Las Vegas Debate: Being honest about taxes (97K is not middle-class)

Run time: 00:52 https://www.youtube.com/watch?v=nP6VBFFK0oY   Posted on YouTube: November 16, 2007 By YouTube Member: Views on YouTube: 0   Posted on DU: November 17, 2007 By DU Member: ariesgem Views on DU: 1675

 

One or two in NYC? Maybe still somewhat lower-upper class. 3-4 gets upper-middle. Probably the same in SF, LA, even Chicago. Smaller cities and towns not so much. The problem is that Hillary represents the city and Barack represents Chicago.

Unless you can qualify for the special magnet programs, the public schools in New York City are below the standards of those in many suburbs with much cheaper cost of living.

For example, I have a sister who lives in a house worth about $150 K in an upstate NY suburb. Her children attended excellent schools with small class sizes, etc. To get schools of that caliber in NYC, you'd have to send your kids to private schools, which in NYC cost well in excess of $20,000 per year, per student. So a person making $97,000 in NYC (reduced by substantial city and state taxes, in addition to federal) can't afford to send their kids to schools nearly as good as the public schools in ordinary little towns upstate.

Another example. I know a couple making $60,000 renting a 700 square foot (2 tiny BR, 1 ba), 60 year old house on a 3,000 sq. foot lot in Northern California. It's all they could afford within a reasonable commute (40 minutes) of their jobs. The house is worth $700,000. Even if they were making $100K a year, they couldn't afford to buy the 700 sq. foot house they're living in now. No one would look at the lifestyle $100K buys in that very ordinary little city and say that it is anything but middle-class.

In Mississippi, $45,000 a year would put a person into the upper class easily. So I'm not crying tears for people making $60,000 a year living in $700,000 houses. They can sell the house now, move somewhere else if they want to: the bottom line is they are choosing to live in an overpriced house. There are plenty of people in Mississippi who live in tin shacks, handed down through the generations. I knew one woman who lived in a rusted out airplane fuselage she had towed from a junkyard near Meridian. Heck, those Californians could sell their houses for $700,000 and move to Mississippi and never have to work again for the rest of their lives. I can't stand it when rich people whine about how poor they are.

I bought my house in Holly Springs for $7000 when I bought it in 96', and the value hasn't gone up since then. Included two acres of property, too.

And many people can't easily find jobs in places where they might otherwise want to live. You live where you can find jobs, where your relatives live, etc. Sometimes the places with the most jobs are also the most expensive. And people with $100K incomes that would be solidly upper-class in a little town in Mississippi are -- in higher cost of living areas -- solidly middle class, not able to afford payments on a 700 sq. foot home.

Try working for an airline. And some of us don't have protection from discrimination/harassment outside of major cities, either. I make more money than most, but I have 2 roomies in a crappy apartment, no car, and can hardly pay the bills.

jobs and housing with people in the cheaper rural areas, I doubt that would make the current residents very happy.

and most of the folks with houses bought them so long ago the tax implications on selling now along with the fact that they have to relocate and find another job etc (which would raise competition/prices in the flyover states) makes that an impracticle solution.

not to mention why should I have to move from LA to podunk nowhere. I lived in GA and ran a hotel - I made 26k a year and paid 400 a month for housing. In LA I run a hospital and make over 100k but pay 3k a month for my little apartment. I choose to live here because ...well it isnt georgia.

But the difference in cost of living is so extreme that making 5 times the salary in LA or NY or SF does not make anyone rich.

And your extended family isn't going to follow you and take up residence, either.

Your suggestions are absurd on their face, for so many reasons.

You really want everyone to move to MS?? Guess what would happen to costs if they did? Of course, that might make YOU rich if you chose to sell, and then you'd be one of those awful rich folk that you seem to despise so much.

You seem to want to penalize the people who have lived, for generations, in areas that are now high cost. That's not terribly productive, that attitude.

Northern California is certainly not representative of the nation as a whole when it comes to housing prices. But even then...

The SS cap is on people making $97.5k individually. So even if the couple you mentioned were making $100k a year, they're probably still under the cap. If they were EACH making $100k a year--so they'd be making $200k a year together--then they'd both be over it. There are certainly some exceptions, but the overall statistical point stands: only 6% of the country makes over $97k a year. So if the cap were eliminated entirely, only the top 6% would be affected. That's pretty much by definition not the middle class--weren't we all objecting when the vast majority of Bush's tax cuts went to the top 5%?

