Ezra writes:
… I was looking at some family income distribution numbers yesterday and was a bit surprised by how the distribution looked. To enter the Top 20 percent, you need to be making $88,000 a year. To enter the Top 5 percent, you need to make $157,000 a year. I've known a lot of families making around $150,000, and none of them would have described themselves as much beyond upper middle class, or "doing pretty well." And though I'd call Top 5 percent rich, in income terms, I probably would have said $250,000.
In response, Matt makes some good points about the crudeness of family income as a metric of actual wealth. I would add that geographical variations in the cost of living make an enormous difference as well, and one obvious reason why a family of Ezra’s acquaintance making around $150,000 annually might not describe themselves as rich would be that, well, they probably aren’t - at least not if they live in the greater New York or Washington or Los Angeles area, where the cost of living is far too high for 150 grand to buy the kind of lifestyle that most Americans associate with being wealthy.
I would also note that when I say the “cost of living” I really mean the “cost of raising children,” since a childless couple in NYC or DC making $150,000 annually enjoys a vastly different lifestyle than a couple trying to raise 2 or 3 school-age children on the same salary. This distinction is worth pondering in the context of the debate over whether conservatives should push for child-friendly tax policy; it’s also worth pondering the context of the desuburbanization agenda beloved of progressives nowadays. You’ll frequently hear Ezra and Matt, among others, lamenting the latticework of subsidies and tax breaks that incentivize Americans to buy biggish homes in spread-out suburbs and exurbs, rather than clustering more efficiently in inner-ring ‘burbs, medium-sized towns and urban cores. But of course these policies don’t just redistribute people from energy-saving cities to gas-guzzling exurbs; they also effectively redistribute money away from the singletons, childless couples and small families who are more likely to be drawn to urban areas, and to the larger families that are more likely to be drawn to bigger yards, quieter streets, and houses with 3-5 bedrooms.
Obviously, if you’re the sort of progressive (or conservative) who doesn’t think the government should show any pro-family bias at all, you won’t have a problem with a policy agenda that eliminates this sort of redistribution. And just as obviously, there may be more effective (and energy-efficient) ways to make it easier for parents to raise the next generation of taxpaying Americans: I’d happily combine a Ponnuru-style tax reform with, say, congestion pricing on highways and a smaller home-mortgage deduction. (And making it easier to build in urban areas is a good idea, period.) But all things being equal, it’s worth keeping in mind what when progressives talk about fighting sprawl and incentivizing re-urbanization, they’re often talking about making it vastly more expensive to raise kids the way most Americans want to raise them.
Photo by Flickr user PeterBaker used under a Creative Commons license.
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"This distinction is worth pondering in the context of the debate over whether conservatives should push for child-friendly tax policy"
I am utterly unable to "ponder" any rational basis for forcibly redistributing income from those who do not have children to those who do.
Posted by KipEsquire | March 13, 2008 7:29 AM