There is a lot of talk about the middle class, but I think few people mutually agree on what defines middle class.

Based on government descriptions, an individual is middle class if they make > 30k, and a household is middle class if their income is >40k. Upper middle class is similarly define as individuals who make more than $62,500 and household who make more than $100k.

Is it fair to stratify middle class based on a rigid income limit, or is it better defined by what they can afford? I understand middle-middle is a broad classification, but, in my opinion, the definition of upper-middle is misplaced. So what is it that you consider middle class?

For me, middle-middle is a family that has enough money to comfortably pay for all the essentials with enough that permits a comfortable nest egg for retirement and college education for their children. I would consider the upper bound of middle-middle to have enough income to cover the basics, contribute 10% to their 401k, max out Roths and have some additional disposable leftover.

I could further rant how 250k/year isn't rich and how 250k/year may barely cross someone into what I would subjectively consider upper-middle, but I would rather hear your thoughts and opinions.

2/13/2011 8:20:51 PM

Anything less than $100k/year is a peasant.

2/13/2011 8:24:59 PM

Quote :

"Is it fair to stratify middle class based on a rigid income limit, or is it better defined by what they can afford?"

Someone's spending is not completely correlated with their wealth or income.

2/13/2011 8:26:12 PM

Social class and income are only related to each other if you're talking about the lower and middle class.

A lot of wolfwebbers consider 100k+ to be upper class, which is simply laughable.

http://en.wikipedia.org/wiki/American_upper_class

Quote :

"Households with net worths of $1 million or more may be identified as members of the upper-most socio-economic demographic, depending on the class model used. While most contemporary sociologists estimate that only 1% of households are members of the upper class, sociologist Leonard Beeghley asserts that all households with a net worth of $1 million or more are considered "rich." He divides "the rich" into two sub-groups: the rich and the super-rich. The rich constitute roughly 5% of U.S. households and their wealth is largely in the form of home equity. Other contemporary sociologists, such as Dennis Gilbert, argue that this group is not part of the upper class but rather part of the upper middle class, as its standard of living is largely derived from occupation-generated income and its affluence falls far short of that attained by the top percentile. The super-rich, according to Beeghley, are those able to live off their wealth without depending on occupation-derived income. This demographic constitutes roughly 0.9% of American households. Beeghley's definition of the super-rich is congruent with the definition of upper class employed by most other sociologists. The top .01 percent of the population, with an annual income of $9.5 million or more, received 5% of the income of the United States in 2007. These 15,000 families have been characterized as the "richest of the rich"."

I tend to agree more with the Gilbert school of thought than Beeghley.

2/13/2011 8:30:16 PM

Yep, that's actually the argument I was going to make as one of the main distinctions between upper-middle class and upper class.

A $250k/year income does not qualify you as rich. That's a comfortable lifestyle, but you are still working for your income and standard of living, and you can't just go out and live the high life (as least not within your means). You can take nice vacations, and drive nice cars, but $250k/year is not rich. It is upper middle class.

Being a millionaire (in terms of net worth, which is independent from income) certainly does not qualify you as upper class. For one thing, the vast majority of Americans can become become millionaires if they want to. It really does not require a big income at all--it requires financial discipline from a fairly early age. You could very easily become a millionaire on a $40k/year salary, but I don't think any of us would call that "upper class". You'd still be living in a modest house, driving a modest car, taking modest vacations, etc. You'd just have a moderate nest egg and be able to continue that same lifestyle throughout retirement (incidentally, a 4% annual drawdown is what many financial planners recommend for retirement planning--so by this guideline, you need to be a millionaire in order to be able to retire at a normal age and safely live a $40k/year lifestyle).


I would say that a primary mark of being rich is that a very large percentage of your income is derived from income such as capital gains, dividends/interest, or income-producing property.

I don't really agree with financially raping these people with the tax code, and I furthermore think that earned income (i.e., your actual salary) should be taxed at a flat rate. I do, however, agree that it's not fair that the truly rich effectively pay lower tax rates due to long-term capital gains and dividends being taxed at a lower rate (currently 15%). This is why Warren Buffett remarks that he pays a lower tax rate than his secretary. That said, I don't think that we should tax long-term capital gains and dividends at regular income rates across the board for everyone. That would suck for the schoolteacher or auto mechanic or Marine officer working on being a millionaire.

