Middle vs upper class

**bjl584** · 12-07-2010, 11:47 AM

It depends where you live as to what social class you are in. $250K in Iowa will buy you a lot more than it will in Manhattan. Also, not all tax filers are individuals. Some are small businesses filing an individual return.

Unemployment benefits have been extended for 13 more months as part of a compromise for an extension of the current tax code. Not all those individuals will receive a full 3 years, but some people that timed it right in theory could. There is a danger in paying out unemployment to someone for too long. First, the benefits have to be paid for by someone. Second, people out of work for too long run the risk of losing their job skills, becoming outdated at their job or specialty, and being passed up by other workers willing to work for less. Third, as you said, there is a percentage of people that could become dependent on handouts.

**disneysteve** · 12-07-2010, 11:48 AM

Originally posted by happygirl View Post

Hi everyone. I have a question that should be simple, but no one I know can seem to answer, so I came here. I keep hearing about the middle class tax cuts that are for people making up to 250k for couples. Then I hear about upper class tax cuts for those making a million or more. My question is, what about the people making 251k up to 1 million? Are they considered middle class or upper class?

While I'm here, I'll ask another question. Someone recently told me that when he lost his job a few months ago he was told he could be on unemployment for up to 3 years. Is that really true? I can't imagine anyone truly needing 3 years of unemployment benefits. Wouldn't that encourage dependency rather than motivating people to return to the workforce?

The definition of "middle class" is a moving target depending on who you ask so forget trying to get a clear answer to that question.

As for unemployment, benefits have already been extended for 2 years which is simply insane. You are dead on about it encouraging dependency, although others will disagree. We've had that debate before.

**wincrasher** · 12-07-2010, 12:45 PM

Poor is when you worry about money all the time.

Middle is when you worry some of the time.

Rich is when you don't worry about money at all.

**disneysteve** · 12-07-2010, 12:55 PM

Originally posted by wincrasher View Post

Poor is when you worry about money all the time.

Middle is when you worry some of the time.

Rich is when you don't worry about money at all.

Of course, that isn't defined by actual income. I know people who earn relatively little who would be considered rich by those criteria and others who earn a ton of money but would be considered poor.

Remember, the definition of happiness is being satisfied with what you have.

**wincrasher** · 12-07-2010, 01:03 PM

Exactly.

I know a guy with $20 million in the bank that frets about money and investments like every dollar is his last.

I fret about value, but not where money will come from.

Most poor people I know, should frankly, worry more about money than they apparently do.

**disneysteve** · 12-07-2010, 01:13 PM

Originally posted by wincrasher View Post

Most poor people I know, should frankly, worry more about money than they apparently do.

Which usually has a lot to do with why they remain poor.

As Dave Ramsey is fond of saying, the rich get richer and the poor get poorer because the rich keep doing what made them rich and the poor keep doing what made them poor.

**jIM_Ohio** · 12-07-2010, 01:16 PM

Generally if you make above 166k AGI (or somewhere in there) I would consider you upper class- between 165k and 200k the IRS starts phasing out most deductions, so that is where I also draw the line as to "middle" or "upper".

Lower class is where the EIC sits (it is designed to help low income WORKERS) which is about 40k with 3 kids or about 20k single.

**MonkeyMama** · 12-07-2010, 01:17 PM

NY Times had an interesting article about this a while back:

Graphic: How Class Works - New York Times

Basically, class is not solely defined by income. It is defined by occupation, education, income and wealth.

**disneysteve** · 12-07-2010, 01:20 PM

I'm in the 97th percentile according to that. I guess that means I'm a pretty classy guy.

Interestingly, I'd have to nearly double my income to move up to the 98th percentile then double my net worth to get to 99th.

**MonkeyMama** · 12-07-2010, 01:21 PM

Originally posted by wincrasher View Post

Poor is when you worry about money all the time.

Middle is when you worry some of the time.

Rich is when you don't worry about money at all.

I kind of agree with this, but only in regards to a certain group of people. My tax clientele tends to run pretty conservative, and this would pretty much sum it up. Anyone I know with a $1 million+ income has more than they know what to do with.

I know when it comes to the greater population, this is not true! I also have a handul of clients who will be *broke* no matter what their income level is. But, I still like how succintly wincrasher put it. On some level, it sums it up pretty well.

**happygirl** · 12-07-2010, 02:20 PM

I'm wondering more about the continuation of tax cuts that may or may not go through. If a couple makes more than 250k, would they be considered wealthy and therefore they would get a temporary continuation of the tax cut, but not permanent? I keep hearing middle class (for the purposes of the tax cut extension) is up to 250k per couple, but above that is the top 2%, always mentioned as making a million or more. I'd like to understand what that means for a couple who makes 251k up to a million. It's hard to imagine that only 2% of Americans make more than 250k.

**wincrasher** · 12-07-2010, 03:33 PM

This is a bit of a rant.

They refer to "middle class" tax cuts not because the cutoff of $250k for a couple or $200k for a single is considered the top end of the middle class, but because, with that cut off, the vast bulk of the benefit would go to people considered in the middle class. Towards that top end, you also get the bulk of the real small businesses too - not just the paper businesses that well off people use to shelter their incomes. I heard on the radio not too long ago that something like only 2% of the corporations in existance are what we would consider small businesses - operations that hire people and sell goods and services - the rest are just paper entities created for a variety of purposes.

Also, keep in mind that the figure being thrown out is AGI - not gross income. A person owning a small business that grosses way over a million dollars could realistically have an AGI - after all his costs and deductions of way less than $250k. Also, the bulk of wealthy people get the majority of their income from capital gains - not earned income - capital gains are only 15% - regardless of your earned income level. So you may have a salary of $500k at a maximum of 35% tax, but earn millions in investments at only 15% tax.

In my particular case, I gross well over $300k/yr. With all the deductions and facilities in the tax code, the amount subject to tax is way less than half of that. Should I get a tax cut? My neighbor argued with me that small businesses will create jobs if they get a tax cut. He doesn't have a clue! If I wanted to pay even less tax, I'd just hire another person and write that expense off. Hiring people reduces tax liability! I hire based on the work to do, not the taxes. More work=more earnings=more taxes. A good "problem" to have. You don't work or produce less in order to reduce taxes.

**Scanner** · 12-07-2010, 04:17 PM

Wikipedia has a good synopsis on the subject of middle class and definitions.

By just about all accounts - an income of 250K or more puts you in the top 3% of the country, if my memory serves me correctly.

**Scanner** · 12-07-2010, 04:21 PM

I agree with Wincrasher - the current theory floating about "Cut taxes on the rich and they'll make jobs" simply has no credible evidence to support that notion.

This isn't to say it's right or wrong to tax the upper class. . .it's just that Republicans and the Tea Party is obsessed with this notion that a tax cut = jobs.

Well, it did one time. . .when Reagan cut taxes. . .if you don't count all the other 7/8 years he hiked taxes.

It's frankly bizzare. . .evidence to me that Baby Boomer Americans have done wayyyy too many drugs.

Middle vs upper class