Not to mention, even if somebody's making a bit over the cap... Let's say $120k instead of $97.5k... Their increased tax burden is only $1,520 per year if the cap is removed, or just over 1% of gross income. The amount of tax increase would be dependent upon how much above the cap they are. Somebody who is barely above the cap would have very little tax increase; Warren Buffet would have a few million a year increase. It could also be phased in over several years or even decades. The important part is that we do it sometime before the 2040s.

I never thought I'd see so many people on progressive websites defending an inherently regressive tax like we have with Social Security. I'm also interested to find out where to find the fire fighters and schoolteachers Senator Clinton said she represents who are making more than $97.5k a year. Average salary of a fire fighter in NYC is $41,607. For a teacher, it's $44,211. These people could double their salaries and still be under the cap.

And I agree with you that S.S. tax is regressive and is too heavily relied on. I would prefer making the income tax more progressive, not less.

But people should recognize that cost of living in different areas greatly affects the definition of what is "middle class." The same income that makes you solidly middle class in a rural area puts you in the barely-getting-by class in many suburban and urban areas. This issue comes up over and over on DU. Exactly the same 3 bd ranch house that might go for $80,000 or less in a rural area would cost $500 K in my city -- and the people who can afford to rent it would hardly be considered rich.

I wish I could find the link about firefighters' salaries that I saw earlier. But the answer to your question is that a good many firefighters (not teachers) have salaries above $98K for two reasons: overtime and seniority. Salaries go up significantly with experience, and overtime is common.

Welcome to DU, Bishop Rook. Enjoy your stay!

... on home-ownership as being the definition of rich versus middle-class. There are lots of middle-class folks who own their home, and there are lots of rich folks who rent. Rich renters are especially common in the cities, in luxury apartments and condos, and middle-class owners are especially common in rural and suburban areas. The overall cost of living does fluctuate depending on location, but it fluctuates much, much less than real estate prices. Real estate in Northern California may be ten times more expensive than in a rural area, but the cost of living isn't ten times higher overall.

Just because you can't afford the house you're living in doesn't mean you aren't rich, in other words. You may still be able to afford a luxury car, to take cruise liner vacations, to send your kids to private schools and put them through college without debt.

And thanks for the welcome!

opposed to middle class -- although the ABILITY to own some kind of home (whether you choose to rent or own) is clearly affected by two things: your income AND the prices of real estate in your area.

The people in my area who rent $500K, 1400 sq. ft., 40 yr. old homes have median household incomes in the range of $60-70K range. Those salaries would go much farther in many rural parts of the country than they go here.

And again, the cost of housing fluctuates more than the cost of basically anything else. Housing is only a part of overall cost of living. Food, utilities, education, medical expenses, transportation expenses, recreation expenses, they all fluctuate much less regardless of where in the country you live. They do fluctuate, of course, but not on an order of magnitude like comparing housing prices between rural Missouri and San Francisco.

So while the area of the country you live in does make a difference in what should be considered "middle class," the difference is going to be significantly smaller if you look at overall cost of living rather than looking at just housing prices. And no matter where you live, even in someplace like San Francisco, an individual making $97.5k per year is making a really large chunk of money.

In fact, only 33% of households in the San Francisco bay area (just to choose one location) make above $100k per year. I can't find any data for individual incomes, but we're already talking at least the upper third in one of the most expensive areas of the country.

It's safe to say that even in the most expensive areas of the country, a single individual making $100k a year is doing quite well.

But a family with school aged kids living in a place like NYC, not as well.

And here is another way of looking at the numbers. The person who makes 2-3 times the median income (approx. 100K income) can hardly be compared to the people who make 50, or 100, or 500 times the median. But this tiny elite at the very top is controlling more and more of the nation's wealth.

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=389x2300859

But the SS cap is only on individual incomes, not household incomes. The 6% figure Obama quoted was for individual, not household incomes. That is, the typical middle class family of five in NYC might be making over $100k a year, but it's from two earners, both of whom are still below the cap.

That's the only point I'm trying to get across, because I've been seeing a lot of comparisons (not necessarily from you, but others) to household income distributions instead of individual income.

I should also say that I understand there's a big difference between a working professional making $120k a year and Warren Buffet... That's more of a semantic thing, I suppose. I have no problem saying that the working professional is in the upper class while also recognizing that he's not in the super-rich.

