Is the American middle class radically shrinking?

what do you define as middle class?

Shocking article. Thank you for the link.

Well, I would say that we’re going to have to do something about this problem. As an individual, I’m not sure what I can do, but I’m open to suggestions. I’m already politically active and socially aware. I write my senators and congresswoman regularly about different issues. I vote. I write businesses when I have concerns. I wonder what more I can do.

The funny thing is that the middle class doesn’t seem to want to protect themselves. All they have to do is support a steep increase in takes on the super-wealthy, and spend that money on education and programs that will help people set up businesses and health care, and things would probably turn around very fast. American ingenuity is still there, but right now it is being stifled by a lack of access to capital. Only the rich can have access to capital, and of course, they’re the ones who need it least.

In 2007, the “real” (adjusted for inflation) median annual household income rose 1.3% to $50,233.00 according to the Census Bureau.

In 2008, the median household income in the U.S. was $50,303.

Median Income
The 2008 census reported the medium income as $50,233. The PewResearch Center suggests that the middle income range is 75 percent to 150 percent of the median income. This would make the middle class income range $37,675 to $75,350. To most, this range seems small, and surveys conducted by the PewResearch Center find that many who fall outside this range still consider themselves middle class.

Read more: What Is an Average Middle Class Salary Range? | eHow.com http://www.ehow.com/about_5212740_average-middle-class-salary-range_.html#ixzz0vOkZt53I

@wundayatta Define “steep”. Consider that the effective tax rate on the upper brackets is about half of what it is on the middle brackets, I really don’t feel that it’s steep to ask them to pay approximately the same percentage (or maybe slightly more since our tax system is progressive) as those earning one-tenth as much or less. Granted, going from 16% to 30–35% is a bit of a shock, but wasn’t the whole point of cutting taxes on the rich to make them pay a fair share instead of 70% like they did pre-Reagan?

At is stands, the bottom 47% of us earned too little to pay taxes last year (and often not enough to live without government assistance, thus requiring more revenue so the government can feed people and keep them off the streets), the middle 43% of Americans earned about 35% of the income and paid ~60% of the taxes, and the top 10% who earned 50% of the income paid the other 40%. Maybe I forgot a bit about math, but it appears to me that it would be fairer for the group that earns more to pay at least half, and probably a bit more (though less than 40%) considering the income disparity and the fact that the poor really can’t afford to chip in if they want to live indoors and eat.

Of course, drastic times call for drastic measures, and we’ve been digging this hole for so long that it’s practically an American tradition, so there is going to be a lot of opposition, especially from those that benefit most by the status quo and can afford the lobbying it takes to get their way.

@jerv Where did you get your stats? Not contesting them, I would just like to see what additional information is available because those numbers are staggering. What does everyone think about the fair tax?

@tablack01 That was actually a compilation based on stats from multiple sources (some from the US Census Bureau) regarding income distribution and what each portion of our population paid in income taxes. Since I look at a lot of different places to get my info maybe more than I need to since I like to verify/corroborate some stuff to make sure I am nt talking out of my ass, it may be a bit before I can name specific sources.

As for my opinion of the “Fair tax”, I think that the commentary in this question that I posted a few months ago says how I feel, but a brief synopsis is that I see it as a bad thing that would only hurt the middle class more and maybe take the lower class with them if done wrong while hardly doing a damn thing to the rich who tend not to spend nearly as large a percentage of their income as us mere mortals.
The fact that it would be implemented by a bunch of morons (a.k.a “Congress”) means that it’d probably be even worse than that with all sorts of loopholes and duck-fuckery makes my opposition of it more intense.

@jerv Steep? Well, there was a time when the richest people were paying 90% of income to taxes, if I remember correctly. I would not be unhappy with a 75% marginal tax rate.

There is the problem of incentives, and the rich say they would stop working hard to build new businesses if the taxes were too high, and/or they might leave the country,

Some of that might happen, but I doubt that American rich people would be all that comfortable overseas for the most part. Second, people don’t work hard to make money. They have all the money they could ever use and more. They work hard to make money so they can be at the top of the heap; so that every door is always open to them; so that they are in at the most exclusive place in the world.

Of course it is much more complicated that marginal personal income tax rates. There are capital gains taxes and corporate taxes and a miasma of so-called “tax incentives” that keep rich people growing richer at increasing rates.

But as a general principle, I agree with your idea that the more wealth, income and resources you control, the greater a portion of the Federal government you should pay for. No loopholes. No tax cheat left out of jail.

@wundayatta I think that before we can figure out what the top marginal rate should be, we would have to take a look at the income distribution. I have to admit that that 40% number was arrived at as a rough guess back when the L-curve was less dramatic than it is now.
Regardless, I feel that the rate was a little high pre-Reagan, too low after his tax cuts, and that W went so far to the wrong side of the Laffer curve that I’m not sure he has the financial savvy to be trusted at the register at McDonalds, let alone making/approving tax policy.