patrick.net

Apparently "Middle Class" is anyone up to a few hundred million dollars...
http://www.cbsnews.com/8301-503544_162-20109658-503544.html

Well, if you count only income there are still two different models:

You get to the diamond model when you classify based on income percentile. In a diamond model it's about like this:

Bottom 10% - below the poverty line. (not a part of the economy)

11%-20% - very poor.

20%-35% - lower class.

36%-45% - lower middle class.

46%-75% - middle class. (it's wider percentile because at this level taxes level the field.)

76%-90% - upper middle class (same as previous)

90%-99% - bottom upper class.

99%-99.9% - real upper class (mostly still a part of the economy, i.e. productive)

99.9%-100% - Ultra rich (not a part of the national economy again).

But this is still in the diamond model - very much outdated in USA.

In reality we leave more in a pyramid model. You get to it, if you count total income distribution. In the way top 400 families are equal to about bottom 40% of the population.

Using the pyramid model you get the following population distribution:

Again 10% - below the poverty line.

10%-65% - lower class

65%-90% - lower middle class

90%-97% - middle class

97%-99.9% - upper middle class

99.9%-100% - upper class.

I did not check actual income distribution, but as far as I remember top 100000 families make much more than bottom 50 million families.

Actual ranges may be different and they are constantly moving, but the idea is clear.

michaelsch says

But this is still in the diamond model - very much outdated in USA.

You've just found a new way to showcase wealth disparity. As a measure of economic class the "diamond model" isn't very good since things get so lop sided at the top by so very few people.

Certainly without defining what is poor, middle class and rich it makes arguments harder to make.

Should it be based on how much money someone has, how much they make, what assets they have, none or a combination?

There are many farmers that can be said to be millionaires if you sold off all of their combines, all of their land and all of their crops. But the liquidity of these items is not efficient so the logic doesn't hold water.

If we use a metric of that "Anyone that is rich is someone who does not have to work" well would elderly people be considered rich if they retired on money they saved/invested for much of their life?

Having something of wealth does not automatically mean it can be sold immediately without some ramifications. If you own a house and sell it you still have to live somewhere and that comes at a cost.

Technically one could argue that anyone can become richer if they just move to a cheaper area (midwest comes to mind). But that is not always desirable. If you go overseas you can see how this differs even more. Europe is expensive (at least the capitals..London, Paris..even Moscow these days is high). Asia is cheap. For me a beer cost $1, bottle of brandy $4, a platter of food $1. China, South Korea, Thailand, Philippians etc. But some would probably prefer some of the social safety nets that operate in Europe.

Standards of living differ everywhere. If you have a car in the suburbs that can be required due to a lack of transport. In a city it usually is not needed..

Middle class is however you define it.

mdovell says

Should it be based on how much money someone has, how much they make, what assets they have, none or a combination?

The thing is that the cost of many goods is very similar most everywhere you go for the rich, middle class, or poor person. The major thing that changes that is easily comparable is their income. Things like wealth are huge factors too but the numbers are so skewed there as to make a comparison bizzarrely lopsided.

Standard of living changes a bit depending on your location but a person making $50K a year in CA couldn't move to say Idaho and make that same $50K and end up being effectively rich or even upper middle class. Of course in the cheaper areas wages also tend to be lower, so that person making $50K in CA might only make $40 or 35K a year instead. So unless they happened to sell a big asset or home in CA and then moved to ID and bought a cheaper home they wouldn't really benefit much financially from such a move.

Some things like housing cost more depending on where you live, but many things that the truly wealthy buy cost the same regardless of where you live. A G5 jet, a Bentley, a Patek watch, a Brioni suit, etc. These things cost the same wherever one lives, and they are purchased by rich people all around the world.

Middle Class is a divide and conquer construct of the Super Rich to distract us from the real reality, that there's only the Super RIch and the rest of us.

mdovell says

Should it be based on how much money someone has, how much they make, what assets they have, none or a combination?

There are many farmers that can be said to be millionaires if you sold off all of their combines, all of their land and all of their crops. But the liquidity of these items is not efficient so the logic doesn't hold water.

I agree that it is more reasonable to talk about wealth instead of income, except people have less intuitive sense of wealth.

Because of taxes people have some sense of income and AGI, most people wouldn't calculate their own wealth accurately in their head (have to include property, goods, insurance policies, retirement accounts, less debts of all kinds). But the wealth distribution is even more skewed than the income distribution.

But I don't give the nearly mythical farmer a pass. If they really have millions of dollars of assets that they own free and clear (combines, machinery, land, etc.) with no debt then they really are wealthy! Just because they choose not to sell (liquidate) those assets and invest them in bonds/stocks/luxury goods doesn't mean they couldn't make that choice. They don't deserve any special treatment.

A wealth tax where everyone needed to pay, say, 2% of all their wealth over a million dollars would raise a lot of money and not impact many folks. It would be one way of implementing the "expiry time on money" that others in this thread suggested. It is sort of like the estate tax, except every year. As long as you couple it with a large one time fee if you renounce your citizenship (to avoid people who might try to hide assets or move them overseas) and also impose a similar tax (I'd advise 2% starting at $0 for them) on corporations and trusts and other legal organizations (to prevent legal maneuvering hiding assets to avoid taxes) I think you could do a pretty reasonable job of rebalancing the economy distribution.

But it would only favor the 99%, so what are the chances of it passing?

mbodell says

A wealth tax where everyone needed to pay, say, 2% of all their wealth over a million dollars would raise a lot of money and not impact many folks

But is that optimal?

Wouldn't it be more optimal to 1) cut the waste in government and then 2) raise taxes on parasitical wealth and not productive wealth?

People actively deploying their capital wealth to create new wealth should be last in line for taxation!

