate. . . . And secondly, unlike the top-out-of-sights, the upper class is visible, often ostentatiously so. . . . When you pass a house with a would-be impressive facade visible from the street or highway, you know it's occupied by a member of the upper class. . . .

* * * *
We now come to the upper-middle class. It may possess virtually as much as the two classes above it. The difference is that it has earned most of it, in law, medicine, oil, shipping, real estate, or even the more honorific kinds of trade, like buying and selling works of art. Although they may enjoy some inherited money and use inherited "things" (silver, Oriental rugs), the upper-middles suffer from a bourgeois sense of shame, a conviction that to live on the earnings of others, even forebears, is not nice.

Caste marks of the upper-middles would include living in a house with more rooms than you need, except perhaps when a lot of "overnight guests" are present to help you imitate upper-class style. . . . This class is also the most "role-reversed" of all: men think nothing of cooking and doing housework, women of working out of the house in journalism, theater, or real estate. (If the wife stays home all the time, the family's middle-class only.) Upper-middles like to show off their costly educations by naming their cats Spinoza, Clytemnestra, and Candide, which means, as you'll have inferred already, that it's in large part the class depicted by Lisa Birnbach and others' Official Preppy Handbook, that significantly popular artifact of 1980.
* * * *
. . . The middle class is distinguishable more by its earnestness and psychic insecurity than by its middle income. I have known some very rich people who remain stubbornly middle-class, which is to say they remain terrified at what others think of them, and to avoid criticism are obsessed with doing everything right. . . .

"Status panic": that's the affliction of the middle class, according to C. Wright Mills, author of White Collar (1951) and The Power Elite (1956). Hence the middles' need to accumulate credit cards and take in The New Yorker, which it imagines registers upper-middle taste. . . .

If the audience for that sort of thing used to seem the most deeply rooted in time and place, today it seems the class that's the most rootless. Members of the middle class are not only the sort of people who buy their own heirlooms, silver, etc. They're also the people who do most of the moving long-distance (generally to very unstylish places), commanded every few years to pull up stakes by the corporations they're in bondage to. They are the geologist employed by the oil company, the computer programmer, the aeronautical engineer, the salesman assigned to a new territory, and the "marketing" (formerly sales) manager deputed to keep an eye on him. . . . IBM and DuPont hire these people from second-rate colleges and teach them that they are nothing if not members of the team. Virtually no latitude is permitted to individuality or the milder forms of eccentricity, and these employees soon learn to avoid all ideological statements. . . . Terrified of losing their jobs, these people grow passive, their humanity diminished as they perceive themselves mere parts of an infinitely larger structure. Interchangeable parts, too. "The training makes our men interchangeable," an IBM executive was once heard to say.
* * * *
. . . Oddity, introversion, and love of privacy are the big enemies, a total reversal of the values of the secure upper orders. Among the middles there's a convention that erecting a fence or even a tall hedge is an affront. And there's also a convention that you may drop in on neighbors and friends without a telephone inquiry first. . . .
* * * *
. . . Proceeding downward, we would normally expect to meet next the lower-middle class. But it doesn't exist as such any longer, having been pauperized by the inflation of the 1960s and 1970s and transformed into the high-proletarian class. What's the difference? A further lack of freedom and self-respect. Our former lower-middle class, the new high proles, now head "the masses," and even if they are positioned at the top of the proletarian classes, still they are identifiable as people things are done to. They are in bondage -- to monetary policy, rip-off advertising, crazes and delusions, mass low culture, fast food, consumer schlock. Back in the 1940s there was still a real lower-middle class in this country, whose solid high-school education and addiction to "saving" and "planning" maintained it in a position -- often precarious, to be sure -- above the working class. . . . These former low-white-collar people are now simply working machines, and the wife usually works as well as the husband.