[Edited on February 13, 2011 at 9:32 PM. Reason : ]

2/13/2011 9:31:37 PM

Consumption taxes for the win!

2/13/2011 10:08:06 PM

Quote :

"Someone's spending is not completely correlated with their wealth or income."

Nor are what one can afford and what they spend, which is a sad reflection of our society.

Quote :

"$250k/year is not rich. It is upper middle class."

I would tend to agree with you, but do you give $250k the same class status when the family is composed of two workers with 4 children as when the family is composed of a single income earner and 1 child?

Quote :

"Being a millionaire (in terms of net worth, which is independent from income) certainly does not qualify you as upper class."

I agree complete. If I save prudently my entire life and retire at 65 with a few million in the bank that does not make me "rich". You and Bobby make an excellent distinction. Even if I retire and have a few million in the bank, I will still need to live by a budget and account for my expenses.

In many cases, families who make 100k a year or, eve, 250k a year are still just trying to provide a comfortable life for their families, not rolling around on mounds of cash and lighting expensive cigars with 20 dollar bills as they watch time pass on their Rolex. Why should we vilify these families when their intention is the same as those we so ardently state need our support and aid? Does a particular level of income mean that a family is no longer permitted to provide for their family to the best of their ability?

2/13/2011 10:22:44 PM

Quote :

"Why should we vilify these families when their intention is the same as those we so ardently state need our support and aid?"

haha

who is vilifying these families...?

2/13/2011 10:30:16 PM

Vilify may have been a strong word to use, but they are looked at with distaste by many. On the news, in political speeches and, even, through out posts in the soap box you see people classify those over certain income levels as "rich" and thereby dictate what their class status is and what they are capable of paying in taxes.

2/13/2011 10:48:01 PM

Mathematics dictates what someone should pay in taxes.

Anything you perceive on top of that is political spin, bias, or some other propaganda.

2/13/2011 10:56:14 PM

really? I was not aware there was a mathematical law that told the exact percentage of one's income he should pay in taxes. man, I missed that in algebra

2/13/2011 10:58:33 PM

where did i say there was a "law"? Are you sure you don't work for Fox News? This is the same tactic they use all the time...

(straw man)

2/13/2011 11:01:09 PM

moron, you know what he means. when you stated mathematics and did so in such a casual,dismissive manner it failed to provide any real contribution. aaronburro was simply pointing that out by highlighting that mathematics is a system and that nothing in that system indicates who should pay what.

it, too, was obvious that you meant tax code, which is based on math. however, tax code isn't a rule of the natural universe and has been established by people and the points of view and biases that they have. so, while tax code does determine who should pay what, is it not possible that we should reevaluate the tax code?

in fact, that wasn't even the point of this thread and I feel partially responsible for taking it down that path. But perhaps it should be addressed since people often justify an individuals appropriate tax burden by the their class status; a flawed system since it is entirely subjective, as has been discussed above. The only commonality in the tax code is that people think that those with whom they don't identify should pay more than they currently do.

2/13/2011 11:17:19 PM

Quote :

"aaronburro was simply pointing that out by highlighting that mathematics is a system and that nothing in that system indicates who should pay what. "

It does actually. At the very least, the mathematics point towards a progressive tax system of some sort.

And calling people "rich" isn't to vilify them. It's paranoia to think that. What term would you suggest for the demographic whose income is greater than 90% of other Americans?

2/13/2011 11:31:08 PM

There are only two classes - the haves and the have nots

^I would call those "the haves"

2/13/2011 11:44:56 PM

Everyone has something

No one has everything

2/14/2011 12:36:08 AM

Quote :

"At the very least, the mathematics point towards a progressive tax system of some sort."

And which mathematics free of a system of emotional values would that be?

[Edited on February 14, 2011 at 12:59 AM. Reason : .,.]

2/14/2011 12:59:12 AM

I will judge individuals who make more than $100k to be "rich".

2/14/2011 4:29:47 AM

I would love to see a back of the napkin calculation of how someone making 40k/yr manages to retire a millionaire.

Without considering what taxes, fuel, food, rent leave you with at the end of the month on that salary, I put 5k in yearly for 45 years at 5% nominal and still only get to about 875k to draw on. Somehow, I feel like someone making 40k a year is going to struggle to put away an extra 415/month.