Again, as I said, I have no problem with eliminating the cap, although I think the better way to go is to introduce more progressivity into the income tax, rather than merely extending the current SS tax to higher salaries. I suspect that you would agree with this, too.

It IS largely a semantic thing. In terms of working professionals, what I see as upper-middle, you see as upper. Maybe I would feel differently if I weren't acutely aware of the possibility of devastating health care costs putting anyone in the $100k range in dire straits. The real upper class, IMO, are the ones who feel they'd never have to worry about even that possibility.

I live in LA and almost everyone I know who is in a house bought it back when it cost 200k or less 10-15 years ago. Recent transplants like me can't afford the new 1million price tags. To get by in LA for less than 100k and own a home requires the use of a time machine.

I only wish that the cost of housing was 30% - I get two paychecks a month and one of them is rent on my 1000 sq ft apartment in a shady neighbourhood.

Again, why is home ownership necessary for someone to be considered upper class? If someone doesn't own a home, but they individually make more than double the median family salary in their very expensive area, why is that still necessarily considered middle class?

By any actual real definition of "middle class" (as oppossed to what someone thinks, wishes or assumes it means) $97,000 is MIDDLE CLASS, and the point is not debatable. (Unless people want that kind of debate where everyone assigns some personal meaning to what words mean.)

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The American middle class is an ambiguously defined social class in the United States.<1><2> While concept remains largely ambiguous in popular opinion and common language use,<3><4> contemporary sociologists have put forth several, more or less congruent, theories on the American middle class. Depending on class model used, the middle class may constitute anywhere from 45% to 49% of households. Sociologists such as Dennis Gilbert of Hamilton College commonly divide the middle class into two sub-groups. Constituting roughly 15% to 20% of households is the upper or professional middle class consisting of highly educated, salaried professionals and managers. Constituting roughly one third of households is the lower middle class consisting mostly of semi-professionals, skilled craftsmen and lower level management.<5><2> Middle class persons commonly have a comfortable standard of living, significant economic security, considerable work autonomy and rely on their expertise to sustain themselves.<6>

Everyone wants to believe they are middle class… But this eagerness… has led the definition to be stretched like a bungee cord - used to defend/attack/describe everything…—Dante Chinni, The Christian Science Monitor. 2005.<4>

There is considerable diversity among members of the middle class, who tend to overlap with each other. Overall, middle class persons, especially upper middle class individuals, are characterized by conceptualizing, creating and consulting. Thus, college education is one of the main indicators of middle class status. Largely attributed to the nature of middle class occupations, middle class values tend to emphasize independence, adherence to intrinsic standards, valuing innovation and respecting non-conformity.<6><2> Politically more active than other demographics, college educated middle class professionals are split.<7> Income varies considerably from near the national median to well in excess of $100,000.<5><2> Household income figures, however, do not always reflect class status and standard of living, as they are largely influenced by the number of income earners and fail to recognize household size. It is therefore possible for a large, dual-earner, lower middle class household to out-earn a small, one-earner, upper middle class household.<6>

http://en.wikipedia.org/wiki/American_middle_class

That's the important part.

A household making $100k is probably middle class.

An individual making $100k is probably not.

the cost of living is through the roof. $100K...I would require roommates to live in Manhattan on $100K. I live by myself in a 500 square foot studio near the Flatiron building - the rent is $3,000. I need to live here because I work at 51st and 6th, which is three subway stops away - and I have to be at work ready for high intensity ACTION at 6:30am....and I go home at 7:00pm. The short commute is critical to quality of life issues, especially since I am not a morning person in the most extreme sense. I have no savings, but this is only my second year of work since finishing grad school and I had an ENORMOUS amount of debt to pay for. I certainly am living paycheck to paycheck. Maybe I will feel upper middle class when the debt is paid for, but for now, I feel very middle middle class....There should be different definitions of middle class depending on your geographic location. I agree that if homes cost ten times more in one location, then that does not mean that the middle class definition would have a threshold that is ten times higher, but there should be SOME adjustments. In Manhattan, that level should be around $200K for an individual. Maybe the threshold should be based on being in the upper ten percent (not 6%) by zip code...or county..or something like that.

out here in LA the student loans and rent take up more than 2 thirds of my income. I like the idea of indexing by cost of living by zip code.

Probably a better representation.

But in this thread I'm seeing quite a lot of "it would be impossible/improbable for one person to live in Manhattan/LA/SF on $100k a year!" Well, apparently a lot of people do it quite handily, because the latest data available for median family income in Manhattan (1999) is $50k, for LA is $40k, for SF is $68k.

