They May <i> Think</i> They’re Middle Class, but Guess What? : Many Southern Californians believe they are simply average. But when it comes to tax cuts, they’re way off the charts.
They’re in the top 20% of income earners in the country. They live in households that take in about $60,000 a year or more. They often have a nice house and two cars in the driveway. But whatever you call them, don’t call them rich.
Economists call them upper class. They call themselves middle class--and mad.
They’re Americans largely overlooked by President Clinton’s proposed “middle class” tax cuts (although many in this group would benefit under Republicans’ “family” tax-cut plans). And they’re the ones often looked at for proposed tax increases. But they say they struggle just to keep the Joneses in sight, especially around these parts.
What’s plenitude in Peoria may just be sufficiency in Southern California and other large urban areas.
“You take the money I earn and move me somewhere else in the country, and I would feel a lot more wealthy,” says Ed Satterfield, a 42-year-old San Diego Postal Service worker whose annual household income is more than $80,000. “. . .It takes a heap of money to live here.”
“The (proposed) Clinton tax break isn’t going to affect me that much,” says Eric States, a 34-year-old small-business owner in Santa Barbara and father of two who also earns more than $80,000 a year. “I think it should affect a higher income level for California.”
“I hope people aren’t going to read this and say, ‘Oh, poor Eric,’ ” he says. “But it is expensive to live here.”
Bobby Kelton, 42, a single actor and comedian who rents in Beverly Hills, feels the same way. His income hovers above $75,000. “The Clinton plan only affects a certain segment of the population,” he says. “I don’t think it’s enough.”
While some might respond with a sarcastic boohoo to Kelton’s complaints, he insists that “in L.A., $75,000 a year is just getting by.”
He might have a point.
Living between Santa Barbara and San Diego means living in some of the 20 most expensive places in the country, according to a ranking of 343 metropolitan areas by the “Places Rated Almanac” (Prentice Hall, 1993).
The average cost of a house in the region, the almanac says, is nearly $250,000. In San Francisco and its suburbs, it’s $353,400. In New York City, it’s $236,600.
Of course, not all upper-income families with an ax to grind live in the big city. “We have a house payment, and we have two car payments, so it goes very quickly,” says Ramon A. Avila, a resident of “Middletown, U.S.A.”--Muncie, Ind.
“Entertainment to us,” he says, “is college basketball and high school games.”
Avila, 39, is a father of four and a Ball State University marketing professor. He and his wife take in about $90,000 a year. After the house payment, the car payments, an annual vacation and endless kid costs, he doesn’t feel so wealthy.
So when Clinton all but shut him out of his middle-class-tax proposal last month (Clinton denied his with-children tax credits to those earning more than $75,000), Avila decided on his vote for next President: whoever’s running against Clinton.
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Defining the middle class can be a quixotic endeavor--and a nightmare for politicians. “The middle class,” says economist Iris J. Lav, “is a feeling.”
Most economists say America’s middle 60%--households that earn between $12,965 and $60,280 a year, according to the U.S. Bureau of the Census--make up the middle class. Others say it depends on the color of your collar. And yet a whopping nine in 10 Americans, millionaires and mail carriers alike, define themselves as middle class, according to a 1994 Roper Research Organization poll.
Politicians try to brush as wide a stroke as possible. Their “middle class” often reaches into the six-digit range, so they can tap a potent pool of voters. (In November, the California households that took in $60,000 and more went to the polls more than any other income group.)
Clinton’s Middle Class Bill of Rights--his family tax-cuts proposal--reaches into the top 5% of incomes in the country.
It includes a small deduction for college tuition for families that make up to $120,000 and an Individual Retirement Account deduction for couples who make up to $100,000. But the centerpiece of Clinton’s cuts--a $500 tax credit for families with kids age 12 and younger--leaves out those that take in more than $75,000. A Republican tax-cut proposal--which is dubbed a “family” plan rather than “middle class”--allows similar credits for families that earn up to $200,000.
In some instances, the Clinton Administration has shown resentment toward upper-income households for their prosperity when true middle-class incomes fell. Said Labor Secretary Robert B. Reich in November: “Most of the middle class (is) being left behind while the overclass breaks away. . . .” He criticizes “the top fifth of American households” for taking home nearly half the nation’s total income.
Even so, the Middle Class Bill of Rights’ definition of “middle class” is pretty high, says UC Irvine economist Richard B. McKenzie.
“It’s certainly not an income middle class,” he says. “It’s a politically attractive middle class.” Still, McKenzie argues that any tax-cut plan that doesn’t address everyone is “tax discrimination”: “Clinton is saying, ‘We’re going to penalize success and subsidize children.’ ”
Some, like Regina Render, senior representative of the L.A. County AFL-CIO, have little in their hearts for upper-income households. “I have very little sympathy for someone who makes 100 grand and drives a BMW,” she says.
“We feel like the middle class is nonexistent,” Render says. “There’s only the rich and poor.”
Many economists question whether there should even be a tax cut when, each year, the federal government spends more than it takes in, borrows money to make up for it and adds to a $4.7-trillion national debt.
“The question is on the affordability of a middle-class tax cut at a time when there is a long-term need to reduce the annual deficit,” says economist Lav, a director at the independent Center on Budget and Policy Priorities in Washington, D.C.
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Despite the country’s misfortunes, and their own comparative fortune, many in upper-income households are frustrated with Washington. “The focus should be on the country as a whole,” says another San Diego Postal Service worker, Jeff Frazier. He and his wife, who works for a medical-supplies company, have a combined income of about $77,000 a year.
Frazier, who considers himself “blue collar,” says the Middle Class Bill of Rights “solidified my position against Clinton. . . . Our circle of friends isn’t very happy with the way things are going right now either.”
Those interviewed for this story say they live paycheck to paycheck and describe their luxuries as a big-screen TV, a spa, or even just car insurance. There isn’t a Mercedes driver in the bunch.
Postal worker Satterfield--whose biggest bill is the mortgage on a $230,000 home--says he’s looking for extra work on the side. “You make $75,000-plus a year, and what do you have to show for it?” he says.
“Pull away our income,” he says, “and we’re done.”
