Tuesday, January 26, 2010

The Disappearing Middle Class

I don't usually go all politico on you but with the State of the Union address to be taking over the airwaves (that is, if you watch network TV) tomorrow night, I figure this is the one time to go rogue and get on my little soapbox.

We happened to catch a few minutes of the news last night and apparently President Obama is going to discuss his middle class tax breaks plan during the State of the Union.

**disclaimer** It might help if I explain a bit about myself. I feel completely and totally alienated by both political parties. I guess I lean a little bit more toward being a Democrat (I voted for Kerry and Obama in the last two elections) but at the same time, I read an article written by Ron Paul about everything that is wrong with today's GOP and I adore his ideas and wholeheartedly agree that if the Republican party can go back toward it's roots (i.e. small government, not so pro-big business), I'd probably swing slightly more to the right. In other words, I'm a political mess! I want more green, meaning that I want the government to care about the environment and I want to pay less for that so I can have more green in my pocket! **

The only thing they really outlined that is part of the middle class tax plan is a big credit on childcare for families that make less than $85,000 combined. When I heard that, I practically felt my aforementioned low blood pressure skyrocket! Let's examine this further.

If you are using childcare (enough to get a tax credit) you are probably a dual-income family. I can tell you already that there is almost no way that Adam and I would ever be able to qualify for that tax credit (not that we particularly would want to need full-time daycare) at this point in our "careers" (haha, career, that's funny in reference to me). Most people in our generation are choosing to wait to have children until their late 20's/early 30's. By that time, you are usually relatively established in your career and you aren't making the standard just-out-of-college-$20000-to-40000 a year job. If you have two people that each earn, say $44,000 annually, you are already out of the running for this tax benefit.

You have to remember that at my current (and I use that word very loosely) job that I can barely hope to ever gross more than $45,000 annually due to our labor contract and the fact that your income tops out at 14 years of service and we are limited in the hours we can work in a month. But in a more mainstream career, in the grand scheme of things, isn't $45,000 a number on the lower end of the spectrum for a person in their early 30's? Are doctors and lawyers not considered middle class anymore? What about teachers or engineers? Lots of school districts pay up to $40,000 if you have a masters degree and that is for teachers just starting out. According to this tax credit, if you had a lawyer and a teacher dual-income family, they are no longer considered middle class. Don't forget, this $85,000 number is almost certainly pre-tax! Say an ER doctor and a nurse are married with two kids. They work crazy hours and probably need childcare. They almost certainly make above $100,000 but are they not middle class? What about the probably hundreds of thousands in student loans that they are working to pay off? Why can't they get a childcare tax credit too?

It's not that I'm saying that $85,000 is at the poverty line or anything but I really feel that that is a number for a dual-income-therefore-childcare-necessary family is pretty low. You can read in a multitude of sources that our salaries here in the U.S. of A. have not kept up with inflation and I think this is a perfect example of that. $85,000 might have been closer the top of the middle class back in the day, not when gas was more than $2.50 a gallon on the regular.

Ok, now I'm off my soapbox. Maybe I'm completely out of touch with reality on this one but maybe I'm actually on to something!

**disclaimer number 2** I hope to be in a position someday to not necessarily need childcare but I still feel strongly about the issue for a number of reasons. First of all, if a woman wants to go back to work after having babies, she should be able to go back without having to worry about if she makes enough to justify the childcare expense. Plus, many families need that second income just to maintain their quality of life. And I'm not talking an extravagant quality of life. Isn't the American Dream to own a home? That's expensive!**


  1. I'm not really into the reading of political stuff, but did come across an article about this on NPR yesterday. Thanks for doing the math and explaining it more. Do you think that maybe he's offering the tax credit to the single working moms? Although if you're a single mom, there's a high probability that you can't afford childcare in the first place and won't need the tax credit.

    Hmm. I should really get involved in this stuff and think about it more like you did.

    btw, found your blog from Lincee's. There are only a few of us who left blog addys.

  2. Hm...I make half of the lower end of your 30's pay scale. Sigh. Stupid grad school :( But the sad thing is that I know I make more than some people who AREN'T in school. And a lot of those people have to live off of that salary with families. You're right - most of our friends probably went to college and made them some monies. But a huge part of the country didn't get that far. Or went to grad school. ;)

  3. I agree with your sentiments exactly. Hello, how about AT LEAST letting me write off ALL of my student loan interest!?!? Seriously, the $2,500 cap on student loan interest is a flipping joke. That allows me to write off about 4 months worth of interest. Sweet, thanks for practically nothing!

    I thought we believed in education in this country? Oh, yeah, we do, but by that we mean we'll subsidize the interest on *some* your loans for the measly 4 (or, in my case, 7) years that you're in school and then allow the private-sector, government-subsidized student loan companies charge ridiculous interest rates for the next 20 years that it takes to pay it off (unless you're like me and would rather live more frugally now than I did when I was actually in school to pay these loans off as fast as I possibly can, because I would rather cut off my left hand than have the blasted student loan companies make any more money off of me than I can humanly prevent).

    And, while we're on the subject, why exactly is the interest rate on government-subsidized student loans so high when interest rates everywhere else are in the toilet? I seriously, do not understand! My mortgage interest rate is lower than my student loan interest rate, and that, my friend, is ridiculous!