There's plenty of leechfuck specuvestors, rent-seekers, and skimmers in the system we can target first. Tapping them would bring hundreds of billions of dollars, probably enough to close the deficit if we could find some cuts.

Once again, I find that I'm referencing the following chart.

Poor is the 0 to 20 percentile
Middle class is the 20 to 98 percentile
Upper middle class is 98 to 99 percentile
Rich is 99 to 99.5 percentile
Ultra-rich is 99.5 to 100 percentile

By the way, for those who say taxing the rich can't solve our debt problem... The area under the curve, i.e. the integral of this curve, is the income that can be taxed. Notice that most of the area under the curve is in the top 2% and a healthy portion is in the top 1%.

Actually, maybe poor is the 0 to 40 percentile nowadays with how little the dollar is worth.

Bellingham Bob says

Wouldn't it be more optimal to 1) cut the waste in government and then 2) raise taxes on parasitical wealth and not productive wealth?

Totally agree. It's not the rich who produce a lot of wealth like celebrities, athletes, and inventors. It's the rich who get their wealth by playing zero-sum games, manipulating the system, and usually causing recessions and unemployment in the process.

B.A.C.A.H. says

Middle Class is a divide and conquer construct of the Super Rich to distract us from the real reality, that there's only the Super RIch and the rest of us.

The middle class rose from the progressive reforms of the early 20th century and resulted in a much higher standard of living for the vast majority of the population along with increase domestic stability.

It is only since the 1980s that the middle class has come under attack and has started to shrink. The term middle class isn't an illusion and I think its worth fighting to protect it. The alternative is abject poverty for most people.

lb51 says

In some cities, a $100,000 six figure salary for a family of four does not go very far.

If that's so, then $100k doesn't go much farther for a single. I know kids are expensive, but they aren't that expensive.

Zoom image

Now, housing costs should really be a constant regardless of whether or not you have kids. A middle class house costs the same for a single person as a married couple with two kids. So subtract the "housing" part from the real cost since you're paying that anyway. Also subtract "education" since it's free and child care is something you choose to buy. You can raise your own kids yourself.

By counting vertical pixels, that means the real cost is 53.4% of what the above graph says. So that most expensive kid, the one on the right, should really cost only $7225.02 per year. If your kids cost more than that, tell them to get a job.

Your kid can pay for him/herself at minimum wage working only 19 hours and 10 minutes a week. I believe that Huntington Moneyworth III, Esq has a factory with openings.

Dan8267 says

Once again, I find that I'm referencing the following chart.

Poor is the 0 to 20 percentile

Middle class is the 20 to 98 percentile

Upper middle class is 98 to 99 percentile

Rich is 99 to 99.5 percentile

Ultra-rich is 99.5 to 100 percentile

By the way, for those who say taxing the rich can't solve our debt problem... The area under the curve, i.e. the integral of this curve, is the income that can be taxed. Notice that most of the area under the curve is in the top 2% and a healthy portion is in the top 1%.

Hey, you did not finish the curve. There is a hugh area under the portion of the curvebetween 99.9% and 100%. It's more than 20% of total national income.

Bellingham Bob says

2) raise taxes on parasitical wealth and not productive wealth?

No. Because that will allow parasits to decide which wealth is parasitic.

tts says

>michaelsch says

But this is still in the diamond model - very much outdated in USA.

As a measure of economic class the "diamond model" isn't very good since things get so lop sided at the top by so very few people.

That's exactly what I wrote in the second part of the message. When you deal with percentiles of income distribution rather than percentiles of population you get to a pyramid rather than a diamond.

benviews says

would be a fair definition of middle class

it depends on individual perception.

no matter how much money you have, if you feel you
still need to work to support your lifestyle, then you are
in middle class zone.

but if you don't have any money , and you do need to work to pay basic bills, then you are not middle class, you are poor.

Dan8267 says

Upper middle class is 98 to 99 percentile
Rich is 99 to 99.5 percentile
Ultra-rich is 99.5 to 100 percentile

By the way, for those who say taxing the rich can't solve our debt problem... The area under the curve, i.e. the integral of this curve, is the income that can be taxed. Notice that most of the area under the curve is in the top 2% and a healthy portion is in the top 1%.

That's a great description using the chart. Thanks!

By the way, what are the break points you are using at 98, 99, 99.5, 99.9? Where'd you get them? It seems like you have 2 other points -- what are those?

Yep, all the discussion about who's in and who's out of the middle class works well for that construct they prop up to distract the rest of Us from Them, the Super Rich. To Them, we are all the same, we're not them.

Regarding child expenses: The cost of a kid is much higher than Dan8267 indicates.

If you have a one-parent household, there must be childcare during the first five years of life, else there will be no household income. If you have a two-parent household, raising your own kid yourself means dropping or reducing one (or both) incomes--there cannot be two full-time careers in the absence of childcare. And childcare alone easily hits $11,000 (up to $25,000) per year for one child around here. The alternative to childcare would be to drop one career, not just for a few years but maybe forever--it is not always possible to get back in.

Once the kids hit elementary school, childcare costs are still significant if the parent(s) need to be employed full-time. Even given a public school, there will be a need to pay for aftercare (around $700 per month around here) as well as Thanksgiving, Winter Break, Spring Break, and Summer camps (usually $200-300 per week here).

We are not even considering food, clothing, diapers, toys, musical instruments, mandatory donations to public schools, the extra room in your house where the kid will live, or the cost of the safer neighborhood and the better school.

Let's not minimize--kids are incredibly costly.

@John B.

>I think the change has been from an American Middle Class with everyone else in the world much poorer, to a global Middle Class.

You have some good insight here.

American, the more chatter from Us "everyone else" (vs Super RIch) about "who's in, who's out" of the middle class, more chits in the gotcha! column of the Super Rich.