2/14/2011 6:49:13 AM

Quote :

"And calling people "rich" isn't to vilify them"

It isn't the term that vilifies people, but the negative sentiment towards those associated with that term.

Quote :

"What term would you suggest for the demographic whose income is greater than 90% of other Americans?"

Imagine a room, and in that room are 100 people who are assigned the task of purchasing enough food to make them full for a week. 20 of these people have $50 in their pocket 70 of them have $75 in their pocket 9 of them have $80, and 1 of them has $3,000. Those who have $80 have "greater than 90%" of the group, but should we call them rich, or significantly better off, in comparison to those who have $75? Just because you have more than 90% of others that does not mean you are rich in comparison.

Quote :

"I would like to see the back napkin calculation that"

[Edited on February 14, 2011 at 9:02 AM. Reason : calcs]

2/14/2011 8:53:22 AM

I don't think what makes one defined as "middle class" does not solely depend on income. Here where I work some mainteance guys make 80K+ a year and we all know about the bolt turners at GM making $40/hr.

Besides income I think factors such as education, job type, hourly/salary, and living situation also factors into who is middle class. Many people are think of themselves as "middle class" are really "working class." These include hourly blue-collar or pink-collar workers. They may make as much or more as teachers and some a lab technician. The later groups though steady pay-check combined with a possible second income with their spouse can differentiate between two totally different life styles.

Overall I think would not be a median quartile of the population but more of an income mean of workers in america. Such that the middle class is really the 3rd and 4th top quintiles of americans.

Upper Middle class I would define as those with professional jobs with incomes in excess of 100K. They will likely retire with significant wealth for retirement but are not in position to forego employment and income to maintain their lifestyle.

The upper class are those with the means and materials to solely live on their wealth.

2/14/2011 11:59:41 AM

Quote :

"Mathematics dictates what someone should pay in taxes. "

Dumbest thing Ive seen on here in awhile.

2/14/2011 12:09:00 PM

Quote :

"moron: What term would you suggest for the demographic whose income is greater than 90% of other Americans?"

Exactly! They rich!

If you can quit your job and forgo a salary before the age of 50 and still live more comfortably than most other people, then you're probably wealthy.

And it's not just semantics! We can't let these people take "rich" away from us.

2/14/2011 12:51:44 PM

ok, so rich is relative, and wealthy is absolute.


still semantics.

2/14/2011 1:04:37 PM

Upper middle class = rich

Living as comfortably as the upper middle class w/o working = mega-rich

Quote :

"Imagine a room, and in that room are 100 people who are assigned the task of purchasing enough food to make them full for a week. 20 of these people have $50 in their pocket 70 of them have $75 in their pocket 9 of them have $80, and 1 of them has $3,000. Those who have $80 have "greater than 90%" of the group, but should we call them rich, or significantly better off, in comparison to those who have $75? Just because you have more than 90% of others that does not mean you are rich in comparison."

If you changed those numbers to be more representative of the real diversity of incomes in the USA, then yes - those last 9 people would be rich in comparison.

2/14/2011 1:09:13 PM

^^There's all kinds of ways to judge and label this stuff. I also think upper middle class is a decent way to describe people, too. But it's not just semantics when we start to look at the growing wealth gap or the shrinking middle class. Just because we identify some families earning $250k/year as "upper middle class," it doesn't mean we should actually count them as middle class when analyzing the strength of our economy or discussing taxes. They are part of the technical/professional elite, and they're definitely rich.

[Edited on February 14, 2011 at 1:23 PM. Reason : ]

2/14/2011 1:23:10 PM

Bridget, how can you say they are definitely rich? I asked a question earlier that received no response. If you have a family with two income earners 4 kids, but their total income is 250K, are they still rich? Do you consider them equally as rich as a family with one income earner and one kid?

I ask this because there is a huge disparity in what these families can afford. The former family would still struggle to have a suitable retirement, pay for the college of their children and live comfortably. It wouldn't be a difficult struggle, but a budget would certainly be required. How can you so casually describe them as rich?

^^ You're right. Let us use these figures, but also adjust that the people in this scenario must feed their families for the week.

10 people have $11, 10 people have $18, 60 people have $43, 10 people have 87, 5 people have $118 and 4 people have $175 and 1 has $3000.

