In Midtown Atlanta, where my wife and I live, housing costs are skyrocketing. The two of us reside in what appears to be the only rental property on the block, but I have no doubt that the homeowners in the neighborhood, especially those who have purchased recently, have parted with small fortunes in order to live there. Perhaps as a result, from time to time they lay claim to things that are not theirs. As a case in point, my wife was recently accosted by a neighbor who argued that it is only “polite” to refrain from parking on the street in front of her house. Though the altercation looked as though it would escalate, it was quickly cut short when the neighbor began her sentence with “As renters…” At that point my wife interrupted the neighbor’s sentence, expressed her offense and ended the conversation.
Thought terminating that exchange was certainly the wiser course, I must admit to some disappointment with not finding out how the neighbor’s sentence was going to end. For any line of argument that begins with the fact of our family’s propertlyessness was almost certain to conclude with a point both dismissive and ugly, and the ability to hear aloud what often goes implied might have been enlightening.
Without the benefit of this woman’s actual thoughts, my own interpretations lead me to expect that her truncated comment was intended to express an expectation of deference mixed with a bit of disgust for the lower orders. This is not an attractive attitude, nor is it in keeping with our nation’s purported philosophy of democratic equal opportunity. But it is on display in a wide range of the American experience, from tenured faculty who cannot give the time of day to the adjuncts in their midst to the recent episode of Modern Family in which Claire is infuriated at her neighbors for parking a boat in their own yard. The truth is that the American upper middle class possesses a sense of entitlement that is frequently unbearable.
Moreover, the size of this group means that the left, right and center of American politics is characterized by a never-ending pander to it. This indulgence begins with the use of the term “middle class,” which politicians stretch to avoid acknowledging any awareness that this wide swath of the electorate is, in fact, quite well-off. The US Census reports the nation’s median household income as $53,000. Yet in the last presidential election, President Obama promised to raise taxes only on the wealthy, a pledge which by itself represents an unreasonable middle class pander. Moreover, he defined that group as those who earn over $250,000 a year. Obama’s Republican challenger Mitt Romney apparently assessed the facts similarly, declaring that “middle income is $200,000 to $250,000 or less.”
More recently, the president declared in last week’s State of the Union address that his economic strategy goes by the name of “middle-class economics.” He defines this approach as “the idea that this country does best when everyone gets their fair shot, everyone does their fair share, and everyone plays by the same set of rules.” The policies Obama proposed to implement this vision include a minimum wage increase, tax credits for “middle-class and low income families” to help pay for daycare, and free community college. What the president did not say in his speech was that he hoped to fund these projects, in part, by eliminating a popular program that would help families pay for college. The program allows parents to deposit money in “529” accounts (named after the section of the tax code that created them) and withdraw those funds later for tuition, without paying taxes on it.
The proposed elimination of the 529 plans proved bipartisan outrage, as Republicans and Democrats alike argued that the president was hurting the middle class. The administration countered that allegation by pointing out that 70 percent of the money in these accounts was held by people with annual incomes of $200,000 or more. Even by the relaxed standards of American political discourse, the term “middle class” might not appropriately apply to those who had the money to take advantage of these savings plans. Republican House Speaker John Boehner disagreed, arguing that “529 plans help middle-class families save for college, but now the president wants to tax those plans…For the sake of middle-class families, the president ought to withdraw this tax increase from his budget when he submits it soon.” Many Democrats also objected to Obama's proposal. Chris Van Hollen of Maryland, the ranking Democrat on the House Budget Committee, claimed that the elimination of 529s “undercut” the president’s “message that they were focused on helping the middle class.” Under pressure, the White House dropped the proposal.
At The Upshot, Josh Barrow summarized the lessons of this debacle by reference to two “rule[s] of modern tax policy.” The first is that government can only raise taxes on the rich, while the second states that, no matter how much money I may have, I am not rich. Barrow cites data from the Government Accountability Office saying that the median annual income for those holding 529 accounts is $142,000. Such people have it within their means to save for college without a federal giveaway. But their “middle class” sense of entitlement combines with their political clout to rescue them from the burden of having to shoulder an appropriate share of civic responsibilities.
There is a word that we use for the programs that make public money available to private individuals: entitlements. When these are earmarked for the poor, the unemployed, the sick and the elderly, many Americans resent them. But in the case of 529 accounts, the rhetoric of the struggling middle class clouded over the typical suspicion of such programs.
Among the most cherished of these middle class entitlements is the provision that allows homeowners to deduct from their taxes the interest they pay on their mortgages. This policy, no doubt, was of great comfort to a certain Atlanta homeowner who now claims a right to treat public streets as her own property.