Middle class Americans have taken a hit over the last few years with sluggish economic growth, an unemployment rate of 7.2 percent and a flat housing market. Most worrying to the middle class is that there are still no signs of a recovery as they struggle to meet the rising cost of living. So would the American middle class be better off living in, say, Sweden?
In a turbulent battle to win the middle class’ support over the budget deficit, President Obama said that “congressional Republicans are more interested in politics than in managing an economy to benefit the middle class.” But, can any side claim they are helping the middle class?
While the U.S remained in gridlock over the over the new budget in Feb 2014, the French government’s solution to their budget deficit is to impose a 75 percent tax rate for income exceeding $1.39 million. To imagine what this would be like — if the U.S. were to tax 75 percent of millionaires’ entire incomes, not just their income over $1 million, this would generate $532 billion in tax revenue. This single tax group would produce a 48 percent dent in the nation’s deficit, which is expected to reach $1.1 trillion this year, but would not make any difference to the $16 trillion plus of national debt.
With huge national deficit in mind the French Government decided to put the tax burden on millionaires and not the middle class. But has it worked?
Like the US, France middle class has been hit by a high unemployment rate (10.2 percent) and poor economic growth, but with subsidized health care, is the French middle class better off than the US middle class?
If you take the average salary of a teacher in France — $34,700 — that teacher will pay on average 69 percent more for accommodation, 53 percent more for gasoline and 52 percent more for beer than the average US teacher, who earns $45,000. Even if you factor in healthcare through taxation which currently (depending on individual or family status) ranges from 14 percent to 30 percent, a US teacher is financially better off.
Despite the real hardships that the US middle class is experiencing they are still better off than most countries. Even if you compare the US middle class to Sweden’s, the US still comes out ahead. Despite Sweden having one of the best healthcare systems in the world, controls on rent and an average of 5 weeks paid vacation, the average American teacher is still financially ahead.
So why do most Americans feel economically worse off? As the economy is kicked about like a political football – with the Senate and the House refusing to compromise on the $1.1 trillion annual deficit budget and the $16 trillion debt ceiling — most Americans are reacting to the political stalement and have no confidence that a solution can be found.
But the reality for most middle-income Americans, according to the Commerce Department, is they are seeing the cost of living going up and a decrease in their disposable income. On average, the middle income American household earns around $50,000, but with higher cost of food, rent and utilities payments are Americans becoming poorer?
There is no simple answer. The Commerce Department reports that wages and salaries are increasing slightly while mortgage rates remain low, but this still seems little comfort to the middle class.