While those with $118.00 have more than 90% of the group, is it fair to constitute them as rich or assert they can burden more in taxes than those who make 87? Before you jump to a conclusion, consider that those with $118 are likely to have 2 - 3 more children than those with $43, and 2 more children than those with $87.

[Edited on February 14, 2011 at 1:43 PM. Reason : scenario scenario]

2/14/2011 1:30:22 PM

Quote :

"I will judge individuals who make more than $100k to be "rich". "

our household income is almost double that, and there's no way I'd consider myself "rich". We live very comfortably, but all of that would change if one of us were unable to work. A lot of our net worth is tied up in company stock and 401k that I couldn't touch without serious repercussions.

2/14/2011 1:35:34 PM

Quote :

"Upper middle class = rich"

Whaaat? By definition, this statement is absurd.

2/14/2011 1:38:08 PM

Not to nitpick, but where you live should also play some part in these discussions. A salary of $58k in the Midwest can afford you a comfortable life style as a single. In Arlington, VA (Washington DC metro), it qualifies you for local affordable housing initiatives.

2/14/2011 1:43:18 PM

Well, by all standards, I'm lower class. Gonna have to pull that white privilege card pretty soon, here.

2/14/2011 1:50:13 PM

white privilege doesn't mean that you're rich, it just means that you're better off than minorities who are in your same class structure.

then again...you know all of that.

2/14/2011 1:56:02 PM

^^^^ It's like everyone's been saying. "Rich" is relative. There no "by definition" to it.

I consider a family to be rich if they afford to live a better lifestyle than most, working for it or not.

2/14/2011 2:12:41 PM

Quote :

""Mathematics dictates what someone should pay in taxes. " Dumbest thing Ive seen on here in awhile."

One of the most unnecessarily condescending things I've seen on the internet in a long time. The pretentiousness of TSB posters knows no bounds.

2/14/2011 2:14:54 PM

Saying that mathematics dictates what the tax rate is asinine. The question of whether or not government should even be able to levy taxes is philosophical in nature. The actual rates themselves are arbitrary, determined by elected officials.

2/14/2011 2:33:30 PM

Quote :

"And it's not just semantics! We can't let these people take "rich" away from us."

That is our word.

2/14/2011 2:38:13 PM

Quote :

"The actual rates themselves are arbitrary, determined by elected officials."

There is an arbitrariness about it, which is the squabbling you see on TV.

But for the most part, they follow a curve determined by a formula.

When you think about how small the percentages are that politicians argue about on TV, it seems like a joke compared to the broader tax structure. Elections are lost of 3-4% changes.

As for whether the gov. should even levy taxes, you're on your own with that. No sensible person seriously thinks the gov. shouldn't tax.

2/14/2011 2:48:37 PM

From my perspective, my parents are 'rich'.
In reality, they are more towards the upper middle class end of the spectrum.

My wife and I make a combined income of ~$60K. We get by just fine. We both contribute moderately to our savings/ retirement investments. We both drive old cars with >100k miles, we have a decent house that will be large enough for us to have a family in and that we can live in forever if we decide to, and we can occasionally indulge in a want, as opposed to needs.

My wife's opinion is that we are scraping by, because we can't save nearly what we want to.
I say that we are doing OK, because we are comfortable right now.

I'd say that puts us in the lower middle class range. I say this because a kid would put us in extreme financial hardship at this point.

2/14/2011 2:57:04 PM

Quote :

"One of the most unnecessarily condescending things I've seen on the internet in a long time."

What would you say to someone who suggests that gravity determines what kind of shoes people wear?

I think you would rightfully point out the stupidity of such a claim.


Personally, I would consider someone wealthy if they earn passive income greater than their salary. A goal I would LOVE to reach one day. I think the problem with our generation is we expect everything now. Studies show we buy better cars and similar houses than our parents. Yet they have worked 30 yrs more, but we dont seem factor that in. We expect to continue the lifestyle we grew up in(paid for by parents), despite just starting out on our own.

2/14/2011 9:57:22 PM

Quote :

"Without considering what taxes, fuel, food, rent leave you with at the end of the month on that salary, I put 5k in yearly for 45 years at 5% nominal and still only get to about 875k to draw on. Somehow, I feel like someone making 40k a year is going to struggle to put away an extra 415/month. "

That is a little less than the average car payment. We are trading future wealth for current esteem with the car payment. Want to stay middle class, a good way is to keep a car payment.