Now I admit that I can't really speak for people living in those cities. I live in Atlanta, which is relatively cheap (not excessively cheap--I'm paying $1k a month for a crappy 1-bedroom apartment in the worst neighborhood in town). But it seems to me that if the average family of four can get by on $50k, then an individual making twice that ought to be able to get by with a lot of comfort padding too.

I guess it really does depend on your definition of "upper class." But that isn't fundamentally a dirty word. My definition of it isn't "so filthy rich that you can simply stop working if you want." My definition is only, you make significantly more money than the median income (nationwide or for your area, either one).

As to the cap change, we could even engineer it however we like by removing the cap and playing with the percentage--we could make it so anybody making less than $300k a year, or $600k, or $1m a year, gets an effective tax cut, while those making over get a tax increase.

couple years must be much higher.

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"But in this thread I'm seeing quite a lot of "it would be impossible/improbable for one person to live in Manhattan/LA/SF on $100k a year!" Well, apparently a lot of people do it quite handily, because the latest data available for median family income in Manhattan (1999) is $50k, for LA is $40k, for SF is $68k."

I went to UCLA for grad school...always felt LA was far more affordable than Manhattan though it might have changed in the last couple years since I left the area in summer 2005. I think Manhattan might have those median incomes being affordable for people living a long time in rent controlled neighborhoods...but like a poster said above, the new folks pay a lot more because

i) The supply of decent housing is so low.
ii) Astronomocal Wall St bonuses have continued to make NYC real estate HOT HOT HOT (unlike the rest of the country).
iii) Lots of people who have been waiting for real estate in NYC to pull back continue to rent. Many of them are very wealthy - like my boss who pays $38K/mo to live in a 5,200 sq ft apartment at 79th and Broadway. Some people in that very same building pay $1K/mo - No Joke! They were living there for 40 years though and it is of course a bit smaller...but nevertheless...I did read a study that said that the average apartment AVAILABLE for rent is 2.5 times the average rent paid in Manhattan apartments...so there are a lot of people who have been living here a very long time with cheaper rents.
iv) The extremely weak US Dollar has made the US extremely cheap, so a lot of Brits, Euros, and rich Russians have come to NY to buy real estate with their strong currencies....or some others just come to live in NYC for a year "on the cheap" with their strong currencies.

I am fortunate, but I am not upper class by any means. I am on my own and while I make over $100,000, after expenses I can barely put anything away. I am NOT frivolous. My health insurance costs $6,000 per year. I live in LA in 860 square feet that cost $500,000. You can't buy a smaller house than this and I have had to sacrifice neighborhoods. I am 43 years old and live in a "starter home." I worry about money every day. To the people saying that we should just move to a cheaper area -- I am in media and would not have a job outside of NY/LA. Not that I should have to justify where my home is any more than Mr. Small Town should. My whole life is here, my friends, my activities, my activism.

My definition of middle class is this: If you can afford to have a crisis hit - get sick for an extended period of time, etc, and you don't need to worry about losing your home or going into bankruptcy, then you have arrived to the upper class. If you are like me - hardworking and successful, but one bad illness or bad earning year put everything at risk, that to me is NOT upper class.

I appreciate an idea John Edwards mentioned once and that Al Franken talks about which is the donut hole. Tax up to $97k, and then start again at $200 or $250k. For that matter, maybe we should have a top down tax instead of a bottum up tax, and END at $97k, or $50k for that matter.

I rent 1000 sq feet apartment support a wife and 2 kids have almost no savings and I can't afford a vacation. I drive a crappy 99 hyundai. I live pretty much paycheck to paycheck.

I think people outside of LA/NY/SF type cities have no idea there are people who pay 2-3k a month in rent on crap apartments because that is all there is.

Having said that - this year when I passed the SS threshhold and they stopped taking that out of my paycheck I felt guilty. It was nice to have an extra 200 a month to put in savings but I think the cap needs to go and I should still pay SS tax.

I can't say I feel guilty passing the threshold, though I respect that you do. I am self employed so I pay double, almost $15k per year. I am all for a fair solution. I just resent Obama, a rich guy, standing on stage saying $97 is upper class, when we struggle too.

And Clinton's answer, which ironically was not part of this thread (after all we want the truth, right op?), talked about how she wanted to represnt all of America, and that in NY for example 97,000 with the cost of living is indeed middle class, and a tax hike would affect them.