Here MB360 reminds us how the U.S. middle class has disappeared in our new Gilded Age of wealth inequality, where the top 10 Percent own 75 percent of all wealth [emphasis mine]:
Since the 1950s the trend has only moved in one direction. People often talk about top tax brackets and how high income taxes are but if you look at the above chart, the average tax rate for those in the top 1 percent is 23.5 percent. How is that when the top tax bracket is 39.6 percent? First, many people have better methods of tax avoidance: IRAs, 401ks, dividend income, real estate deductions, etc. Since the bulk of wealth is in the hands of the top 10 percent, this group is already lowering their tax burden via these deductions and beneficial tax structures. Since the typical American is living paycheck to paycheck with little saved for retirement these tax reducers don’t really help. Besides, their income tax burden share is minimal. However, their other tax burdens are large as a proportion to their income. This is usually ignored when people talk about how little the working class pay in this country as they try to scapegoat the disappearing middle class.More to the point, the middle class by definition should be well, the middle. In this case, being middle class is a household making $35,000 or more. We often hear about $250,000 being middle class by the media but by the IRS tax data, this is closer to being in the top 2 percent of AGI. Not exactly middle class when 98 percent are below you. Even if we look at the bottom 75 percent, the cutoff here is $70,492; certainly a far away cry from $250,000. Or even the top 5 percent starting point of $167,728.
Remember the 2012 presidential campaign when Romney said, amazingly, that the middle class was any household making "$200,000 to $250,000 and less"? And less, indeed. The media didn't put his absurd comment in context, although the IRS income data was right there for them to see -- probably because the Obama campaign's definition of middle class was basically the same.
Folks, U.S. economic inequality is still the elephant in the room; it was the most under-reported story of 2013.
Happy New Year! Let's hope it's a more equitable one.
The Great Income Divide: IRS data shows 50 percent of households make less than $35,000 per year. Top 10 percent pay 68 percent of income taxes.
Posted by mybudget360 | December 31, 2013