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New Economic Data Underscores Urgent Need For Middle-Class Tax Cuts

Posted on by Faiz Shakir

As Leader Pelosi said last week, “Instead of heading home, we should stay here in the House and pass the middle income tax cuts to help restore stability and certainty for America’s families, workers, and businesses.” Despite the urgent need for action, some in the House GOP leadership have suggested that “serious legislating is all but done until after the election.”

For 525 days, House Republicans have stood in the way of a jobs agenda while continuing to put millionaires ahead of the middle class—and working Americans are paying the price. A new Federal Reserve survey of family finances finds that median income and mean net worth of most Americans fell significantly over the past three years. As the Fed economists said, the most noticeable drops in wealth security “were among families in the middle-income, middle-wealth, and middle-age groups.” While middle-income families took “the biggest hit,” the highest income brackets actually saw wealth gains due in part to the Bush tax cuts for the wealthy.

Some key findings from the report:

– Over the 2007-10 period, mean net worth fell almost 15 percent to $498,800 from $584,600.

The median net worth of family income fell almost 39 percent, from $126,400 in 2007 to $77,300 in 2010.

Debt as a share of family assets rose to 16.4 percent from 14.8 percent.

The drop in wealth was concentrated in middle-class families. Those in the 60th to 80th percentile of income saw the biggest drop in wealth — 40%. The second-steepest drop came from those in the 20th to 40th percentile of income — 35%. The top 10% actually saw an increase of nearly 2%. Via NY Times:

incomes

The data underscores that the high-end tax cuts pushed by the Bush administration exacerbated income inequality and hurt middle-class families. As Democrats have long argued, tax reform must include the expiration of tax cuts for the richest while giving middle-class families much-need tax relief. But Speaker Boehner and Majority Leader Cantor are still holding the middle-class tax cut hostage to tax breaks for millionaires that increase the deficit and don’t create jobs or promote economic growth.

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