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1 Gerald Prante, New Census Data on Income Gives a Welcome Dose of Fact Checking to Middle-Class Rhetoric 1 (2007)

handle is hein.taxfoundation/ffbacxz0001 and id is 1 raw text is: FOUNDATION New Census Data on Income Gives a Welcome Dose of Fact Checking to Middle-Class Rhetoric Fiscal Fact No. 102 September 11, 2007 by Gerald Prante Throughout the 2008 presidential campaign, candidates from both parties have applied the term middle class loosely to anyone who might benefit from their proposals. Economists rarely use the term and will typically use the term middle income instead to mean the 20 percent of households whose incomes are in the middle, or sometimes to the 60 percent who are in the middle. But politicians are driven by polls, not income data, and a recent Tax Foundation poll showed nearly four out of five Americans label themselves middle-class.1 Only 2 percent consider themselves upper-class. In tax policy, this greatly expanded middle class has created some strange bedfellows. Even during the current congressional debate over the alternative minimum tax (AMT), an overwhelmingly upper-income tax, prominent tax writers and presidential candidates have proclaimed that they'll be helping the middle class by repealing the AMT.2 It may be plausible, at least a little, for a person earning $200,000 a year to feel middle-class even in terms of income if half the families in his neighborhood earn more. Similarly, a married couple with $35,000 in income might label itself middle-class in response to a survey. But those are really wrong answers that people give because middle-class refers more to how one feels about oneself in relation to society at large. It is a useful term for discussing the values that Americans hold dear: working for a living, participating in community activities, helping the poor, succeeding in a competitive world without a government handout, etc., but less useful for objective discussion of incomes. In this Fiscal Fact, we align the term middle class with an objective set of data: the Census Bureau's survey of household income. Middle class therefore means middle income, and middle income will mean the middle range of income in a large cross-section of American households. We use two different ranges to describe middle income. One is the most commonly used in academic literature: the middle quintile-that is, the 20 percent in the middle with 40 percent of households earning more and 40 percent earning less. The second range of income we call middle income is what Senator Max Baucus recently referred to as the middle class while chairing a Senate Finance Committee hearing. This Baucus middle class is the middle 60 percent, with 20 percent of households earning more and 20 percent earning less.3