Even this analysis is incomplete as it fails to account for divisions between ethnic subcultures. Are working-class whites in the same "class" as working-class blacks at the same income level? In ten years, maybe, as the last social barriers to interracial socializing and marriage fade, but not today.

[blowero]

That's a different question, though. We're talking about taxation, not "class" in general. When Kerry refers to the $200,000 mark, he does so entirely in relation to his tax plan. He certainly wasn't making any pronouncements about race and it's relationship to social classes.

[Liberal]

If you have more money than I, you are rich.

[Metacom]

That's a different question, though. We're talking about taxation, not "class" in general. When Kerry refers to the $200,000 mark, he does so entirely in relation to his tax plan. He certainly wasn't making any pronouncements about race and it's relationship to social classes.
I don't think it's a different question at all. Kerry is using the $200,000 figure has part of a populist message, and when you start getting into that territory the definition of "class" becomes very relevant.

Interesting quote, BrainGlutton. My shopping cart on Amazon just gone a bit bigger. :)

[Metacom]

If you have more money than I, you are rich.
In that case, I look forward to either being supported by your tax dollars or supporting you with mine. Both work for me.

[OliverTwistofLime]

I think that Brain Glutton's post was excellent. But:

Gore was talking about the upper 1% in assets? should pay the huge taxes

Kerry uses the arbitrary figure of $200,000 per annum income to pay taxes at a much higher rate which is not fair in and of itself.

To accumulate that figure in my prime as an Ob-Gyn working close to 24/7 and in solo practice was not easy.

I inherited nothing from anyone..working long and hard at my profession and donated plenty of concern, time, effort, stress, diagnosis and treatment for gratis or was stiffed.

Why should people in this category be more responsible than others to pay taxes at a much higher rate?

Inheritance, I believe, above a figure of 10 million dollars should be taxed higher. This would seem fair to me. You can have 5 estates like John Kerry and his wife and still handle it with 10,000,000 or more.

In other words, *let the **rich* pay is not specific enough...your comments, please.

[slu]

If you have more money than I, you are rich.

I know this was made in jest, but this is 100% true.

For example, my Dad makes more than $200,000/year and he is voting for Bush only because he thinks his tax burden will be lower under Bush.

To a lot of people, my Dad is rich. There is no denying that he lives well, but he worked hard, put a couple of kids though college and he can't retire yet. He says, "I don't feel rich?" To my Dad, rich is having enough money to play golf all day and play with GarageBand all night.

The reason Kerry used $200,000 is because when the median income is $43,000, most people consider that rich. And that is how you get votes...by saying we are going to do all of these things...and the "wealthyist American's" who make over $200,000/year are going to pay for it.

BTW, I am Kerry supporter, I am just saying...

[Atticus Finch]

To accumulate that figure in my prime as an Ob-Gyn working close to 24/7 and in solo practice was not easy.
...
Why should people in this category be more responsible than others to pay taxes at a much higher rate?
...
In other words, *let the **rich* pay is not specific enough...your comments, please
I had no idea you were a doctor, MadSam. First, I don't think you really have a handle on the proposal. It's certainly more specific than "let the rich pay". It's the return of income taxes on people earning over $200,000 pa to the levels they were at before Bush. If you were an Ob-Gyn earning more than $200,000 pa a few years ago, you were already paying the rates that Kerry proposes. Did you feel that they were "much higher" and unfair at that time?

Inheritance, I believe, above a figure of 10 million dollars should be taxed higher. This would seem fair to me. You can have 5 estates like John Kerry and his wife and still handle it with 10,000,000 or more.
You realise that Democrats tend to be in favour of such a tax - an estate tax or "death tax"? I don't know of any proposal from Kerry to raise these taxes, but perhaps it might be part of a legislative agenda for later years.

[jshore]

Inheritance, I believe, above a figure of 10 million dollars should be taxed higher. This would seem fair to me. You can have 5 estates like John Kerry and his wife and still handle it with 10,000,000 or more.

