While these particular circumstances are a bit humorous, it should also serve to highlight a major problem with our “safety net” – it imposes an absurdly high marginal cost on earning additional income at around a lower middle class income level. The numbers vary by state, program eligibility and family size, but many welfare programs are phased out over the same range, with the result that new income results in a reduction of EITC, food stamps and Obamacare subsidies. Add in the usual payroll and state income taxes, and a family with an opportunity for a promotion, overtime work, an extra part time job, etc. can easily end up seeing 2/3 or more of the new income go to taxes and decreased benefits. There could also be a reduction in a social security benefit, loss of eligibility for S-Chip or Medicaid, school lunch program, state school vouchers, public housing, etc. That is a huge disincentive that ought to be addressed somehow… – IL
What Is Middle Class Income? - Work To Not Work
There are, of course, may possible definitions of what it means to be poor or low-income as well as what makes one middle class or even upper class. This report defines low income as less than 200 percent of the official poverty threshold. For the purposes of this report, persons with incomes at this level are considered to live in or near poverty. They are also referred to as the poor and near-poor. Alternatively, persons with incomes above this level may be viewed as having at least a middle class income level. This definition is consistent with the formulation developed by the Population Reference Bureau and has the advantage of controlling for family size as well as being a consistent measure over time.
Middle Class Shrinks as Households Earn Less
Browse through your user friendly tax manuals and you will findall sorts of deductions which phase out after you reach an uppermiddle class income level. It’s Congress’ schizophrenicway of imposing higher marginal rates on the reasonably well offwithout simply creating a new tax bracket.
What It Means to Be Middle Class Today - US News