If you are shielding the middle-class there are two things that are givens:
1. Economics is a discipline based on limitations. There are finite resources to any economy and the responsible economist will seek ways to maximize those resources for the best possible return.
2. Making a promise is a precarious activity for a politician. There are so many things out of control, even for a President who has to work on the global stage, that promises are limiting and must be carefully thought out and not just used to pander.
Hillary Clinton’s promise not to raise taxes on the middle class and her definition of the middle class should be anguishing for a respectable economist. Even those who appear to support her, like Paul Krugman, have serious problems with her definition of middle class and her promise not to raise taxes on it.
It is limiting to try to define a group by income level. If someone falls five hundred dollars out of a definition income level are they in one or the other? How about five hundred dollars? Or three thousand? Also location helps define your income level. Someone living in a small town in Idaho or in much of the South and earning $70,000 a year may be well off. A person living in New York, especially Manhattan, earning that same $70,000, is definitely not well off. Shielding the middle class is about honesty and reality so they can make realistic plans – not creating unobtainable fairy tales that lead toward depression.
If you really need to bracket let the minimum and maximum for that bracket speak for themselves. $180,000 to $200,000 is a wage category and not clearly a definition of middle class or upper class. Hillary Clinton’s proposal that middle class income is up to $250,000, when median income in the United States is a little less than $60,000 is economic nonsense that certainly does not help in either defining or shielding the middle class.
Making a pledge to not raise taxes does little toward shielding the middle class – unless you consider the absence of economic reality a positive way of shielding the middle class. As you recall at the beginning of this piece I mentioned that economies have limitations. There is no way to afford a single payer health system, single payer being favored by so many of our allies throughout the world, without raising taxes. Single payer, like Medicare, is our most efficient insurance in the United States. Why this is so is very simple – Medicare does not have to generate profits for its stockholders and Medicare does not have to spend millions in advertising like insurance companies competing with each other have to.
So to establish a single payer system as Bernie Sanders is calling for causes taxes to go up. But then the individual or family does not have to pay large and ever increasing premiums. So taxes go up but household expenses go down. Way down. The role in economics in this equation is to limit the tax increase as much as possible and gain maximum benefit in other expenses going down.
Any educated person can see this. Hillary Clinton, who many years ago supported single payer can certainly see this. What I can’t see is a responsible Presidential candidate making a promise that they don’t know if they can keep.
“A policy response should give those who are sliding backward a hand up, most likely funded by the people who are doing so well. But under Mrs. Clinton’s pledge, some of the well off won’t be called on to help out, and are in fact lumped in for receiving a boost. (I should note that my spouse works on the technology team for the Clinton campaign, but is not involved in policy.)”
“Mrs. Clinton’s pledge also blocks her from backing policies that would almost certainly benefit middle-class Americans, even if it raised their taxes slightly.”
“Take paid family leave. As things stand, Americans are not legally guaranteed any pay when they take time away from work for the arrival of a new baby or to care for a sick family member. According to a 2012 survey, about a third of people who get no or partial pay when they take time off for a new child end up doing things like borrowing money, dipping into savings or putting off paying bills. Fifteen percent enroll in public benefits.”
“Senator Bernie Sanders also wants to help the middle class, but he wants to do it in a way that could mean raising its taxes, even if he promises that most of an increased burden will fall on the wealthy. This has made him a target of the Clinton camp, which is telling voters that Mrs. Clinton is the only candidate pledging to shield the middle class.”
“Mr. Sanders, as well as Martin O’Malley, who is also running for the Democratic nomination, have avoided any pledge against middle-class tax increases. The paid family leave program both support is designed as social insurance much like Social Security, funded by a 0.2 percent payroll tax increase.”
“Yet Mrs. Clinton’s pledge rules out supporting such a proposal. While she has frequently talked about paid family leave, she says her plan will call on only the wealthiest to pay for it.”
“I tend to agree that $250K is not middle class. But that is the problem. How do we “classify” things like “middle class”.
“…Mr. Obama, who also made a pledge not to raise middle-class taxes, has seen how limiting it can be. Early last year, he made an effort to levy some taxes on 529 college savings accounts, given that 70 percent of account balances in those and similar accounts are owned by families who make more than $200,000. The revenue from the tax would have been plowed into college subsidies that would reach low- and middle-income Americans.”
“It was a doomed idea. Some families with closer to median income do use 529 accounts. So adding a tax would, technically, increase some middle-class people’s burden, thus violating Mr. Obama’s promise. Backlash erupted not just from Republicans, but fellow Democrats, and he dropped the idea less than a week after floating it.” http://www.nytimes.com/2015/12/28/opinion/campaign-stops/250000-a-year-is-not-middle-class.html?emc=edit_th_20151228&nl=todaysheadlines&nlid=63667984