Wednesday, December 14, 2011

Who's Rich?

Bruce Bartlett:
Last week, Catherine Rampell posted a commentary on a new Gallup poll on the question of who is “rich” in America. The median threshold in the poll’s responses was that rich is $150,000 a year of income or a net worth of $1 million. Because I have asserted that the rich need to pay more taxes if we are to get out of our fiscal mess, and even Republicans say that government benefits for the rich should be cut off, the question of who is rich is politically important.
The first thing to know is that there is no formal definition of who is rich, middle class or poor. Of course, there is an official definition for the poverty rate, but that figure is just a back of the envelope calculation that has simply been increased by the inflation rate since the 1960s. There are many other ways of calculating the poverty rate that could either raise the poverty threshold or reduce it.
Another problem is that one’s social class is a function of both income and wealth. There are many among the elderly who have little income but may have fairly substantial wealth by, for example, owning a home free and clear. At the other end, there are those with high incomes who are, nevertheless, deeply in debt, perhaps even having a negative net worth.

Social class also involves self-identification. According to the General Social Survey at the University of Chicago, which has been asking people what social class they belong to since 1972, more than 90 percent of Americans put themselves squarely in the middle – belonging either to the working class or the middle class.
He is right, that is a loaded question.  At the same time, it is pretty indicative of the difference between flyover country and the coasts (and big cities like Chicago) that $150,000 a year income or $1 million net worth is the median response as to what is rich.  Democrats in Washington are talking about raising taxes on those making $1 million a year, and Republicans are opposed to that, even though 75% of Americans think that the wealthy should be taxed more (and their definition of millionaire is having a million dollars in assets, not having $1 million a year income).  But cost of living is so different between flyover country and the coasts that these numbers don't resonate in DC.  I am surprised that so many folks who make less than I do think that taxes shouldn't go up on wealthy folks, but I also don't drink the tea.

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