In other words, *let the **rich* pay is not specific enough...your comments, please.

Well, I agree with you completely. Remind me, which President is it who decided to phase out the inheritance tax (which did already have a high exemption so that it affected only the top few percent of estates)? [And, also to lower taxes on income that is derived from investing wealth, i.e., dividends and capital gains taxes.]

By the way, it is important to note that the correlation between wealth and income tends to work both ways: Not only does higher income tend to lead to the accumulation of wealth, but also if you have a lot of wealth, you tend to have a high income due to the money you earn on that wealth.

But, for those who feel that it would be fairer to tax wealth more than income, hey, you'll get support from me.

[OliverTwistofLime]

I had no idea you were a doctor, MadSam. First, I don't think you really have a handle on the proposal. It's certainly more specific than "let the rich pay". It's the return of income taxes on people earning over $200,000 pa to the levels they were at before Bush. If you were an Ob-Gyn earning more than $200,000 pa a few years ago, you were already paying the rates that Kerry proposes. Did you feel that they were "much higher" and unfair at that time?


You realise that Democrats tend to be in favour of such a tax - an estate tax or "death tax"? I don't know of any proposal from Kerry to raise these taxes, but perhaps it might be part of a legislative agenda for later years.



Atticus Finch: Yes....I felt then that the tax rate was too high for me. I and others like me were paying tax on income and more tax on that remaining and tax on what remained from that.

Capital gains tax was 25% when I finally had an investment that made a profit. Now it is 15%. What did Senator Kerry say he would do with Capital gains tax after he is elected?

[BrainGlutton]

Atticus Finch: Yes....I felt then that the tax rate was too high for me. I and others like me were paying tax on income and more tax on that remaining and tax on what remained from that.

That is meaningless, MadSam. You were paying taxes on income, period. Everybody pays a certain level of tax on the first $10k of income and then a higher rate on the next $10k and so on, that's just the way marginal tax rates in a progressive income tax system are calculated. (Not sure of the exact figures but that's the general picture.) But what it comes down to is, you paid a certain percentage of your income in taxes, just like everybody else who is too poor to hire high-powered tax lawyers and take advantage of the really juicy loopholes.

Capital gains tax was 25% when I finally had an investment that made a profit. Now it is 15%. What did Senator Kerry say he would do with Capital gains tax after he is elected?

A friend of mine, a retired stockbroker, told me that market dips everything Kerry jumps in the polls, because Kerry has promised to raise the capital gains tax and that scares investors. I had not heard that before and it's not mentioned on Kerry's website (http://www.johnkerry.com/index.html), so I started a thread on the question, back in July: http://boards.straightdope.com/sdmb/showthread.php?t=268754 It went on for 46 posts, and while there was some intellectually stimulating discussion of the politics, economics, and ethics of taxation, only one poster (jshore) provided any information relevant to answering the question -- a link to this CNNMoney article from 7/7/04: http://money.cnn.com/2004/07/07/news/economy/election_ticket/

While some of their rivals in the Democratic primaries wanted a total repeal of the tax cuts passed in the last three years, Kerry and Edwards wanted to retain the cuts that favored the middle class, while repealing cuts for wealthier Americans.

Kerry said he wanted to roll back tax cuts for families earning more than $200,000 a year. As a result, those people would see their tax rates rolled back to 2000 levels -- 39.6 percent for people making $319,000 or more and 36 percent for people making between $200,000 and $319,000 (compared with 35 and 33 percent, respectively, under the new tax law).

Dividend tax rates would also jump back up to the tax rates of regular income -- but Kerry said he would give a dividend and capital gains tax cut to people in the "middle class," though he has not yet defined what he meant by that (making less than $200,000?) or what sort of cut he'd give. The new tax law cuts the rate on the top four brackets to 15 percent and the lower brackets to 5 percent in 2007 and 0 percent in 2008.

