WASHINGTON (CN) – Middle-class income gains of about 20 percent since 1990 have been far outstripped by the increased costs of health care coverage (153 percent), a 4-year public college education (60 percent), and home prices (56 percent), according to Vice President Joe Biden’s Task Force on the Middle Class.
Biden recommends doubling the Child and Dependent Care Tax Credit for families making less $85,000 a year, and smaller increases for nearly every family that makes less than $115,000.
The task force report suggests capping student loan debt payments at 10 percent of income after basic living expenses, and forgiving the remaining debt after 10 years of payments for those in public service careers and 20 years for other borrowers.
The newly issued report also suggests making permanent the temporary American Opportunity Tax Credit, which is worth up to $2,500 per year and can be claimed against tuition, fees, and textbook expenses for up to 4 years of college.
The report suggests steps to simplify student aid applications by eliminating dozens of questions that are statutorily required, and letting families fill out forms electronically with information transferred from tax returns they have already filed.
The report suggests simplifying and expanding the Saver’s Credit to provide a 50 percent match on the first $1,000 of retirement savings for families earning up to $65,000, and a partial credit to families earning up to $85,000.
The report champions a host of larger Obama administration goals including green jobs, loosening restrictions on formation of collective bargaining units in the workplace, and narrowing the definition of independent contractors to maintain employees’ benefits.
The task force took a broad view of who counts as middle class, loosely defining the middle class as families that aspire to home ownership, a car, college education for their children, health and retirement security and occasional family vacations.
The Department of Commerce estimates that to obtain a middle class lifestyle, families with two working parents and two school-aged children would have to make a minimum of $51,000 and that at $123,000 all six elements identified as part of that life style are attainable.
Families that make $81,000 could afford a mortgage on a home worth about $231,000; families making $51,000 could afford a mortgage of $144,000. Because the actual prices of median homes across the country vary more widely than do income distributions, even higher-end middle-class families may feel pinched when trying to meet their aspirations.
In studying changes in middle class incomes from 1990 to 2008, the task force found that after rapid growth in the late 1990s, incomes remained flat throughout the 2000s. But middle class income gains were far outstripped by the increased costs of health care coverage (153 percent), a four-year public college education (60 percent), and home prices (56 percent).