As part of his proposed health care reform plan, Obama envisions two new tax increases: one on non-wage income for individuals making over $200,000 a year and families making over $250,000 a year; and another, an additional Medicare assessment, on earned income for the same group. The proposal takes on so-called “high-earning households” as part of Obama’s promise not to increase taxes on the middle class. But the idea that someone earning $199,000 is “middle class” remains laughable to many Americans and to economists.<\/p>\n
The political reality is that nearly 80 percent of Americans self-identify as “middle class,”<\/a> 2 percent identify as “upper class” and 18 percent identify as “lower class.” Only the latter total is likely accurate.<\/span><\/p>\n Standard statistical practice is to divide the country into five groups, or quintiles, each representing 20 percent of the population. Median household income<\/a> in the United States in 2008 was $52,029, which fits squarely in the 3rd quintile, where households range in income from $39,000-$62,725. That’s what the statistical middle class really looks like. If one wanted to encompass the middle of the entire range — which is to say the middle 60 percent of the households in America, including the “lower middle” and “upper middle” classes — the range of middle class could be expanded to those households earning between $20,000 and $100,240 every year. There’s a lot of daylight between the highest earning households in the bottom 80 percent of the population, and individuals earning $200,000 year.<\/p>\n In fact, only 5 percent of the households in America earn more than $180,000 to begin with, so “high earners” comprise something less than 5 percent of the country. Interestingly enough, rank-and-file members of Congress, senators included, will make $174,000 in 2010<\/a>, putting them just outside the top 5 percent of earners in this country if they aren’t married or their spouses don’t work. The president earns $400,000 a year, meaning he makes more than $100,000 more than the average salary of the top 5 percent of Americans.<\/p>\n