2/14/2011 10:00:12 PM

HOLY GOODNESS, WHO PAYS $415 A MONTH FOR A CAR?!?!?!

2/15/2011 2:30:11 AM

annual income of > $500,000/year/person is rich. this 100K shit is laughable.

2/15/2011 7:35:44 AM

Quote :

"If you have a family with two income earners 4 kids, but their total income is 250K, are they still rich? Do you consider them equally as rich as a family with one income earner and one kid? "

I would consider $250k if you are just taking care of yourself to be rich. if its a couple with one kid it might be, depending on what their financial situation going into it was. if they don't have any debt then $250k could be rich. with 4 kids that's still pretty comfortable but its not really rich anymore.

2/15/2011 7:43:40 AM

comfortable, nice cars, nice house, vacation, retirement funds, etc. don't make you rich. a large annual income makes you rich. if you're smart with your money (saving or spending wise) then you aren't rich and shouldn't be considered such. when you bring in a shit ton of money every year, on top of other financial assets, then you are rich. I don't get why you lefties wanna call so many people rich, tax the shit out of them, and effectively destroy the middle class. you realize that much of america's industry is fueled by the middle class (per my definition above) and when you fuck them into being poor because they could afford a new car or nice vacation, you're fucking everyone.

2/15/2011 7:53:24 AM

Quote :

"Before you jump to a conclusion, consider that those with $118 are likely to have 2 - 3 more children than those with $43, and 2 more children than those with $87"

I like your analogy. My only issue is that the quoted statement is likely incorrect. Those with "$43 or less" dollars
often have no disincentive to NOT have children and are likely procreate more than their own means can afford. In such
case our heart felt overly liberal socialist "safety net" showers the rabbit like mother with food stamps, school free lunch,
etc.

Quote :

"a large annual income makes you rich."

I disagree. There is a acronym for such people called HENRY High Earning Not Rich Yet.

2/15/2011 8:31:08 AM

^
I understand your point, but I was basing my analogy on government data that suggests income per family rises for those in the 1 - 3 children range, and then starts to drop again in the 4 or more range.

http://www.census.gov/hhes/www/income/statemedfaminc.html

2/15/2011 9:18:57 AM

I reread your post and understood better. If you look at the data, check out Utah. There families with 7 or more have teh highest income. Fucking Mormons.

2/15/2011 9:22:21 AM

Why does having more children mean you're less rich? Children are a luxury.

For that matter, why are we so focused on what people spend their money on? What matters is the amount of comfort one can afford, regardless of how much comfort one chooses to afford one's self.

[Edited on February 15, 2011 at 9:31 AM. Reason : .]

2/15/2011 9:22:51 AM

It is a correlation but also has a bit of causation.

In many cases those with less income and/or wealth are that way from making bad financial and/or life decisions. This correlates to dropping out of high school after getting pregnant or not taking into financial consideration having a 4th kid when your household is already struggling with an income of $35,000/year. Plus as income decreases there is less "penalty" if not incentive (once income approaches $0) to have more children.

On the flip side having more children can be a causation of not becoming rich for those even with a decent income. A family with one child likely has less expenses and therefore better means of building wealth over the long term. On the other hand if the same parents had 4 children, their income would be going to the greater expenses of child rearing foregoing the usage of this money for wealth creation.

Quote :

"Children are a luxury. "

If ALL people in this country realized this than we would be much better off. Unfortuantly many believe that children is a RIGHT ( which it is if you have the means to afford them) but not IMHO if you require subsidization of the tax payer.

If you have the income and want to have 9 children than so be it. You spend your money on diapers I will spend mine on European vacations. To his/her their own. Different strokes for different folks. My only issue is those on child #6 from daddy #3, while living on welfare, collecting food stamps, and living in Section 8 housing.

[Edited on February 15, 2011 at 9:39 AM. Reason : a]

2/15/2011 9:35:31 AM

This thread is so fucking stupid.

Most rational post in here is MaximaDrvr

[Edited on February 15, 2011 at 12:33 PM. Reason : HUR is ok]

2/15/2011 12:33:33 PM