Saturday, September 24, 2011

Romney: Middle class?

Multimillionaire Mitt Romney took some heat  recently for saying he's middle class. He's worth between $190 million and $250 million -- hardly middle class.

Here's exactly what he said:
We ought to provide help to the people who've been hurt most by the Obama economy, and that's the middle class. It's not those at the very low end, it's certainly not those at the very high end, it's for the great middle class, the 80 to 90 percent of us in this country.
Some have defended Romney, saying he used the word "us" to mean the collective American people.

Whatever. We object to a couple of other assumptions he made. First, that Americans are suffering from the "Obama economy." Romney must have missed the memo that said 28 percent of middle-class Americans fell into poverty since 1979. Those are years in which both Republicans and Democrats served as president.

We also take issue with Romney's estimate of the size of the U.S. middle class. Let's take his own definition -- people earning less than $200,000 a year. So middle-class households earn less than $200,000 a year and more than the poverty level.

The U.S. population is 309 million. The number of households earning more than $200,000 is 4.5 million. There are an average of 2.59 people per U.S. household, which means 11.6 million people, or 3.8 percent of the population, are richer than the middle class.

The number of people in poverty is roughly 56 million, or 18.1 percent of the population (a disgraceful figure, by the way). So that leaves 78.1 percent of the U.S. population in the middle class.  That's considerably less than Romney's "80 to 90 percent."

But if Romney's math is a little off, his solution is just nutty. Eliminating taxes on interest, dividends and capital gains for people earning less than $200,000 a year does little or nothing to help people who are still paying payroll taxes, state and federal income taxes, property taxes, sales taxes, excise taxes and fees.

Few people in the middle class are paying significant amounts of taxes on interest, because rates are so low. Capital gains? Most people pay that when they sell their houses, but few people are making money on housing appreciation any more. And dividends? The vast majority of middle-class Americans who own stock do so through their tax-free 401(k) or IRA accounts.

Who knows what Mitt Romney would do as president anyway? Here's a guy who brought Obamacare to Massachusetts and now opposes it. Supported abortion rights before he opposed them. Was against Social Security before he was for it.

But even if he were consistent and did what he said he would do, his tax reform plan wouldn't do near enough to save the American middle class.