But Kerry also wanted to keep the higher child tax credit, the lower marriage penalty and the new 10 percent bracket for lower-income families. He also called for new tax credits for health care and college tuition.

Edwards had similar ideas, saying he would keep the tax on very large estates, and would raise the top rate on capital gains to 25 percent for families earning more than $350,000, which he said represented less than 1 percent of all Americans.

Edwards also called for adjusting the tax code so that the top 1 percent pay the same tax rate on investment income that middle-class families pay for their wage and salary income. And he proposed additional tax breaks, such as a $5,000 credit for first-time home buyers.

It's uncertain whether Kerry will incorporate any of Edwards' proposals in his campaign. The Kerry campaign could not be reached for comment.

And I've heard nothing since then about this particular aspect of Kerry's tax policies. Maybe he'll will clear things up for us in tomorrow night's debate. We can hope.

[blowero]

I don't think it's a different question at all. Kerry is using the $200,000 figure has part of a populist message, and when you start getting into that territory the definition of "class" becomes very relevant.

Sorry, I still disagree. I think you're confusing "important" with "relevant". Issues such as ethnicity and its relationship to social standing are certainly important, but they are not relevant with regard to taxation. I'm reasonably certain a tax code based on race or social standing would not only be incredibly difficult to enforce, but illegal as well.

[blowero]

But, for those who feel that it would be fairer to tax wealth more than income, hey, you'll get support from me.
I still don't get what "taxing wealth" means. Does that mean a yearly tax on savings? Like, hypothetically, there's a 15% "wealth" tax, so say you have $1000 in the bank, and you pay $150 tax, so you have $850 left. Then the next year, you pay $127 tax, so you have $723 left. Then the next year, you pay $108 tax, so you have $615 left, etc. That's insane. You can only tax income. Taxing "wealth" is nonsensical.

[UDS]

I still don't get what "taxing wealth" means. Does that mean a yearly tax on savings? . . . That's insane. You can only tax income. Taxing "wealth" is nonsensical.
On the contrary, it's not only sane but commonplace. Property taxes are a tax on wealth rather than income.

Taxing wealth at a rate greater than the wealth can be expected to generate income might be insane, unless your policy objective is actually to elminate wealth (which in turn might be an insane objective).

But a tax on capital assets at a lower rate can be an incentive to taxpayers to use their assets effeciently (so as to generate income to pay the tax). So, for example, if I own a large portfolio of residential properties, and I let my extended family and friends live in them for free or for nominal rents, or I am simply letting them degenerate, a wealth tax will encourage me to charge market rents (or to sell the properties to someone who will).

[blowero]

On the contrary, it's not only sane but commonplace. Property taxes are a tax on wealth rather than income.

Oooh, great example. Thank you - I stand corrected.

[msmith537]

From a financial point of view, it appears that Kerry draws the magic line that you are * Rich* if you make 200,000 dollars (net?) per year or more.


The general rule I have always heard is 200k a year or 2M in assets.



Everybody pays a certain level of tax on the first $10k of income


You don't pay taxes if you make under $7800 or you are filing jointly and make less than $15,600



Why should people in this category be more responsible than others to pay taxes at a much higher rate?


The reason we have a progressive tax is because %x of a poor persons income of $20,000 is much more of a burden than %x of a wealthy persons income $200,000.



To simply BrainGlutton's post:

Top out-of-sight - I would not be seen working
Upper - I feel guilty or bored so I will work at something I like
Upper middle - I worked hard to get to where I am
------------------------
Middle - If you work hard, good things will come
High proletarian - Work sucks
Mid-proletarian - I'm just happy to be working
Low proletarian - I hope I can find work
------------------------
Destitute - I will probably never work again
Bottom out-of-sight - I would not be seen working

[BrainGlutton]

Taxing wealth at a rate greater than the wealth can be expected to generate income might be insane, unless your policy objective is actually to elminate wealth (which in turn might be an insane objective).

It might be, but it isn't! :D